Walwyn Proposed Decision (Item 1)

IX. Other Issues

A. Tracking and Posting Data

Informing customers of their rate group's usage pattern with comparison information from the previous year will provide some assessment of the success of conservation efforts. In addition, as pricing information becomes available, such information will enable customers, particularly those on TOU schedules, to make decisions about when to consume energy. Data collection this summer is essential both for analysis in future rate proceedings and to raise consumer awareness about the challenges California faces in the months ahead. We direct the utilities to post customer load profiles on their website, with weekly updates. We consider this feedback to customers to be critical to the success of the conservation efforts underway in this state.

We therefore direct PG&E and Edison to post dynamic load profile information for all rate groups for which such information is available on their websites. Pricing information should also be posted as it becomes available. We also direct the utilities to post the day-ahead ISO price for electricity daily. Consumers will take heed at the magnitude of the wholesale market prices, and it will serve as a tool to understanding generation pricing. Current price data from the ISO will raise consumer awareness of the unjust and unreasonable wholesale market costs for electricity.

Moreover, we direct these utilities, as part of their overall customer service function, to provide such other information on their websites as may be useful to customers in controlling their energy usage and bills. We appreciate their efforts to date to inform and educate their customers, and we know that they will continue. We also direct our staff to work with the utilities to maximize the potential for information sharing and customer assistance offered by the website.

PG&E and Edison have explained that they can provide such information. For each rate group, Edison can post on its website the monthly load pattern and level for this summer and, for comparison purposes, last summer. In addition, load level and patterns of usage for each customer class will be available for June, July, and August. Edison will average the daily load profile by hours over either a week or a month and will present some text analyzing and explaining the significance of the information in an effort to be helpful to consumers. Edison also promises to display pricing information by time of use when it becomes available.

PG&E states that it provides dynamic load profile information with daily updates of the hourly consumption profiles for the statistically representative customer served under sixteen separate rate schedules. PG&E cautions that while a comparison of this year's load profile with last year's may provide some feedback on the success of conservation efforts, it maintains that this data is not sufficient to determine individual price responses, and that the comparisons should be controlled for weather related effects.

ORA generally supports the idea of providing more information to customers about the market prices for electricity. Better-informed customers will be more likely to adjust their consumption to avoid high price times, and to make conservation investments. ORA recommends that the Commission maintain its own website, rather than relying solely on the utilities. We agree and intend to use our website for these purposes, as time and resources become available.

B. Expedited Installation of RTP Metering Systems

Current metering capabilities place significant limitations on rate design. Customers that are able to reduce or shift their load in response to hourly price fluctuations would benefit from a real time pricing model. We find that real time pricing has tremendous potential for reducing the overall costs of supplying energy. Such pricing will enable to customers to control their bills by shifting load to lower cost times. Reducing peak load will lead to more efficient use of our available generation resources.

We intend to promptly develop a detailed real time pricing rate structure to capture these benefits for California consumers. The Legislature has appropriated funding for real time metering systems. AB29X provides $35 million dollars for the installation of RTP metering systems for all bundled service customers with greater than 200 kW in peak load. Timely installation of the meters authorized by the Legislature is critical to the success of our plan. Installation of the meters will also assist in implementing our TOU rate design discussed above.

Two things need to happen, however, before real time pricing can become a reality in California - meters and information. The CEC intends to begin the meter deployment process during this summer and complete it by this fall. The CEC also states that extending the meters to the next size range, 100 - 200 kW, creates another 22,000 end-users requiring meters, approximately doubling the population that is being addressed by the AB29X monies. It is possible for this next set of end-users to have advanced metering systems installed by early 2002 if additional funds are authorized by the Legislature, if end-users can be mandated to make self-provision of such meters a condition of service, or if the Commission decides to authorize utilities expenditures with a workable cost recovery mechanism.

We will closely monitor the CEC's progress, and commit to providing any necessary assistance to ensure timely installation of the meters. The CEC maintains that it is working with the utilities and the ISO to meet the price information requirement. We direct our staff to cooperate and assist in these efforts.

