ALJ/KLM/jva Mailed 3/16/2006

Decision 06-03-024 March 15, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of PACIFIC GAS AND ELECTRIC COMPANY (U 39-E), for Approval of 2006-2008 Demand Response Programs and Budgets.	Application 05-06-006 (Filed June 1, 2005)
Southern California Edison Company's (U 338-E) Application for Approval of Demand Response Programs for 2006-2008 and Cost Recovery Mechanism.	Application 05-06-008 (Filed June 1, 2005)
Application of San Diego Gas & Electric Company (U 902-E) for Approval of Demand Response Programs and Budgets for Years 2006 through 2008.	Application 05-06-017 (Filed June 2, 2005)

(See Attachment D for List of Appearances.)

DECISION ADOPTING SETTLEMENT

This order adopts the uncontested modified settlement filed by Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), the Division of Ratepayer Advocates (DRA) (then known as the Office of Ratepayer Advocates), The Utility Reform Network (TURN), Aglet Consumer Alliance (Aglet), San Francisco Community Power, and the Association of California Water Agencies (ACWA) (Settling Parties) which would resolve all outstanding issues in these applications. Accordingly, we adopt programs and associated budgets for the demand response efforts of SCE, PG&E and SDG&E for 2006-2008. The demand response budgets for the three utilities during the three year funding cycle are as follows:

PG&E $108.7 million

SCE $101 million

SDG&E $ 52.6 million

Consistent with the settlement, we also adopt various program management practices and procedures for utility recovery of associated demand response program costs. We defer to a process outlined in Decision (D.) 05 11-009 for the review and adoption of a cost-benefit model for evaluating demand response programs and a set of utility-specific demand response goals. These applications remain open to address related cost-benefit issues and program goals.

I. Procedural Background

PG&E, SCE, and SDG&E filed these applications in June 2005 seeking approval of program plans and budgets for their 2006-2008 demand response programs, and in compliance with D.05-01-056. In these proceedings, the Commission has considered which programs should be funded and at what funding levels.

Testimony provided in these consolidated applications considers (1) demand response program goals; (2) cost-benefit models for evaluating demand response programs; and (3) measurement of program elements toward program goals. In Rulemaking (R.) 02-06-001, all three utilities received authority to fund existing programs pending an order in these applications.

The Commission conducted a prehearing conference on October 21, 2005. It issued a Scoping Memo and Ruling, which, among other things, scheduled evidentiary hearings in these applications for November 29-December 5, 2005. The Commission subsequently took the hearings off calendar upon notification by several active parties that they were close to reaching a settlement on all contested issues. On December 2, 2005, Settling Parties filed a settlement resolving most programmatic issues and agreeing to reserve certain issues for later consideration.

Following the protest period, the assigned administrative law judge (ALJ) convened a hearing on January 17, 2006 for the purpose of addressing outstanding procedural matters and clarifying elements of the settlement. At the hearing, Energy Division staff, California Energy Commission (CEC) staff and the ALJ asked a number of questions about the settlement. The ALJ clarified the CEC staff's role as being similar to that of Energy Division staff, one of providing expertise and assistance to decision-makers. The ALJ also described some concerns she had about the settlement, namely, that some of its elements appeared to be either unlawful, contrary to Commission policy, or more bureaucratic than necessary. Based on these concerns, the Settling Parties agreed to reconsider some of the settlement's elements and possibly to modify the settlement to address the ALJ's concerns.

On January 30, 2006, the Settling Parties filed a modified settlement. The modified settlement states the parties' intent that their amendments to the original settlement address and resolve the concerns raised by the ALJ at the January 17 hearing. The Commission has received no objection or protest to the settlement or the amended settlement.