APPENDIX A
JOINT SETTLEMENT AGREEMENT IN
SAN DIEGO GAS & ELECTRIC COMPANY'S
RATE DESIGN WINDOW, APPLICATION (A.) 03-03-029
Pursuant to Rules 51 through 51.10 of the Commission's Rules of Practice and Procedure, the undersigned parties (the "Settlement Parties") submit this Settlement Agreement in San Diego Gas & Electric Company's ("SDG&E") Rate Design Window (RDW) proceeding, A. 03-03-029. The Settlement Agreement describes the initial proposals and positions of the Settlement Parties followed by the settlement terms. If adopted by the Commission, the Settlement Agreement will resolve all disputed issues in this proceeding.
I. SETTLEMENT AGREEMENT
1. Marginal Costs
a. Development of marginal costs for this proceeding:
SDG&E Proposal
SDG&E proposes the use of the Rental method for determining the marginal customer cost (JSP-3, lines 4, etc). SDG&E proposes the use of a 5 year forecast of costs to derive marginal demand costs (JSP-4, lines 2, etc.)(Rebuttal, JSP-1, etc.).
ORA Position
ORA proposes using the NCO method of calculating the marginal customer costs and the use of the standard NERA regression in determining the marginal distribution demand costs (Khoury, 1-3).
FEA Position
The use of the Rental method is more appropriate (MB, page 3, 15-21). The use of the NERA regression methodology is more appropriate (MB, page 10, 6-11).
Farm Bureau Position
The NCO methodology for marginal customer and the standard NERA regression methodology should be used (WLI 1, lines 20-23).
CAL-SLA Position
The NCO method is appropriate (RVS 3, lines 6-13). The standard NERA regression methodology should be used (RVS 3, lines 15-19).
Settlement Agreement
For the purpose of revenue allocation in this proceeding, the Settlement Parties recommend: 1) Marginal Customer costs that are an average of the Rental and New customer only ("NCO") methodologies; and 2) Marginal Distribution costs that are developed using the NERA methodology. These proposals are not intended to be precedential.
b. New cost factor to include in a future proceeding:
ORA Proposal
ORA recommends that the Commission require SDG&E to file developed marginal energy costs in its next RDW (Casey, 2-1).
CAL-SLA Position
Supports ORA proposal (RVS 2, lines 20-26).
Settlement Agreement
The Commission should require SDG&E to file marginal energy costs in its next RDW filing provided the market structure remains such that they are meaningful. If SDG&E considers such marginal costs not to be meaningful, then SDG&E should be required to address its reasoning in its next RDW proceeding.
2. Revenue Allocation
SDG&E Proposal
SDG&E proposes to use the equal percentage of marginal cost (EPMC) methodology in developing revenue allocation (JSP-5, line 12). SDG&E further proposes that allocated revenue changes be no greater than plus or minus 3% to any customer class as compared to current effective rates (RWH-2, lines 16-18)(Rebuttal, RWH-1, 15, etc).
ORA Position
ORA agrees with the plus or minus 3% cap as long as there is a small change in revenue requirements. If, however, the Commission were to adopt SDG&E's proposed changes in the SDG&E COS proceeding, A. 02-12-028, then ORA recommends applying a system average percent changes (SAPC) to all customer classes (Khoury, 1-2).
FEA Position
FEA recommends using an uncapped EPMC methodology (MB, page 12, line 22, etc.).
Farm Bureau Position
A cap on the increases in rates seems appropriate but no floor should be applied (WLI 4, lines 12-25).
CAL-SLA Position
A 3% cap and a 3% floor is appropriate for this proceeding (RVS 4, lines 8-15).
Settlement Agreement
Revenues will be allocated in one of three ways using EPMC based on the settled marginal costs as the starting point. The three approaches will be triggered based upon the percentage of change in distribution rates in A. 02-12-028.
