VIII. Assignment of Proceeding

Rachelle B. Chong is the assigned Commissioner and Kim Malcolm is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. Utility demand response programs are a key to system management during periods of critical need and potential system instability.

2. Many of the program modifications the utilities propose will require advance marketing, and in some cases implementation, in order to have commitments of energy and capacity by summer 2007.

3. The Working Group 2 Measurement and Evaluation subcommittee was authorized to provide oversight of demand response evaluation in D.06-03-024.

4. Third-party contractors may be able to increase participation in demand response programs.

5. PG&E's proposal to increase BIP Option A incentives could attract customers and ease the transition from the Non-Firm program to BIP.

6. No customers have signed up for PG&E's BIP Option B.

7. PG&E's proposed replacement for BIP Option B could be attractive to additional customers.

8. Reopening PG&E's Non-Firm program could confuse customers since the program could be ended as soon as January 1, 2008.

9. Lowering SDG&E's BIP penalties could increase participation.

10. BIP and CBP could appeal to different customers.

11. Allowing aggregators to participate in SCE's BIP could increase demand response.

12. "Soft triggers" for calling demand response events may permit the utilities to manage demand response programs more effectively and in ways that are more attractive to customers than hard and fast event criteria.

13. Replacing the DBP's market-based incentive with a flat incentive and allowing standing bids could simplify the program and increase customer participation.

14. PG&E's proposal for a "no-bid" option as part of its DBP program may be costly and provide little in the way of additional demand response.

15. AC cycling could contribute to concrete load reduction capability in PG&E's service territory.

16. PG&E did not provide detailed budget information for its proposed 2007 AC Cycling program.

17. SDG&E can increase participation in its offering new cycling options.

18. Other jurisdictions have used RFPs to identify new demand response opportunities.

19. Seeking proposals directly from customers and aggregators could unleash innovative and cost-effective demand response technologies and activities.

20. Larger TA and TI incentives can encourage customer participation in demand response programs.

21. Permanent load shifting can reduce the need for capacity investments, reduce the likelihood of shortages during peak periods and lower system costs overall by reducing the need for peaking units.

22. Permanent load shifting is not currently supported by the utilities' demand response budgets.

23. SCAPP currently provides funding to SF Power to sign up small and medium sized commercial customers located in Alameda, San Francisco, and San Mateo counties.

24. The BEC is a program in San Francisco designed to subscribe hard-to-reach customers into demand response programs.

25. BUGs are a supply resource that does not reduce energy demand.

26. Our objective in funding demand response programs is to reduce system demand, not to substitute system electricity with electricity generated by off-grid natural gas facilities.

27. PG&E's Schedule E3 is scheduled to be decommissioned as of December 31, 2006, and the residential CPP rate will not be available until Spring 2007.

28. SDG&E's C&I Peak Day Credit could contribute to reliability during peak periods.

29. SDG&E's Residential Smart Thermostat program provided "day-of" load reductions in 2006.

30. SDG&E proposes changes to its CPP program that are likely to improve customer participation.

31. The testing of real-time in-home displays will provide valuable research about how residential customers respond to real-time information about their energy usage.

32. The magnitude of the potential peak load reduction from direct load control of pool pumps is unclear.

Conclusions of Law

1. The utilities should pursue both price-responsive and reliability demand response tariffs and programs.

2. The Commission should not change the demand response goals in this proceeding.

3. Agency staff should address the issue of revising the existing demand response goals in a proposed rulemaking.

4. The Working Group 2 Measurement and Evaluation subcommittee should be renamed as the Demand Response Measurement and Evaluation Committee and should continue to provide oversight of demand response evaluation.

5. The Energy Division and CEC should have access to information necessary to oversee demand response program evaluation.

6. The Commission should adopt PG&E's proposal to increase BIP Option A incentives and close the existing BIP Option B.

7. PG&E's new BIP Option B should be approved with an incentive level of $0.60/kWh.

8. Aggregators should be permitted to participate in PG&E's BIP Option A and new BIP Option B.

9. PG&E should not permit new customers to sign-up for the Non-Firm program in 2007.

10. SDG&E should be permitted to decrease BIP penalties, adopt additional triggers, and change Rule 29.

11. BIP should be continued as a statewide program, and SDG&E should not be permitted to close its BIP.

12. Aggregators should be permitted to participate in SCE's BIP.

13. SCE should work collaboratively with aggregators so that aggregators can provide the level of viability that the utility needs.

