ALJ/TRP/tcg DRAFT Agenda ID #3984
Ratesetting
11/19/04 Item 40
Decision PROPOSED DECISION OF ALJ PULSIFER (Mailed 10/19/2004)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking Regarding the Implementation of the Suspension of Direct Access Pursuant to Assembly Bill 1X and Decision 01-09-060. |
Rulemaking 02-01-011 (Filed January 9, 2002) |
(See Attachment A for List of Appearances.)
OPINION REGARDING MUNICIPAL DEPARTING LOAD
REHEARING AND RELATED ISSUES
OPINION REGARDING MUNICIPAL DEPARTING LOAD
REHEARING AND RELATED ISSUES 1
I. Introduction 2
II. Procedural Background 5
III. Positions of Parties Concerning New Load CRS Allocation Exception 6
IV. Resolution of Application for Rehearing Issues 9
A. Framework for Determination of Cost Responsibility for
MDL "New Load" 9
B. Conclusions Relating to "New Load" Exception 16
V. Resolution of CMUA Petition for Modification 25
A. Overview of Issues 25
B. Implications of Assumptions Concerning Delivery Date of
PG&E Load Forecast Data to DWR 28
C. Quantification of PG&E "transferred load" Reflected in
DWR Forecast 31
D. Allocation of Transferred Load Exclusion Among MDL
Customers 35
E. Extent to Which DWR Procurement was Influenced by
Forecast Data 37
F. Timing of DWR Procurement Relative to Date of Receipt
of Forecast 40
G. Significance of Whether DWR, Itself, Makes the Adjustment 42
H. Analogies to the U.S. Navy Load CRS Requirement 45
TABLE OF CONTENTS
(Cont'd)
Title Page
VI. Determination of List of MDL Entities Eligible for Applying
for Any CRS Exemption 47
A. Background 47
B. Defining Existing Publicly-Owned Utility for Purposes of
Exceptions to CRS 49
C. Parties' Positions 49
D. Discussion 52
VII. Rehearing and Judicial Review 57
VIII. Comments on Proposed Decision 58
IX. Assignment of Proceeding 58
Findings of Fact 58
Conclusions of Law 61
ORDER 63
Attachment A - List of Appearances
Appendix 1 - Summary of Bypass Forecasts for Irrigation Districts
and Municipalization Included in PG&E's Bypass Report
Appendix 2 - PG&E's Estimated Lost Customers and Sales Due to Customer Bypass to Irrigation Districts
Appendix 3 - PG&E's Estimated Lost Customers and Sales Due to Customer Bypass to Municipalization
Appendix 4 - Adopted Modifications to D.03-07-028
OPINION REGARDING MUNICIPAL DEPARTING LOAD
REHEARING AND RELATED ISSUES
I. Introduction
This order addresses the limited rehearing ordered by Decision (D.) 03-08-076 (The Rehearing Decision), and related matters, as described below. The rehearing addresses a limited issue decided in D.03-07-028 (the Municipal Departing Load Decision or MDL Decision) which set forth the requirements for a Municipal Departing Load (MDL)1 "cost responsibility surcharge" (CRS) within the service territories of California's three major electric utilities: Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E). The CRS was assessed on MDL customers to provide recovery of a fair share of costs incurred by the California Department of Water Resources (DWR) pursuant to legislative directive, as set forth in Assembly Bill No. 1 from the First Extraordinary Session (AB 1X ). (See Stats. 2001, Ch. 4.)
In the MDL Decision, although we imposed a CRS provision on MDL customers, we also granted a limited CRS exception to new municipal load attributable to publicly-owned utilities "formed and delivering electricity to retail end-use customers before February 1, 2001," which was defined as existing publicly-owned utilities. (D.03-07-028, p. p. 76 [Conclusion of Law 11] (slip op.).)2
For purposes of applying the CRS exception, "new load" was defined as load that had never been served by a California investor owned utility (IOU), but that was located in territory that had previously been IOU territory and had been annexed or otherwise expanded into by a publicly-owned utility.
The Rehearing Decision, issued in August 2003 stated, however, that, "the record for extending this [CRS exception] to existing publicly-owned utilities and not to newly formed ones appears to be inadequate on this allocation issue." Thus, a rehearing was granted "concerning whether, or to what extent, there is sufficient factual basis for a CRS allocation based on whether the publicly-owned utility was formed before or after February 1, 2001."
In this order, we also address a related issue that was left unresolved in the MDL Decision, having to do with the identification of the specific publicly- owned utilities that would be subject to any exceptions from the CRS. In this regard, the Municipal Departing Load Decision further states:
"It is not clear from the record exactly which existing publicly-owned utilities would be entitled to exceptions from the CRS from this decision. It is our intent that only those publicly-owned utilities with substantial operations in place as of February 1, 2001 gain such benefit. Conversely, if there are any publicly-owned utilities serving minimal numbers of customers (e.g., under 100) which would technically qualify for CRS exceptions, we would choose to close such loopholes because there is too much chance for disproportionate expansion by such entities, expansion which could not reasonably have been considered by DWR." (Id. at pp. 61-62.)
The MDL Decision anticipated further inquiry in this proceeding to clarify the definition of "existing publicly-owned utility" for these purposes." On July 23, 2004, the assigned ALJ solicited comments from the parties to develop applicable criteria for identifying publicly-owned utilities whose MDL departing load customers would qualify for exclusion from the CRS. The ruling anticipated the Commission would subsequently identify publicly-owned utilities whose customers qualify for the "new load" exception from the CRS.
We also address herein the California Municipal Utilities Association's (CMUA) related Petition for Modification of D.03-07-028 (The Municipal Departing Load Decision) filed on February 17, 2004, regarding the effects of certain new disclosures concerning the point in time that DWR received delivery of PG&E's load forecast.
Upon review of the record developed on rehearing issues, as addressed in parties' comments, we reach two major findings. First, in the case of PG&E, an explicit adjustment was made in its load forecast provided to DWR to recognize future bypass due to anticipated transfers of existing IOU load to irrigation districts and municipalities. We conclude that a corresponding CRS exclusion is warranted to recognize the effects of this MDL "transferred load" component, as discussed below. Second, there is no evidence of any measurable adjustments made to the load forecasts for any of the three IOUs that subtracted any specific provision for bypass by new municipal load. We find no evidence that any distinction was made in the load forecasts utilized by DWR with respect to new municipal load attributable to various publicly-owned utilities based upon the date that they were formed or started serving these DL customers. In particular, no distinction was made in the DWR forecasts recognizing new load bypass based upon whether a publicly-owned utility (POU) was formed before or after February 1, 2001. Thus, all "new load" should pay a CRS.
As to the eligibility criteria for applying for any available CRS exceptions, we conclude that in order to qualify as an "existing publicly-owned utility" for the limited CRS exception provided in the Municipal Departing Load Decision, the publicly-owned utility must have been providing electricity to retail customers as of February 1, 2001 and serving 100 or more customers.
1 As used in D.03-07-028 and in the instant order, the term "Municipal Departing Load" refers to departing load served by a "publicly-owned utility" as that term is defined in Pub. Util. Code § 9604(d).
2 On February 18, 2004, the California Supreme Court summarily denied the petitions for writs of review challenging the lawfulness of D.03-07-028 and D.03-08-076. (Modesto Irrigation District v. Public Utilities Commission, et al., Case Nos. S119310, S119365, S119368, S119376. The petitions included challenges to the Commission's authority to impose CRS on new MDL and sufficiency of the evidence to impose the CRS on such load.