If the change in revenue requirements is 12% or more, then revenues will be allocated to each class of customer on a uniform percentage basis (SAPC).
If the change in revenue requirements is equal to or less than 9% then: (1) revenues will first be allocated on an EPMC basis, then (2) a cap of 3% will be applied to limit the amount of increase to any class above the change in the revenue requirements, then (3) the revenue shortfall created by the 3% cap will be made up using EPMC factors from the unaffected customer classes, then (4) a floor of 9% below the percentage change in the revenue requirements will be applied to each class of customer, then (5) any additional revenues collected will be allocated back to the remaining classes of customers that have not been impacted by either cap.
If the change in revenue requirements is between 9% and 12% then the same procedure as is set forth for a less than 9% revenue requirement change shall apply except that the cap will be reduced by 0.1% for each full 0.1% change in the revenue requirements and the floor by 0.3%. This means that if the revenue requirement change is 9.5% then the cap will be 2.5% and the floor will be 7.5%.
3. Implementation of Rate Changes following a Decision in A. 02-12-028, SDG&E's Cost of Service (COS) Application, if the COS Decision Becomes Effective On a Different Date Than a Decision in the RDW Proceeding.
SDG&E Proposal
Once a change to revenue requirements is determined in the COS proceeding, SDG&E proposes that the Commission modify each rate component on every SDG&E rate schedule by the average percentage change to that class (See Direct Testimony of Mohamed Derbas, page 8, lines 10-12).
CAL-SLA Position
CAL-SLA believes it would be easier and more straightforward to simply increase each class' revenue amount by the SAPC resulting from the Commission's decision in the 2004-COS application (see Direct Testimony of Reed V. Schmidt, p.5, lines 23-25).
Other Parties
No other party filed comments on SDG&E's proposal.
Settlement Agreement
If a decision in the COS proceeding becomes effective on a different date than a decision in this RDW proceeding, the Parties recommend that the Commission allocate, on a uniform percentage adjustment basis, the revenue requirement change adopted in the COS proceeding to all of SDG&E's distribution unit charges on every rate schedule.
4. Franchise Fee and Uncollectibles (FF&U) Adjustment to Rates
a. If there is a delay between a RDW decision and a COS decision:
SDG&E Proposal
SDG&E anticipates that a delay in this RDW proceeding would cause SDG&E to under-collect Franchise Fees and Uncollectibles (FF&U). In order to mitigate such a shortfall, SDG&E proposed that the Commission issue an interim decision in this RDW that would: 1) authorize SDG&E to adjust its Nuclear Decommissioning (ND) and Competition Transition Charge (CTC) rates by the FF&U factor ultimately adopted in the COS decision; 2) implement these rate adjustments current with the COS rate changes; and, 3) permit SDG&E to establish a memorandum account to record any under collections of the other unbundled rate components - - Public Purpose Program (PPP) and Trust Transfer Amount (TTA) (RWH-7, lines 2-17) .
Other Parties
No other party filed comments on SDG&E's proposal.
Settlement Agreement
SDG&E's proposal should be adopted
b. If the RDW decision and a COS decision become effective concurrently:
SDG&E Proposal
SDG&E proposes that the Commission: 1) authorize SDG&E to adjust its Nuclear Decommissioning (ND) and Competition Transition Charge (CTC) rates by the FF&U factor adopted in the COS decision; 2) implement these rate adjustments current with the COS rate changes; and, 3) permit SDG&E to adjust the distribution rates to recover the FF&U factor applied to the - - Public Purpose Program (PPP) and Trust Transfer Amount (TTA) (RWH-7, lines 2-17).
Other Parties
No other party filed comments on SDG&E's proposal.
Settlement Agreement
SDG&E's proposal should be adopted.
