DISCUSSION
The Commission decision authorizing EDR programs, D.96-08-025, was clear that shareholders and ratepayers would split the benefits derived from the EDR programs, but that ratepayers would be protected from any costs2. The decision specifically states that if the EDR agreements do not generate enough revenues to cover marginal costs and Competition Transition Charge (CTC), the allocated CTC would come from SCE shareholders3.
This Summer's high energy prices have made the EDR Agreements untenable. The discounts originally envisioned for these agreements have been replaced by rates that exceed the EDR customer's OAT rate. This occurs because the OATs are protected by the rate freeze, with SCE being at risk for any unrecovered expenses. EDR agreements are not covered by the rate freeze, and EDR customers must pay at least the marginal cost of their service regardless of the OAT rates.
SCE's position is that it is unfair that EDR customers could pay more than non-discounted customers. Therefore, they propose to cap the minimum charge and shift the unrecovered costs to other parties. This is unacceptable. The EDR rates minimum charge provision was established to ensure EDR customers were charged the cost of the service they receive. D.96-08-025 specifically considered the eventuality of costs exceeding the OAT rate and created the minimum charge to protect ratepayers from a potential cost shift. While it may be unfair that energy prices have dramatically increased, it would surely be unfair to shift the costs EDR customers incur to other SCE customers.
In a real sense, the EDR rates are no longer appropriate for today's markets. At the time the EDR Tariffs were adopted, their original purpose, to increase load, was reasonable in a time of excess capacity. The shortage of generation experienced this Summer and projected for next Summer undercuts the justification for EDR tariffs. With the summer initiative encouraging load management and the ISO seeking demand responsiveness, it is inappropriate to offer discounts in order to increase the load in California without demand responsive components. Therefore, the EDR tariffs are closed to new customers. In order to assist firms that relied upon EDR rates and are now faced with high minimum charge provisions, we will require SCE to allow EDR customers to transfer from the EDR tariff to their OAT without paying liquidated damages. EDR customers are entitled to remain on the EDR tariffs, but if they do they will be subject to the existing minimum charge provision.
SCE has interpreted the EDR tariff's minimum charge provision as requiring SCE to charge customers no more than the OAT and has billed EDR customers accordingly. SCE requests Commission approval of SCE's interpretation and authorization to revise the EDR agreements accordingly. The plain language of the EDR tariff sheets do not support SCE's interpretation. The rate sections of the EDR tariff are clear and contain no provision that would limit customer charges to the OAT rate.
However, our re-examination of the tariff language concerning minimum charges reveals that the filed tariff is not in compliance with D.96-08-025. The decision adopted the energy portion of the minimum charge as the lower of the PX price or Short Run Avoided Cost (SRAC). The tariff relies solely on the PX price. Therefore, the tariff is not in compliance with the decision. EDR customers can only be required to pay the rates adopted by the Commission, and should not be charged a filed rate that does not comply with the Commission's adopted program.
We will not cap EDR customers rates at the OAT, but we will insist that they pay no more than the rate established in D.96-08-025. EDR customers signed an agreement that specifically required participants to pay the marginal cost of service through a minimum charge provision. Since the EDR Agreements are not in compliance with the Commission's adopted program, we will adjust the agreements. We require SCE to file revised tariffs in compliance with the floor price discussion in D.96-08-025, and collect the amounts due under those tariffs.
SCE must enforce the adopted program and not shift EDR customer costs to other ratepayers, but SCE has expressed concern for the situation of EDR customers. For that reason SCE has only billed these customers the OAT charge. Today we direct SCE to charge the SRAC. This will still leave an uncollected portion. Therefore, we give SCE the additional option of negotiating a uniform percentage sharing of the uncollected charges between SCE shareholders and EDR customers, contingent on the sharing being applied equally to all EDR customers. SCE shareholders are under no obligation to absorb any of the uncollected costs, but if SCE chooses to, it is granted Commission authorization. )mistake-stet)
By letter dated August 1, 2000, the Energy Division Director suspended the revised tariff sheets, included as part of Advice Letter 1461-E, for up to 120 days. SCE claims the Director of the Energy Division has no authority to take such an action. We hereby ratify the Energy Division Director's suspension of the tariff sheets attached to Advice Letter 1461-E and determine that the advice letter and attached tariff sheets, as originally filed, never went into effect.
2 "If discount sales gross revenues fail to exceed costs, which is highly unlikely, ratepayers will therefore not share in any expenses." 67 CPUC 2d, p.324.
3 Conclusion of Law No. 19, Customers participating in Edison's flexible pricing options should assume responsibility for any future CTC assignments, and shareholders should guarantee that no such CTC will be shifted to non-discount customers. Ibid., p.338.
