Wood Mattson Comment Dec. Interim Opinion on Demand Bidding Program

2. Background

In our decision on Phase 2 matters, we kept this proceeding open for further consideration of the DBP. (Decision (D.) 02-04-060, Ordering Paragraph 21.) In particular, we said:

"...we keep this proceeding open to examine the future of the DBP. DWR [Department of Water Resources] may or may not be able to fund the DBP for Summer 2002. We want continuation of this program, or a smooth transition to a similar program, because this or a similar program provides unique flexibility for customer participation and payment based on performance. Customers are familiar with DBP, and both hardware and software are in place for its implementation. The Assigned Commissioner and Administrative Law Judge should seek comment on alternatives as appropriate for our further consideration and resolution before this summer." (D.02-04-060, mimeo., page 54.)

Comments on the future of DBP and alternatives were sought by Ruling dated May 14, 2002. On May 20, 2002, comments were filed and served by Pacific Gas and Electric Company (PG&E), SCE, San Diego Gas and Electric Company (SDG&E) and the Office of Ratepayer Advocates (ORA). On May 24, 2002, reply comments were filed and served by PG&E, SCE and ORA.

Utilities largely recommend against wholesale redesign of DBP and suggest several limited changes. Utilities state that they are not procuring electricity, and do not have access to the information necessary to determine when to activate the program or how much load relief to request. SCE recommends a single DBP price rather than the current range of four prices in two tiers. Utilities generally oppose revival of the Voluntary Demand Response Program (VDRP) or other alternatives to DBP.

ORA recommends resurrecting the California Independent System Operator (ISO) Discretionary Load Curtailment Program (DLCP) and linking DLCP with the Optional Binding Mandatory Curtailment (OBMC) program. ORA suggests adding an initial DBP price at the Federal Energy Regulatory Commission (FERC) current wholesale spot market price cap of $0.09187/kWh.