XII. Criteria for Determining July 1 Cut-off Date for Applicability of DA-CRS

A. Parties' Positions

Certain parties argue that the measurement of DA load as of July 1, 2001 for purposes of applying DA charges in this proceeding should be based on contract execution date, and not on the date when power under those contracts actually began to flow or the first date on which such power flows were billed. These parties take issue with Navigant's modeling assumption that only 2% of total load was on DA as of July 1, 2001, and claim that there was a substantial body of DA customers who were not "physical" DA customers as of June 30, 2001 but who nevertheless possessed a legal right to obtain such service even assuming a July 1, 2001 cut-off date for new DA service. As a result, these parties claim that Navigant's indifference measure overstates the amount of DWR costs for which DA customers properly bear responsibility.

SBC Services, Inc. (SBC) argues that basing the July 1, 2001 cut off on contract execution date is the only fair measure because DA customers have no control over any other aspect of a switch to DA. SBC argues that use of the billing cycle date is inherently unfair as a cut off criterion because some DA customers that properly entered into DA arrangements prior to July 1, 2001 could be subject to 15 years worth of DA CRS costs merely because their billing cycle began on July 2^nd.

SBC disputes SDG&E's claims that the administrative burdens of implementing measures to recognize a contract execution date, rather than a billing cycle date, would unduly delay the institution of a DA CRS. SBC supports the approach proposed by CMTA as a means of implementation on an expedited basis. CMTA proposes using the procedures already adopted in D.02-03-055 to administer the September 20, 2001 DA suspension date. Under those procedures, customers and ESPs are to use an independent third party to verify that a DA contract existed as of July 1, 2001, with both the customer and the ESP submitting an affidavit under penalty of perjury that the contract date is correct.⁵⁸

B. Discussion

We find SBC's arguments to be unpersuasive. The affidavit process adopted in D.02-03-055 was intended to be the exception, not a procedure to determine the eligibility of thousands of applicants. The Commission allowed for the affidavit process only if the there was a dispute regarding the omission of a customer from the ESP-supplied list of customers with valid contracts.

Basing the July 1, 2002 cut off on a contract date criteria is not workable, increases implementation time and costs, and creates uncertainties and risks. Implementing such a proposal may be extremely difficult for the utility. The utility does not have information regarding contract dates. This approach would, therefore, require the utility to first attempt to obtain this information and then attempt to verify its accuracy, which would increase implementation time and costs (Ex. 55, p. 7). Risks of misconduct and uncertainty would be created, because utilizing this exemption date will require self-certification of the contract date by the DA customer and ESP. A process involving a system of self-certification of a date that has financial incentives for the DA customer and ESP could lead to misconduct. This process would also cause uncertainties in the amount of excluded load, because the amount would not be known until some time after a decision date, which would complicate the establishment of DA CRS. The customer's contract date cannot be used as the exemption criteria according to SDG&E since this information is not available to SDG&E.

SDG&E recommends that the customer's DA "active date" be used as the criterion for an exemption of CRS since the customer's billing account is established based on this date and it is easily determined. SDG&E argues that using a different criterion may be feasible to determine the exclusion criteria, but the data would need to be available and tracked by the utility.

Another option for the exemption criterion is the date of the Direct Access Service Request (DASR). SDG&E argues that the criterion would need to be defined as "accepted DASR date" since "submitted DASR date" is too vague and includes DASRs which have been rejected by the utility. Most customers are not aware of their DASR submittal date since the ESP submits the DASR.

As pointed out by Ms. Osborne of SDG&E, if the DA load on July 1 was interpreted as the amount of load that had contracted for DA service, it would take months to learn how much load did qualify for the July 1 exemption.⁵⁹ This would impede the Commission's ability to implement DA CRS in a timely manner.

SDG&E's DASR processing system is separate from the billing system and would require special programming to pull the DASR accepted date from the DASR system and populate the billing system with this criteria as necessary to exempt these customers from the CRS. The DA "active date," is known by the customer, albeit at a delayed date out of the control of the DA customer , but it does exist within the billing system. The DA customer should not be harmed because of the manner in which the utility organizes its data bases.

The interpretation of a July 1 suspension date based on contract execution leaves bundled service customers with reduced CRS revenues to offset their costs, and it leaves the remaining DA customers worse off, since they will now have to pay a higher unit amount. The interpretation of a July 1 suspension date based on the DA "active date" has the opposite effect. There may be ESPs that submit DASRs to utilities on behalf of their DA customers prior to July 1. For reasons out of the control of either the DA customer or the ESP, the utility may have not activated the account for periods significantly beyond the July 1 date. The DA customer should not be penalized for such delays. For purposes of imposing charges, it is not always practical or realistic to achieve exact precision in matching each customer's charges with kWhs consumed. In this instance, we conclude that reliance on the "submitted DASR date", as opposed to either the contract execution date or the DA "active date", strikes an equitable balance and forms an acceptable measure for purposes of determining the cut-off for DA CRS purposes.⁶⁰

The standard of bundled customer indifference as prescribed in D.02-03-055 requires that there be no cost shifting due to load that migrated on or after July 1, 2001. Cost causation is a function of when a DASR is submitted to the utility. Thus, if a contract is dated June 2001, but the ESP did not provide the DASR to the utility until after July 1, 2001, this customer would not have become an active DA customer until after the July 1 cut-off. Conversely, if the DASR is submitted before the July 1 cut- off, the customer should become an active DA customer. Neither the DA customer nor the ESP should be held accountable for delays in activation by the utility.