G. Comments on Proposed Decision
The PD in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1, along with an ALJ Ruling shortening the time for comments pursuant to a stipulation signed by the parties on February 8, 2005. Pursuant to this ALJ ruling, joint comments on the PD were filed on June 6, 2005 by Edison, PG&E, ORA, TURN, AECA, CFBF and CARB. As suggested by the joint comments, minor corrections have been made to the decision's references to air emission reductions, and the ordering paragraphs have been modified to make clear that the commencement date of the engine conversion program - including the two-year period during which customers may apply to enroll in the program - will be August 1, 2005.
1. On March 30, 2005, the active parties in these proceedings filed the Joint Settlement set forth in Attachment A, along with a motion requesting that the Commission adopt the Joint Settlement.
2. Even with a relatively low participation rate, the engine conversion program described in the Joint Settlement is likely to result in a significant improvement of the air quality in the Sacramento and San Joaquin Valleys.
3. PG&E and Edison both have sufficient resources so that the additional peak load that can be expected as a result of the engine conversion program set forth in the Joint Settlement will not present reliability problems during the 2005-2007 time period.
4. The provisions of the Joint Settlement represent a reasonable effort by the active parties to balance the benefits of the engine conversion program as originally proposed by the utilities against the concerns about the costs of the program, as set forth in the intervenors' testimony, especially that of ORA and TURN.
5. But for the provisions of the engine conversion program set forth in the Joint Settlement, neither PG&E nor Edison would be obtaining the emission reductions that they have agreed to (a) donate either to CARB or the applicable air district, or (b) hold for the benefit of their ratepayers.
1. The initial rate of $0.07539 per kWh that will be paid by agricultural customers who agree to convert their diesel engines to electric service pursuant to the engine conversion program described in the Joint Settlement, is reasonable and should be approved.
2. The provision in the Joint Settlement that the initial rate of $0.07539 per kWh shall escalate at a rate of 1.5% per year during the 10 years these incentive rates are in effect, is reasonable and should be approved.
3. The provision in the Joint Settlement that the electric engine rates provided for therein are not exempt from non-bypassable charges approved by this Commission, including Nuclear Decommissioning Charge, the Public Purpose Program Charge and the DWR Bond Charge, is reasonable and should be approved.
4. The provisions in the Joint Settlement that (a) it is not necessary for the Commission to revisit the issues of the marginal cost of serving, or the contribution to margin paid by, customers who participate in the diesel engine conversion program, and (2) that no party to the Joint Settlement shall advocate for such a revisitation, are reasonable and should be approved.
5. The line extension adders based on the kilowatt rating of the replacement electric motor, as set forth in paragraph 4 of the Joint Settlement, are reasonable and should be approved.
6. The provision in the Joint Settlement that the incentive rates included within the agricultural engine conversion program shall remain in effect through and including December 31, 2015, is reasonable and should be approved.
7. The parties' stipulation that the two-year period for enrolling in the agricultural engine conversion program should commence on August 1, 2005, which stipulation is set forth in the June 6, 2005 comments on the PD filed by Edison, PG&E, ORA, TURN, AECA, CFBF and CARB, is reasonable and should be approved.
8. The provisions in the Joint Settlement that total capital investment (including both standard line extension allowances and adders) shall be limited to $27.5 million for PG&E and $9.17 million for Edison during the two-year enrollment period for the engine conversion program, and the provisions relating to how these limits shall be enforced, are reasonable and should be approved.
9. The provision in the Joint Settlement permitting PG&E and Edison to record in a balancing account for recovery, the costs of connecting electric service under the engine conversion program, is reasonable and should be approved.
10. The provisions in the Joint Settlement requiring that the PG&E and Edison service extension agreements be amended to require that, if a customer departs from the utility system within 10 years after signing an engine conversion agreement to take service from another provider, such customer must reimburse the utility for the amount of the adder, plus the difference between the incentive rates paid by the customer and the otherwise applicable rates, are reasonable and should be approved.
11. The provision in the Joint Settlement stating that no more than 100 engine conversion program participants will be permitted within the boundaries of the South San Joaquin Irrigation District in southern San Joaquin County, is reasonable and should be approved.
12. The provision in the Joint Settlement stating that all emission reductions (including CO2 reductions) acquired by PG&E or Edison as a result of the engine conversion program and not donated to CARB or the applicable air district, shall be held for the benefit of ratepayers, is reasonable and should be approved.
13. Taken together, the provisions of the Joint Settlement are reasonable in light of the whole record, consistent with law, and in the public interest, and should be approved.
14. Pursuant to Pub. Util. Code § 853(b), PG&E and Edison should be granted an exemption from the requirements of Pub. Util. Code § 851 with respect to the emission reductions they will obtain solely as a result of the Joint Settlement's engine conversion program, and then donate either to CARB or the applicable air pollution control district.
15. Pursuant to Pub. Util. Code § 1804(b)(1), TURN should be found eligible for an award of intervenor compensation in this proceeding.
16. Pursuant to Pub. Util. Code § 1804(b)(2), AECA should preliminarily be found eligible for an award of compensation in this proceeding. Before any compensation can be awarded, AECA must present a showing of significant financial hardship addressing the issues set forth in this decision.
IT IS ORDERED that:
1. The March 30, 2005 Joint Settlement appended to this decision as Attachment A is approved, except for the provision in paragraph 5 thereof stating that the agricultural engine conversion program described in the Joint Settlement shall commence as of the effective date of the Commission's approval of the Joint Settlement.
2. Subject to the capital investment limitations set forth in paragraph 6 of the March 30, 2005 Joint Settlement and described in Conclusion of Law 8, the two-year period for enrolling in the agricultural engine conversion program approved in this decision shall commence on August 1, 2005.
3. Applicants Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (Edison) shall file advice letters within 10 days after the effective date of this decision, which advice letters shall include updated tariffs, applications for service and agreements that are consistent with this decision. Such advice letters and updated tariffs, applications for service and agreements shall be submitted to the Commission's Energy Division in Microsoft Word and Excel formats. The updated tariffs, applications for service and agreements shall become effective on August 1, 2005, subject to a determination by the Energy Division that they comply with this decision.
4. PG&E and Edison are hereby granted an exemption from the requirements of Pub. Util. Code § 851 for the sole purpose of transferring to the California Air Resources Board, the Sacramento Metropolitan Air Quality Management District, or the San Joaquin Valley Air Pollution Control District, as the case may be, emission reductions obtained as a result of the agricultural engine conversion program set forth in the March 30, 2005 Joint Settlement and approved in this decision.
5. The Utility Reform Network is eligible for an award of intervenor compensation for its work in this proceeding.
6. The eligibility of the Agricultural Energy Consumers Association for an award of intervenor compensation in this proceeding is contingent upon an adequate showing that without such an award, its participation would represent a significant financial hardship, as set forth in this decision.
7. This proceeding remains open for the purpose of considering requests for awards of intervenor compensation in this proceeding.
This order is effective today.
Dated June 16, 2005, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
DIAN M. GRUENEICH
JOHN A. BOHN
Commissioners
ATTACHMENT A
