ALJ/LTC/acb* DRAFT Agenda ID#2068

Ratesetting

Decision ______________

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on policies and

practices for advanced metering, demand

response, and dynamic pricing.

Rulemaking 02-06-001

(Filed June 6, 2002)

INTERIM OPINION IN PHASE 1 ADDRESSING DEMAND RESPONSE GOALS AND ADOPTING TARIFFS AND PROGRAMS FOR LARGE CUSTOMERS

INTERIM OPINION IN PHASE 1 ADDRESSING DEMAND RESPONSE GOALS AND ADOPTING TARIFFS AND PROGRAMS FOR LARGE CUSTOMERS 1 1

I. Summary 2 2

II. Background 2 2

III. Statewide Demand Response Vision and Goals 7 7

IV. Demand Response Programs For Large Customers 11 11

A. This Decision in Context: The Challenge of Developing Demand Response Programs for Large Customers 11 11

B. Design Objectives for Demand Response Programs 14 14

C. Mandatory or Voluntary Participation? 15 15

D. Program Details 17 17

1. Dynamic Pricing Proposals 18 18

2. Demand Bidding Programs 27 27

3. Pilot Programs 34 34

E. Customer Participation Issues 37 37

1. Agricultural Customers 37 37

2. Multiple Meter Situations 39 39

3. Multiple Program Participation 40 40

4. Transitional Incentives 44 44

F. Expected Impacts 53 53

G. Program Duration 53 53

H. Elimination of Superfluous Programs and Tariffs 54 54

I. Program Costs and Related Cost Issues 55 55

1. Cost-Effectiveness 55 55

Program/Tariff 56 56

2. The Principle of Revenue Neutrality and Recovery of Revenue Shortfalls 57 57

3. Program Administrative Costs 60 60

4. Capital Costs 61 61

5. The Costs of Incentives 61 61

6. Imposition of Cost Cap 62 62

7. Cost Recovery Mechanisms 62 62

J. Customer Education/Outreach 62 62

K. Program Evaluation, Monitoring and Oversight 64 64

V. Phase 2 of this Rulemaking 67 67

VI. Comments on Draft Decision 67 67

A. Revisions: Program Details 68 68

B. Revisions: Customer Participation Issues 68 68

C. Revisions: Program Costs and Related Cost Issues 69 69

D. Revisions: Program Evaluation and Monitoring Oversight 69 69

VII. Assignment of Proceeding 69 69

Findings of Fact 70 70

Conclusions of Law 79 79

ORDER 83 83

Attachment A

Attachment B

Attachment C

Attachment D

Attachment E