C. 10% Rate Discount Associated with Rate Reduction Bonds

Pursuant to § 368(a), PG&E's and Edison's residential and certain small commercial customers currently receive a 10% reduction to their electricity rates. This rate reduction is financed by rate reduction bonds (RRB) issued pursuant to § 840-847, and orders of this Commission. The 10% rate reduction applies through the end of the transition period established in § 368(a), i.e., through March 31, 2002, with the repayment obligation extending for another six years. The Legislature intended that the 10% RRB-financed rate reduction would be followed by additional rate reductions at the end of the transition period, yielding a cumulative reduction of 20% by April 1, 2002. § 330(a).

TURN proposes that the 10% reduction continue despite the expiration of the RRB-produced financing. TURN reasons that the Legislature's prohibition on rate increases in AB1X preclude this Commission from ending the 10% rate reduction because an end to the 10% reduction would effectively be an additional rate increase for residential and small commercial customers. Edison opposes this and PG&E states that this proposal is premature.

At this time, we will make no determinations as to any ratemaking ramifications of the expiration of the 10% rate reduction in this decision. We need not reach the issue of how the expiration of the 10% rate reduction might interact with the prohibition on residential rate increases for up to 130% baseline because implementing the end of the 10% reduction will require further Commission action. At that time, the Commission will be better informed about the ramifications of TURN's proposal.

One related calculation issue, however, does require our determination. Edison raises the question of whether the 10% reduction should be applied to the pre-existing rates, i.e., prior to both the 1¢/kWh and 3¢/kWh, or should be applied after the surcharges are added to rates. Because the bonds that finance the rate reduction were sized to the pre-existing rates, Edison concludes that the 10% reduction should apply only to the pre-existing rates.

The amount financed by the bonds did not provide for these surcharges. Consequently, we are constrained to limiting the 10% reduction to rates in effect prior to the surcharges. In applying the 10% rate reduction for residential customers and certain commercial customers, PG&E and Edison shall apply the rate reduction to rates in effect prior to the surcharges.

D. Bill Display

We provide direction with respect to how PG&E and Edison should format the new rate design on the customer bill. Our intent is to adopt a format which accurately and effectively conveys to customers our stated fundamental rate design goal of promoting conservation to reduce the amount of electricity needed to serve customers. The customer bill format must communicate the direct correlation between electricity supply, price, usage, and consumption patterns in order to promote price-responsive behavior. We intend that the bill format communicate easily understood price signals, and deliver the message that by managing their electricity usage, customers can assume a significant measure of control over the impacts of the rate increase and reduce their overall bill.

We believe consumers are most likely to respond to these price signals when the bill provides sufficient detail allowing consumers to clearly identify and understand the differential pricing structures based on usage levels. In order to accurately portray the new rate design, whereby customers who use more electricity pay higher rates, each differential rate category or tier will identify its respective applicability to usage. On residential customer bills, the new rates will be incorporated through the five designated tiered usage levels: Baseline, 101% to 130%, 131% to 200%, 201% to 300% and over 300%. TOU customer bills will categorize the new rates under off-peak, mid-peak and on-peak classifications, as applicable. Likewise, commercial non-TOU customer bills will reflect the rate increase within the appropriate commodity component or block structure. Any bill reference to total energy charges will include the total cost of all energy consumption during the billing period, not merely baseline usage or some other minimum level of usage.

PG&E proposes to characterize the rate increase as a "Baseline Surcharge." This is inaccurate and would cause customer confusion. Therefore, we do not adopt this recommendation.

We recognize that customers may experience confusion as to why their electric rates are increasing while the rate freeze and legislated 10% rate reduction is still in effect. We have no objection to the utilities characterizing the rate increase as a "energy surcharge" provided the bill format complies with our objective to communicate easily understood price signals. The utilities should also include definition of the surcharge designation on the bill and a line item showing the total of energy surcharges authorized by D.01-01-018 and D.01-03-082.

E. Bill Insert

The customer bill does not provide sufficient space to accommodate comprehensive information about the rate increase. Electric customers should receive information describing the need for the rate increase and the tiered rate structure adopted by the Commission. The bill insert should inform customers that if their usage falls completely within Tier 1 and Tier 2, they will not see a rate increase. Customers should be aware that the rate increase will not apply to

medical baseline, CARE or Direct Access customers. The bill insert should briefly describe the CARE and medical baseline programs, and provide information on how to apply. And finally, the bill insert should make customers aware that their diligent, consistent conservation efforts will reduce the both the impacts of the rate increase and the chance of blackouts due to inadequate electricity supply. A brief description of the California 20/20 Rebate Program adopted in Resolution E-3733 on May 3, 2001 should also be included.