5. Changes to the Processing Schedule for SDG&E's Rate Design Window Applications.
SDG&E Proposal
Currently, SDG&E mails preliminary marginal costs to interested parties (the most recent RDW proceeding) before filing the actual RDW Application (see Attachment A of D. 94-09-020). This initial mailing was intended to replicate the former General Rate Case (GRC) procedure in which companies filed marginal costs with Phase I of the GRC and considered revenue allocation and rate design proposals in Phase II.
SDG&E has observed that in the last three RDW filings, where proposed marginal costs were mailed ahead of the actual application, parties appeared disinterested in these costs until the RDW application was filed. In short, SDG&E believes that the marginal cost mailing has become a meaningless compliance step - one that uses scarce time and resources without any real benefit. Accordingly, SDG&E proposes that the Commission discontinue the marginal cost mailing requirement, and permit SDG&E to file its proposed marginal costs along with the company's RDW application (See the Direct Testimony of James Parsons, page 7, beginning at line 12) (JSP-7, lines 12, etc.).
FEA Position
FEA has no objection to SDG&E's proposal (MB, page 15, lines 16-19).
Settlement Agreement
The Commission should permit SDG&E to file its Marginal Cost Study on November 1, concurrently with the company's Rate Design Window Application.
6. Residential Rates
(Schedules DR, DR-LI, DM, DS, DT, DT-RV, D-SMF, DR-TOU, DR-TOU-DER, EV-TOU, EV-TOU-2, EV-TOU-3)
a. Changes to fixed fees:
SDG&E Proposal
SDG&E recommends that no changes to the minimum bill charges, TOU metering charges, unit discounts under Schedule DS and space discounts under Schedule DT be made in this proceeding (RWH-3, lines 10-11). To implement SDG&E's COS rate change, SDG&E proposed that each rate component be modified by a single factor derived from the percentage change in the class revenue requirement amount (MAD-8, lines 16-17).
ORA Position
ORA concurs with SDG&E's recommendation for no changes to these rate structures at this time (Khoury, 4-2).
Settlement Agreement
No changes to the minimum bill charges, TOU metering charges, unit discounts under Schedule DS and space discounts under Schedule DT should be made in this proceeding. To implement SDG&E's COS rate change, each rate component should be modified by a single factor derived from the percentage change in the class revenue requirement amount.
b. Changes to the variable rates:
SDG&E Proposal
SDG&E proposes that the RDW change in class revenue allocated to the residential class be collected by changing all the distribution energy-based rates within the class on a uniform percentage basis, excluding all fixed components (RWH-3, lines 11-13). To recover SDG&E's COS revenue change, SDG&E proposed that a single factor be applied to all components, based on the percentage change in the class's allocated revenue. (RWH-3, line 13-14, MAD-8, lines 14-17).
ORA Position
ORA proposes to allocate the changes to distribution revenue requirements to the distribution rates for usage above 130% of baseline usage only (Khoury, 1-4).
Settlement Agreement
Parties agree that it is appropriate to address the constraints of AB1X on residential rate design in this proceeding by brief only. If SDG&E's interpretation of the law is adopted then all tiers of the residential distribution rates will be changed on a uniform percentage basis. If ORA's interpretation of the law is adopted then the first 130% of baseline distribution rates will not be permitted to increase and the revenue shortfall will be made up from within the residential class, but, on a uniform percentage basis from those tiers over 130% of baseline. SDG&E's current distribution rate structure for residential customers (Schedule DR, DR-TOU, DM, DS, DT, DT-RV, and DR-TOU-DER) would be modified to accommodate a new usage tier applicable to usage above 130% of baseline, and the existing non-baseline tier would be modified to be applicable for usage from 100% to 130% of baseline usage.
7. Small Commercial Rates (Schedules A and A-TC)
a. Changes to fixed fees:
SDG&E Proposal
SDG&E proposes that no change be made to the Basic Service Fees for Schedules A or A-TC (RWH-3, line 20). To implement SDG&E's COS rate change, SDG&E proposed that each rate component be modified by a single factor derived from the percentage change in the class revenue requirement amount (MAD-8, lines 20-21, RWH-3, lines 19-23).
