DISCUSSION

PG&E proposed eight changes to the VPRC program in order to increase participation. We will address each proposed change on its merits.

(1) Program participants should receive the full PX price without any adjustment.

One of the major issues addressed in Resolution E-3650 was balancing the need for a demand responsiveness program against the anti-competitive aspects of allowing the utility to offer such programs. Resolution E-3650 noted that given the magnitude of the incentives being offered by the utilities under their demand responsiveness programs, there was a possibility that customers choosing direct access might switch back to bundled utility service in order to take advantage of these incentives. Limiting the incentive payment to the PX price less the applicable tariff rate was one of the safeguards adopted by the Commission to minimize the utilities' advantage.

As Resolution E-3650 noted:

As ARM states, the utilities have proposed an incentive payment equal to the full day-ahead PX price multiplied by the amount of curtailed load. The actual savings directly attributable to the load curtailment is this gross amount, less the revenue the customer would have paid the utilities on Schedule PX had it not curtailed load. Because it reflects gross savings rather than net savings, the utilities proposed incentive payment exceeds the savings attributable to the load curtailment. ARM suggests, that if adopted, the utilities' programs should subtract the otherwise applicable energy charge from the day-ahead PX price when computing the curtailment incentive.

Resolution E-3650 supported this reasoning, concluding that:

We also agree with ARM's suggestion that the utilities incentive payments to program participants should be based upon the market clearing price less the otherwise applicable energy price the customer would have paid. This avoids overpaying the customer for curtailing and helps maintain a competitive balance between the utilities' and the ESP's demand responsiveness programs.⁵

In its advice letter PG&E neither addresses the anti-competitive aspects of its proposal, nor proposes any safeguards to minimize this problem. This proposed change is denied.

(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.

PG&E requests this change to allow E-BID customers greater flexibility to participate in the program and assist in lowering California's energy demands. Lowering the threshold for participation would give customers more opportunities to participate in the program and, if customers choose to participate, would reduce energy demands. It would also increase program costs by paying customers to curtail more often and when benefits are less significant. Still, this proposal could reduce energy prices and its increased costs should be more than offset by savings in overall energy procurement. Therefore, we believe it is reasonable to lower the threshold as PG&E has requested.

(3) Reduce the E-BID enrolment fee from $600 to $100.

PG&E requests this change because the $600 fee level may be viewed as a hindrance towards customer participation. Considering the public benefits that will accrue if this program increases the amount of demand responsive load, we believe it is reasonable to reduce the enrolment fee at this time.

(4) Install interval meters for new program participants at PG&E's expense.

PG&E claims some customers, especially ones of smaller size view this requirement as a barrier to participation. ORA requested clarification that PG&E's offer was to be paid by shareholders and not entered into a regulatory account. We believe the benefit of additional demand responsiveness outweighs the cost to ratepayers of interval meters for program participants. We will not require that PG&E's shareholders fund this proposal.

ORA also recommended that meters be chosen and installed competitively and paid for by PG&E. While the potential anti-competitive aspects of free meters concerns us, in the interests of simplifying the administration of this program we will reject ORA's request at this time.

(5) Give program participants the option of electing whether or not to be subject to interval metered hourly pricing after the rate freeze.

In D.00-06-034, we required that after the rate freeze customers with interval meters must be subject to metered hourly pricing. An advice letter is not the appropriate forum to modify this decision. PG&E's request is denied.

(6) Reduce the minimum curtailment requirement from 20 percent of baseline to 10 percent. PG&E claims some customers can not achieve the 20 percent reduction. There will always be customers who can not achieve the minimum requirements no matter where they are set. PG&E has not provided adequate support to change the current limits. PG&E's proposed change is denied.

(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.

PG&E believes the requested changes to the E-BID program will result in additional participation in the program. PG&E's estimate of increased participation in the program, if all the proposed changes were adopted, does not exceed the current program limits. In the absence of a defined need and supporting data, we will not change the limits established in Resolution E-3690.

By letter dated August 23, 2000, the Energy Division Director suspended the revised tariff sheets, included as part of Advice Letter 2018-E, for up to 120 days. We hereby ratify the Energy Division Director's suspension of the tariff sheets attached to Advice Letter 2018-E and determine that the advice letter and attached tariff sheets, as originally filed, never went into effect.

⁵ Resolution E-3650. P. 31. See also Finding #62 (p. 41) and Ordering Paragraph #3 (p. 43)