PLAN ELIGIBILITY

In its late filed protest on March 12, 2001, the Polaris Group (Polaris) protests SDG&E's proposed implementation of the eligibility requirement in Advice Letter 1260-E-A. Citing increases in monthly electric bills from $2,000 to $13,500, Polaris argues that customers, in particular restaurants such as Marie Calendar's #88 resturant has kept its peak demand under 100 kW since AB 265 was passed. However, these customers are being penalized due to the criteria SDG&E is using to determine eligibility for the rate ceiling.

Polaris proposes that we modify SDG&E's plan in AL 1260-E-A to provide that the 100 kW eligibility requirement be satisfied as long as the customer's peak load at given service point's is less than 100 kW for any one of the past 12 months (instead of 9 of 12 months). Then prospectively, the customer would be required to have peak load under 100 kW for 9 of 12 months.

Polaris also recommends we adopt a provision that all customers that have reduced their demand below 100 kW since the passage of AB 265 be included in the rate stabilization plan.

Polaris argues that its proposal would comply with AB 265, since the law does not specify how a customer qualifies to be less than 100 kW. SDG&E in its March 13 response, objects to this assertion since the Commission has a well-established record of defining "peak demand" and that definition is consistent with AL 1260-E-A.

Under existing peak load definitions,4 a commercial customer qualifies to receive the rate ceiling when it does not exceed 100 kW for 9 months of the last 12-month period. We note that under the existing criteria, proposed by SDG&E, a customer that has reduced its load since the passage of AB 265 on September 6, 2000, could be eligible for the plan by June of this year. Moreover, granting the retroactive credit for late-qualifying customers would further our goal of rewarding conservation efforts and providing customers the opportunity and incentive to manage their load in some manner.

SDG&E views Polaris' argument about allowing customers the opportunity to manage their loads to qualify for the plan as fallacious. SDG&E argues that market pricing will encourage conservation better than a rate cap, since customers under a rate cap do not see accurate market signals. SDG&E also points out that no matter how the law was structured, there would always be customers who "almost got included."

Addressing the same issue, California Restaurant Association (CRA) in its March 22, 2001 comments, argues that the Commission should modify Advice Letter 1260-E-A to properly categorize restaurants into the small commercial customer category. CRA maintains that in passing AB 265, the Legislature intended to provide rate relief to small business such as restaurants. Arguing that restaurants are precisely the types of small businesses the legislature sought to assist through AB 265, CRA states that restaurant utility bills were offered as evidence in legislative hearings.

CRA further argues implementation is creating competitive issues within the restaurant sector. Many restaurants within close proximity to each other have differing meter set-ups (one versus multiple meters), distorting eligibility determination. In a March 22, 2001 letter to Commissioners, CRA has raised concerns that businesses with multiple meters will gain a competitive cost advantage by being classed as small customers. These concerns arise because SDG&E's tariffs require it to bill on a meter by meter basis while some businesses have more than one meter. It is therefore possible for businesses using in the aggregate more than 100 kW per month to be classed as a small customer if each meter shows less than 100 kW usage. SDG&E should review its database of customers and report to Energy Division within 30 days the identity and number of business customers with multiple meters and, to the extent possible from its database, the kW billed to each of those meters. The Commission urges CRA to contact SDG&E with the identities of any businesses it believes have multiple meters. The Commission will then assess the magnitude of the problem and take further action if it is deemed appropriate. Finally, CRA urges the Commission to keep in mind when implementing AL 1260-E-A, that 500kW is a more generally acceptable threshold to distinguish between small and large commercial customers.

We support CRA's assertion that some customers that straddle the 100kW threshold have the ability to bring their electricity usage below 100kW through strict load management. In view of our conservation objectives, we agree that businesses with a billing history on both sides of the 100 kW benchmark should have the opportunity to benefit from efforts to conserve energy and manage their loads. Therefore, we direct SDG&E to, each month, include in the plan, all commercial customers that achieve load below 100 kW and to apply this provision retroactively to June 2000.

In its March 13, 2001 response, SDG&E objects that Polaris is asking the Commission to redefine the standard peak load definition commonly used by SDG&E as well as the other California Utility Distribution Companies. SDG&E argues that the Commission should reject Polaris' recommendation. In response, we emphasize that the modified eligibility requirements apply strictly to the rate stabilization plan and in no way alter the existing definition of peak load.

4 3. Rule 1, Definitions (See definition for Small Commercial, Small Customers, Load Profile, Residential and Small Commercial.); Rule 24, The Hourly PX Rate Option Rules,Section A.3; Rule 25, Direct Access Rules, Section A.3; Rule 25, Direct Access, Rules, Section I.1

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