Other Parties
No other party recommended any changes to these charges.
Settlement Agreement
The Basic Service Fees on Schedule A and A-TC should not be changed. To implement SDG&E's COS change, Schedule A energy charges will be adjusted by an equal cent per kWh.
b. Changes to the variable rates:
SDG&E Proposal
SDG&E recommends that any change in revenue requirements to the class be applied to the distribution energy rates on a uniform percentage basis (RWH-3, lines 19-20).
ORA Position
Changes in these rates should be made to the distribution energy charge (Ross, 5-1).
Settlement Agreement
Any change in revenue requirements to the class should be applied to the distribution energy rates on a uniform percentage basis.
c. Seasonality of Energy Rates:
SDG&E Proposal
SDG&E proposes to decrease the summer/winter rate differential for Schedule A commodity rates in Schedule EECC by 1.015 cents/kWh (RWH-5, lines 9-15). SDG&E proposes implement the Schedule EECC rate change on May 1, 2004, and to apply a "rate adder" for the 1st 12-months to ensure the same annual revenue recovery as the current seasonal rates (MAD-7, 8).
ORA Position
ORA objects to SDG&E's proposal to narrow the seasonal component of rates at this time (Khoury, 1-4).
Settlement Agreement
The seasonal differential in energy rates Schedule A should be reduced by 0.552 cents/kWh. Parties agree to implement the Schedule EECC rate change on May 1, 2004, and to apply a "rate adder" for the 1st 12-months to ensure the same annual revenue recovery as the current seasonal rates.
8. Large Commercial and Industrial Rates
(Schedules AL-TOU, AL-TOU-DER, AD, AY-TOU, A-TOU, AL-TOU-CP, A6-TOU, PA-T-1, S)
a. Transmission level Basic Service Fees:
SDG&E Proposal
SDG&E proposes to increase the transmission level Basic Service Fees to produce a 15% change in rates to the UDC charges (MAD-3, lines 5-7).
ORA Position
ORA objects to the increase in the transmission level Basic Service Fee of 15% (Khoury, 1-4) (Ross, 5-1).
FEA Position
FEA supports SDG&E's proposal (MB, page 15, lines 7-8)
Settlement Agreement
The Transmission Level Basic Service Fee should be increased by 15%.
b. New Transmission level Basic Service Fee:
Duke Proposal
Retail service bills should be based on the generator's net load requirements if, and to the extent that it is taking power to serve load at the same substation to which it is simultaneously delivering power. In such a case, the application of normal retail rates should not apply to service to power plants where service is taken even if at two different transmission level voltages (WAM 5, lines 11, etc).
WCP Proposal
Auxiliary power loads of divested generation facilities should be netted across all meters that service that generation (GAC 2, lines 1-7).
SDG&E Position
The approach for resolution of Duke's interest should be addressed in another proceeding (rebuttal, RWH-4, lines 11, etc).
Settlement Agreement
A new Transmission Multiple Bus Basic Service Fee should be established at $3000.00 per month. This new Basic Service Fee would be applicable to customers that deliver to or are served from one or more than one transmission service level bus even if at two or more different voltages all on a single premise. This new charge should appear only on Schedule AL-TOU.
A new Special Condition should be added to Schedule AL-TOU that reads as follows: "Transmission Multiple Bus Basic Service Fee. This fee shall apply where a customer has at their option elected to be billed at this rate and is limited to where the customer is delivering power and taking service at one or more than one transmission service level bus even if at two or more different voltage levels, for service to a generation facility that is located on a single premise owned or operated by the customer. In such a case, the utility shall, for the purposes of applying retail rates, combine by subtracting any generation delivered from any loads served provided, however, that for purposes of applying retail rates the difference resulting from this combining may not be less than zero. All other charges on this tariff shall also apply to the resulting combined loads.
