Demand Reduction Costs

DWR's revenue requirement includes $29 million in regards to a proposed demand response program intended to decrease customer demand during hours of high demand and short supply. These costs are included in DWR's forecast of ancillary service costs. We remove these costs from DWR's proposed revenue requirement. AB 1X, which authorized DWR to purchase energy and charge the costs of DWR purchased energy to utility customers did not give DWR the authority to incur costs for demand reduction programs, nor charge such costs to ratepayers. Since the $29 million in costs for demand reduction programs in DWR's current request is not within DWR's statutory authority to include in charges to consumers, we must remove those costs from the revenue requirement adopted today. We note that costs for demand reduction programs were not included in the prior DWR revenue requirement approved by the Commission in D. 02- 02052. The decision to remove these costs is not a reflection on the effectiveness or merit of such programs, which the Commission is not addressing in this proceeding.