ALJ/MCK/jva Mailed 4/28/2006
Decision 06-04-065 April 27, 2006
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company (U 39 E) for Rate and Line Extension Incentives for Conversion of Stationary Agricultural Internal Combustion Equipment to Electric Service. |
Application 04-11-007 (Filed November 9, 2004) |
Application of Southern California Edison Company (U 338-E) for Rate and Line Extension Incentives for Conversion of Stationary Agricultural Internal Combustion Equipment to Electric Service. |
Application 04-11-008 (Filed November 9, 2004) |
OPINION GRANTING INTERVENOR COMPENSATION TO
THE UTILITY REFORM NETWORK AND
THE AGRICULTURAL ENERGY CONSUMERS ASSOCIATION
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION 05-06-016
Table of Contents
Title Page
2. Requirements for Awards of Compensation 44
4. Financial Hardship Showing by AECA 77
5. Substantial Contribution 1212
6. Reasonableness of Requested Compensation 2121
6.1. The Effect of D.05-11-031 on the Compensation Requests of TURN and AECA 2121
6.2. Discussion of Hours and Rates Requested by TURN 2323
8. Waiver of Comment Period 3838
9. Assignment of Proceeding 4040
OPINION GRANTING INTERVENOR COMPENSATION TO
THE UTILITY REFORM NETWORK AND
THE AGRICULTURAL ENERGY CONSUMERS ASSOCIATION
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION 05-06-016
This decision awards The Utility Reform Network (TURN) compensation of $46,277.58, and the Agricultural Energy Consumers Association (AECA) compensation of $69,131.27, for their respective contributions to Decision (D.) 05-06-016.
1. Background
In D.05-06-016, we considered applications by Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (Edison) for authority to offer reduced rates and additional line extension allowances to agricultural customers who converted engines used for pumping purposes from diesel fuel to electricity. Under the original proposals of PG&E and Edison, customers who converted in either utility's service territory were to receive a 20% reduction from the tariffs that would otherwise be applicable to the customers' engine use. PG&E and Edison proposed that the rate reductions should remain in effect for 10 years and should be subject to an annual escalation of 1.5%. Ratcheted demand charges were to be eliminated from the new rates, and converting customers were not to be subject to any deficiency charges.
Under the PG&E and Edison proposals, customers taking advantage of the conversion program were also entitled to a special line extension allowance - referred to as an "adder" - in addition to the usual allowances provided for in the utilities' tariffs. PG&E proposed to offer each customer signing up for its diesel conversion program an adder of $32,935, and Edison proposed to offer its converting customers an adder of $29,942. The utilities argued that as consideration for the rate reductions and adders, converting customers should be required to destroy their old diesel engines, and to assign the resulting air emission reductions to the utilities. With the exception of carbon dioxide (CO2) reductions (which the utilities proposed to keep), the utilities would then transfer the emission reductions to the California Air Resources Board (CARB) or the customer's local air pollution control district.
Despite the air quality improvements that the engine conversion program promised in the San Joaquin and Sacramento Valleys, the applications drew protests from both the Office of Ratepayer Advocates (ORA),1 and TURN. In its protest and subsequent testimony, ORA disputed the utilities' assertions that the proposed rate reductions would make a positive contribution to margin (CTM), and argued that without significant modifications, the conversion program would impose unacceptable new costs on ratepayers. TURN argued that the fixed adders proposed by the utilities would require ratepayers to pay widely varying amounts for the promised emission reductions. Rather than pay a fixed adder to all converting customers, TURN argued, the utilities should pay an adder based on the average cost of the reductions in oxides of nitrogen (NOx) that it was estimated the program would bring. TURN also advocated that the adder should be capped.
Before it became necessary to litigate these issues in hearings, the parties reached a settlement. The settlement agreement was filed on March 30, 2005, and a hearing on the settlement was held on April 7. Under the terms of the settlement agreement, the rate reduction portions of the utilities' proposals were retained, with converting customers in PG&E's service area receiving a 20% reduction from the otherwise applicable tariffs for 10 years, and converting customers in Edison's service area receiving a 12.5% reduction over the same period. Instead of paying a single, flat adder to all converting customers, the utilities agreed under the settlement to pay one of three adders, based on the size of the electric motor replacing the old diesel engine. The settling parties also agreed that eligibility for the program would end in two years, or as soon as the total capital investment for the conversion program reached $27.5 million for PG&E or $9.17 million for Edison. (D.05-06-016, mimeo. at pp. 20-24.)
In approving this settlement, D.05-06-016 concluded that even with a modest participation rate, the engine conversion program was likely to result in a significant improvement in the air quality of the Sacramento and San Joaquin Valleys, which have some of the worst air quality in the nation. D.05-06-016 also concluded that the settlement did not expose ratepayers to undue risk, because eligibility for the conversion program would end in two years, or as soon as the $25.7 million (for PG&E) or $9.17 million (for Edison) caps were reached. (Id. at 25-33.)
1 ORA become the Division of Ratepayer Advocates, effective January 1, 2006, pursuant to Senate Bill 608.