Any customer selecting this optional billing no later than Six (6) months from the first effective date of this new rate shall, for billing purposes, have any previously incurred demand ratchet treated as a "zero" from the effective date of the change in billing forward. In addition, any Standby charges shall be adjusted to the customer's contract level from the effective date of the change in billing forward until the customer's demand triggers a future change."
The parties recognize that the California Independent System Operator (ISO) or the Federal Energy Regulatory Commission (FERC) may address issue(s) related to this settlement provision and may resolve the issue(s) in a different manner from the resolution adopted here. If that were to occur, the parties recognize that the actions of the ISO or FERC within their jurisdiction are likely to supersede any conflicting provisions of this settlement, including the Transmission Multiple Bus Basic Service Fee.
c. Distribution Energy Rates:
SDG&E Proposal
SDG&E proposes the elimination of the distribution energy charges from Schedules AL-TOU, AL-TOU-DER, AD, AY-TOU, AL-TOU-CP, A6-TOU, and PA-T-1 (RWH-4, lines 2, etc.). SDG&E proposes change the energy rates on Schedule A-TOU by the same cents/kWh as is adopted for Schedule A (MAD-3, lines 16-17).
ORA Position
ORA objects to SDG&E's proposal to eliminate the distribution energy rates on the commercial rates (Khoury, 1-4) (Ross, 5-1).
FEA Position
FEA supports SDG&E's proposal (MB, page 15, lines 7-8).
Farm Bureau Position
Supports ORA's position to limit changes in demand charges (WLI 8, lines 2, etc).
Settlement Agreement
The distribution energy rates for Schedules AL-TOU, AL-TOU-DER, AD, AL-TOU-CP, and A6-TOU should be made equal to zero. Any revenue shortfall resulting from all of the above steps will be recovered by a uniform percentage change to the demand charges on these rate schedules.
If there is a decrease to the average rates for Schedule AY-TOU or PA-T-1 then the decrease should first be applied to the distribution energy rates with any additional decreases assigned on a uniform percentage basis to the demand charges. If there is an increase to these average rates to either schedule the increase shall be applied on a uniform percentage basis to the distribution demand charges.
The distribution energy rates on Schedule A-TOU should be change by the same amount as those on Schedule A.
d. Splitting tariffs:
ORA Proposal
ORA proposes to split the commercial and industrial rates into two. The split would be based on whether a customer was smaller or larger than 100 kW (Khoury, 1-4)(Ross, 5-1).
SDG&E Position
SDG&E objects to the splitting of these tariffs into two (rebuttal, MAD-2, lines 14-25).
Farm Bureau Position
Objects to the splitting of rate schedules at this time (WLI 8, lines 14, etc).
Settlement Agreement
At this time the commercial and industrial rates should not be split into two. SDG&E agrees to collect additional data that would be necessary in developing a voluntary opt-in CPP rate such as proposed by ORA in the demand response proceeding.
e. Standby Rates:
1) Closure of Schedule S-I (Interruptible Service)
SDG&E Proposal
SDG&E recommends the closure of Schedule S-I to new customers (RWH-4, lines 20-22).
Other Parties
No other party filed comments on SDG&E's proposal.
Settlement Agreement
Schedule S-I should be closed to new customers.
2) Changes to the Standby Rates
SDG&E Proposal
SDG&E recommends that the distribution rates be increased to result in a 15% increase in the total standby charges (RWH-4, lines 23, etc). SDG&E withdrew its proposal to increase standby rates for Transmission, Primary Substation and Secondary Substation levels of service, and instead proposed that the distribution standby rates be set at zero for these levels of service (rebuttal, MAD-3, lines 1-4).
ORA Position
ORA objects to SDG&E's proposal contained in its original testimony at this time (Khoury, 1-4)(Ross, 5-1).
Duke Position
Any increase to the distribution related transmission level standby rates is inappropriate (WAM 7, lines 1-6).
