STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 6, 2003

TO: ALL PARTIES OF RECORD IN ORDER INSTITUTING RULEMAKING 02-06-016

Decision 03-06-032 is being mailed without the written Dissents of Commissioner Lynch and Commissioner Wood. The Dissents will be mailed separately.

Very truly yours,

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:acb

Attachment

ALJ/LTC/acb Mailed 6/6/03

Decision 03-06-032 June 5, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on policies and practices for advanced metering, demand response, and dynamic pricing.

Rulemaking 02-06-001 (Filed June 6, 2002)

INTERIM OPINION IN PHASE 1 ADDRESSING DEMAND RESPONSE GOALS AND ADOPTING TARIFFS AND PROGRAMS FOR LARGE CUSTOMERS

INTERIM OPINION IN PHASE 1 ADDRESSING DEMAND RESPONSE GOALS AND ADOPTING TARIFFS AND PROGRAMS FOR LARGE CUSTOMERS 11

I. Summary 22

II. Background 22

III. Statewide Demand Response Vision and Goals 77

IV. Demand Response Programs For Large Customers 1111

A. This Decision in Context: The Challenge of Developing Demand Response Programs for Large Customers 1111

B. Design Objectives for Demand Response Programs 1313

C. Mandatory or Voluntary Participation? 1414

D. Program Details 1717

1. Dynamic Pricing Proposals 1717

2. Demand Bidding Programs 2727

3. Pilot Programs 3333

E. Customer Participation Issues 3636

1. Agricultural Customers 3636

2. Multiple Meter Situations 3838

3. Multiple Program Participation 3939

4. Transitional Incentives 4343

F. Expected Impacts 5252

G. Program Duration 5252

H. Elimination of Superfluous Programs and Tariffs 5353

I. Program Costs and Related Cost Issues 5454

1. Cost-Effectiveness 5454

Program/Tariff 5555

2. The Principle of Revenue Neutrality and Recovery of Revenue Shortfalls 5656

3. Program Administrative Costs 5959

4. Capital Costs 6060

5. The Costs of Incentives 6060

6. Imposition of Cost Cap 6161

7. Cost Recovery Mechanisms 6161

J. Customer Education/Outreach 6161

K. Program Evaluation, Monitoring and Oversight 6363

V. Phase 2 of this Rulemaking 6666

VI. Comments on Draft Decision 6666

A. Revisions: Program Details 6767

B. Revisions: Customer Participation Issues 6767

C. Revisions: Program Costs and Related Cost Issues 6868

D. Revisions: Program Evaluation and Monitoring Oversight 6868

VII. Assignment of Proceeding 6868

Findings of Fact 6969

Conclusions of Law 7878

ORDER 8282

Attachment A

Attachment B

Attachment C

Attachment D

Attachment E