We will direct PG&E and Edison to submit a bill insert to the Commission's Public Advisor for review and approval by May 18, 2001. The utilities may coincide the bill insert we order today with the release of any planned bill inserts related to implementation of the 20/20 Program and should include the bill insert information on their internet websites.

F. Customer Education

The rate design we adopt here delivers a price increase to electric customers of PG&E and Edison that is larger than any they have experienced. We need to provide customers the information and tools they need to be able to respond to these prices by (1) lowering their energy use through participation in energy efficiency programs, (2) understanding the savings available through the Governor's 20/20 program, (3) ensuring low income families understand the assistance available to them, and (4) offering commercial and business customers the opportunity to manage their energy bills through participation in a real time pricing program.

On May 3, 2001, the Commission in D.01-05-033 took action to address issues related to the rapid deployment of additional funding for low-income assistance programs during the energy crisis. The Commission's energy efficiency and conservation programs include low-income assistance programs for rate assistance under our California Alternate Rates for Energy (CARE) program, and energy efficiency services under the Low Income Energy Efficiency (LIEE) program. Funding for these programs was substantially augmented with the passage of SB1X 5 and AB1X 29, both passed by the Legislature on April 5, 2001 and signed by the Governor on April 11, 2001²⁹.

The Commission also administers a program for customer education about the changes occurring in the electric industry, and how those changes would affect them. This program includes the activities of the Electric Education Trust (EET) utilizing the services of community-based organizations (CBOs), and the education of small businesses under the auspices of the Commission's Consumer Services Division (CSD). A draft decision by Administrative Law Judge John Wong, mailed April 24, 2001 for consideration at the May 24, 2001 conference, changes the focus of these customer education efforts to adjust for the energy crisis. Instead of focusing on direct access, these educational efforts should be broadened to include messages about conserving electricity, eligibility for the CARE program, and the exemption of certain customer classes from the recently adopted three-cent per kWh surcharge.

We can facilitate further customer education by coordinating with other state agencies who are also involved in energy issues. The Department of Consumer Affairs is organizing a major marketing campaign to promote energy conservation titled "Flex Your Power" that will provide customers savings tips and promote the savings available under the Governor's 20/20 program. Further, the California Energy Commission under its AB1X 29 funding for real time pricing meters should have funds available to address the extensive customer education that Dr. Borenstein testified will be needed to gain customer acceptance of real time pricing programs.

G. Payments to CDWR

Today's order sets schedule-specific rates for each customer class. Previous Commission orders require the utilities to unbundle, on each customer's bill, the various non-generation related charges. Accordingly, it is now possible for Edison and PG&E to specifically state, on each customer's bill, the customer's energy charges (including the 3 cent surcharge and its amortization). We will order them to do so.³⁰

In D.01-03-081, we implemented an immediate methodology under which the utilities segregate and hold in trust certain sums for CDWR. However, we also stated that a "more precise method for remitting funds to DWR should be arrived at as soon as practicable." But implementation of this more precise methodology had to await the availability of tariff schedule-specific generation-related or energy rates. As explained above, these schedule-specific energy charges are now available. Accordingly, we will order the utilities, concurrent with the implementation of today's rate design and recovery of those sums from customers, to switch to this more precise methodology of segregating, holding in trust, and remitting funds to CDWR. The method for calculating the number of CDWR-supplied kilowatt hours under this more precise methodology is spelled out in D.01-03-081. By implementing this more precise methodology, concurrent with collection of the 3 cent surcharge, we provide for the utilities to remit the surcharge (including amortization amounts) to CDWR, based on the number of CDWR-supplied kilowatt hours, once they have collected the money from customers.³¹

²⁹ SB1X 5 and AB1X 29, collectively, also appropriate an additional $140 million to the Department of Community Services and Development (DCSD) to augment its state low-income energy assistance programs, including weatherization services. ³⁰ We note that the sample bills provided by both PG&E and Edison in this proceeding meet this requirement ³¹ We take this opportunity to re-affirm, notwithstanding any inartful language apparently to the contrary that may be contained elsewhere in this decision, that, pursuant to AB 1X, CDWR does not sell electricity to utilities at wholesale, but rather sells it to retail end use customers. Under today's decision, monies that the utilities collect from customers as agent for CDWR are based on the amount of CDWR-power supplied to those customers and the rates we authorize today.