Settlement Agreement
The distribution standby rates for Transmission, Primary Substation and Secondary Substation levels of service should be set at zero.
The distribution standby rates for Primary and Secondary level service should be increased by 15%. For clarity, the 15% is the combined impact on distribution standby rates from the COS and the RDW proceeding.
9. Agricultural Rates (Schedule PA)
SDG&E Proposal
Changes to the rates on Schedule PA should be made only to the distribution energy rates (need citation)
Other Parties
No other party filed comments on SDG&E's position.
Settlement Agreement
Changes in rates to Schedule PA should be made only to the distribution energy rates.
10. Street Lighting
SDG&E Proposal
SDG&E proposed the use of an updated street lighting model using input data from prior Commission decisions and their supporting data (RWH-5, lines 19, etc).
CAL-SLA Position
Supports the use of the updated street lighting model. Recommends that the model become a part of the record in this proceeding (RVS 9, lines 2-9).
Settlement Agreement
The Street Lighting Cost of Service Model shall be attached to the settlement agreement and the input will not be updated in this proceeding. The inputs that would normally change as a result of changes adopted in A. 02-12-028 will be reflected in a subsequent proceeding.
11. Tariff Language Changes
a. Changes to Schedule S:
SDG&E Proposal
Schedule S should more clearly define a customer's right to either sign up for Standby based on the name plate rating (kW), or some other kW level different from the name plate rating. SDG&E proposes that Special Condition 4 of Schedule S be modified (MAD-9, lines 11-24).
Other Parties
No other party commented on SDG&E's proposal.
Settlement Agreement
Special condition 4 of Schedule S should be changed to read as set forth below:
Special Condition 4 - Contract Demand. The level of Contract Demand shall be established by Contract or Agreement. The customer may in such a Contract or Agreement identify a demand level (kW) different than the name-plate rating of the generator. However, if the utility determines that the customer uses standby service in excess of his contract demand in any billing month, such increased demand shall become the new Contract Demand for the next 12 months beginning with that month.
b. Additional Change to Schedule S:
SDG&E Proposal
SDG&E recommends that there be clarity that a customer on this rate schedule be required to install a generator output meter to avoid future confusion in, among other things, trying to bill charges such as PPP, ND, CTC and FTA (MAD-10, lines 5-8).
Other Parties
No other party commented on SDG&E's proposal.
Settlement Agreement
The following new special condition should be added to Schedule S.
Generator Output Meter: Customer shall provide for the installation of a meter(s) that register the net output of an electric generator on customer's property.
c. Modify Schedule DA to Eliminate Credit for Customers Who Take Distribution Service:
SDG&E Proposal
Schedule DA provides a credit to customers based on the rates set forth on page 5 of this schedule. One of those rates is a credit of $0.00007/kWh applied to DA customers who provide certain of their own services. When this credit is applied to the bills of large consumers taking service at the transmission level, there is the potential that SDG&E will end up having a larger distribution credit than the sum of the distribution charges. In such cases, SDG&E would pay these customers to take distribution service. Obviously, that would be an inappropriate outcome; SDG&E cannot recover the cost of providing distribution services if it must pay someone to take that service. SDG&E proposes to change the language found in the "Other Charges" section of Schedule DA to read as follows (MAD-10, beginning at line 13):
Billing adjustments may be necessary to reflect changes in energy used in developing the transportation charge of prior periods. The minimum charges shall be the customer charges or basic service fees or the minimum bills of the otherwise applicable rate schedules by billing component, such as distribution, transmission or other charges. A late payment charge may apply to the customer's billing charges whenever the customer fails to pay for services rendered under this schedule.
Other Parties
No other party commented on SDG&E's proposal.
Settlement Agreement
Adopt SDG&E proposals as no party objects to SDG&E's proposed Schedule DA modification.
d. Delete Unnecessary Language in Schedule AL-TOU-CP:
SDG&E Proposal
