BACKGROUND
In Resolution E-36501 the Commission approved demand responsiveness programs for the year 2000 for Southern California Edison (Edison) and PG&E. The purpose of PG&E's demand responsiveness program, E-BID, is to identify a group of customers who are willing to voluntarily curtail their energy usage in exchange for monetary compensation during time periods when the day-ahead price of the California Power Exchange (PX) is expected to be equal to or greater than $250/mWh. By having these customers reduce their energy usage, the total demand for energy in the day-ahead market is reduced, putting downward price pressure on the market clearing prices of the PX. The savings from the reduced energy prices are intended to outweigh the costs incurred in getting these customers to voluntarily curtail. This is intended to result in net savings to ratepayers.2
Under Resolution E-3650, program participants choosing to curtail their energy usage under the E-BID program receive the PX market-clearing price less the "otherwise applicable energy charge" (i.e. the per kWh energy charge reflected in each utilities' frozen rate schedule). For example, if the PX day-ahead price was $500/mWh (50 cents/kWh) and a participating customer was on an existing rate schedule of 8 cents/kWh, than the customer would receive a payment of 42 cents/kWh (50 cents - 8 cents) for his/her participation in PG&E`s program.
This adjustment was included in Edison's and PG&E's demand responsiveness programs to address protests raised by parties, such as the Alliance for Retail Markets (ARM),3 that paying program participants the full PX price without any adjustment would "overpay customers to curtail" and allow the utility to unfairly compete against Energy Service Providers (ESPs) in offering demand responsiveness programs.4
In Advice Letter 2018-E, PG&E is proposing to modify its E-BID program so that:
1. program participants would receive the full PX price without any adjustment;
2. revise the market clearing price threshold so that it would be equal to one half the price cap on the CAISO Real Time Market with a minimum of $100/MWh and a maximum of $250/MWh;
3. reduce the E-BID enrolment fee from $600 to $100;
4. install free interval meters for program participants;
5. give program participants the option of electing whether or not to be subject to interval metered hourly pricing after the rate freeze, an exemption from the Commission's current requirement adopted in D.00-06-034;
6. reduce the minimum curtailment requirement from 20 percent of baseline to 10 percent;
7. increase the total number of customers that may participate in the program from 500 to 1000 and the number of smaller customers from 50 to 300; and
8. rescind the limit on the maximum total load reduction for any one curtailment (500 MW) that was established in Resolution E-3650.
In its advice letter filing, PG&E also requested that the 20-day protest period be shortened to five days, and the 30-day comment period, required by Public Utilities (PU) Code Section 311(g), be shortened to 3 calendar days in order to allow the Commission to vote on the request at its August 3, 2000 meeting.
By letter dated August 23, 2000, the Energy Division Director suspended the effective date of the tariff sheets attached to Advice Letter 2018-E for up to 120 days.
In response to a data request by the Energy Division, PG&E states the current program includes 44 participants representing approximately 100 MW of load. If the proposed changes are adopted, PG&E estimates 50-100 more customers representing 50-100 MW would participate in the program, depending on market conditions.
In Decision (D.) 00-06-034, the Commission required that all customers having interval meters be placed on hourly pricing after the rate freeze.
Rule 77.7(f)(9) of the Commission's Rules of Practice and Procedure permits the waiver or reduction of the 30-day period for public review and comment where the Commission determines that public necessity requires reduction or waiver.
1 Adopted April 6, 2000.
2 Resolution E-3650 provided the following illustrative example: "If a utility such as PG&E or Edison is required to purchase 20,000 mWh from the PX at a price of $250/mWh, than the utility would pay $5 million/hour to meet its energy needs. By paying some of its customers (in this example 500 mWh of demand) an incentive payment of $250/mWh to curtail their energy usage, the utility need only purchase 19,500 mWh from the PX to meet its needs. Because the utility is demanding less energy from the PX, the market-clearing price should be lower (in this case we will assume it drops to $240/mWh). The total cost to the utility under this scenario is $4,805,000. Although the utility has had to pay $125,000 to some of its customers to curtail their load the effect of this reduced demand was to lower by $320,000 the price that the utility had to pay for it's remaining 19,500 mWh of load. The net savings in this example are $195,000 (approximately 4% lower)." Subsequent operation of California's energy markets, however, have shown that generators may have responded to efforts by California utilities to underestimate their demand in the PX market by correspondingly reducing the amounts bid into the PX. Ordering Paragraph #4 of Resolution E-3650 requires Edison and PG&E to report on the effect of their demand responsiveness programs on "all other energy markets operated by the ISO."
3 ARM identified itself as an "alliance of energy service providers (ESPs) who actively participate in the California retail electric market...[and] serve a significant portion of California's direct access market." (ARM Protest to Resolution E-3650, p. 1)
4 See Resolution E-3650, p. 14