14. It is reasonable to give customers 30 days from the date this decision to adjust their firm service levels for 2007.

15. Flat incentive payments should be adopted for all three utilities' DBPs.

16. PG&E should not be permitted to add a DBP "no-bid" option.

17. SCE and SDG&E should be authorized to add a DBP standing bid option.

18. PG&E, SCE, and SDG&E should be directed to create a day-of DBP program.

19. PG&E's proposal to expand its AC Cycling program for 2007 using the existing demand response budget is reasonable in concept, but the utility should provide a final budget and additional details to the Commission.

20. SDG&E's proposals to add cycling options to its Summer Saver program are reasonable.

21. PG&E and SCE should be directed to run RFPs or seek bilateral contracts for new demand response proposals.

22. PG&E, SCE, and SDG&E should be authorized to increase TA/TI incentives.

23. PG&E, SDG&E and SCE should be ordered to file a detailed plan for the implementation of Auto DR. The plans should include proposals for working with the DRRC, providing quality control and oversight of their 3rd party implementation contractors, how TA/TI funds will be used, and a detailed budget that identifies administrative, evaluation and incentive costs.

24. Allocating demand response funds to permanent load shifting programs to reduce summer 2007 peak load is reasonable.

25. The IOUs should seek permanent load shifting proposals through an RFP process and bilateral arrangements.

26. PG&E's proposed changes to its CPP program are reasonable and should be approved.

27. The changes to the SCAPP program proposed by SF Power, with the exception of the submetering proposal are reasonable and should be approved.

28. PG&E should be authorized to expand the BEC program to achieve a total of 50 MW of load reduction by June 1, 2007.

29. The Commission should consider an application to extend the BEC program for seven-years.

30. PG&E should not be permitted to implement its proposed BUGs program.

31. PG&E should be authorized to extend the Schedule E3 rate until June 2007 so that customers may be transitioned to the residential CPP rate.

32. PG&E's cap on fund shifting should be retained.

33. SDG&E should be permitted to extend its C&I Peak Day Credit Program through 2008.

34. SDG&E should be authorized to extend its Residential Smart Thermostat Program through 2007.

35. SDG&E's proposed modifications to its CPP program are reasonable and should be approved.

36. SDG&E should be authorized to initiate a In-Home Display Pilot Program.

37. SDG&E should not be authorized to change its accounting or ratemaking for demand response programs except to the extent explicitly provided for herein. SDG&E's cap on fund shifting should be retained.

38. TURN proposal to require direct load controls for pool pumps should not be approved at this time.

IT IS ORDERED that:

1. Pacific Gas and Electric Company, (PG&E), San Diego Gas & Electric Company, (SDG&E), and Southern California Edison Company (SCE) shall provide all data and background information used in monitoring and evaluation projects to the Energy Division and the California Energy Commission (CEC), subject to appropriate confidentiality protections. In addition, we direct the investor-owned utilities (IOUs) to provide appropriate subsets of these data to vendors and academic researchers selected by the Commission or the CEC, such as the Demand Response Research Center, to conduct additional monitoring and evaluation projects, under appropriate confidentiality protections.

2. PG&E, SCE, and SDG&E shall, within 15 days of the effective date of this order, file tariffs in compliance with this order.

3. PG&E and SDG&E are required to give BIP customers 30 days from the date this decision is adopted to adjust their firm service levels for 2007.

4. PG&E shall file an advice letter within 20 days to implement an Air Conditioning (AC) Cycling program for 2007 consistent with this decision. PG&E shall provide detailed budget information including the costs of installing the switches, incentives, and any other costs.

5. PG&E and SCE shall pursue Requests for Proposals (RFP) and bilateral arrangements for additional demand response resources and file an application with the Commission requesting approval for specific contracts by February 28, 2007.

6. PG&E, SDG&E and SCE shall within 30 days of this order submit to the Commission's Energy Division plans for implementing Auto DR, consistent with this order. This plan shall be for one year.

7. PG&E, SDG&E and SCE shall, by October 31, 2007, file proposals for continuation or modification of their AutoDR programs.

8. PG&E and SCE shall pursue a RFPs and bilateral arrangements for permanent load shifting for the summer of 2007. Each IOU is directed to file an advice letter with their selected proposals by February 28, 2007. PG&E, SDG&E, and SCE are authorized to shift up to $10 million, $4 million, and $10 million respectively of their existing demand response budgets.

9. PG&E shall file an application for approval of a seven-year extension of the Business Energy Coalition program.

This order is effective today.

Dated November 30, 2006, at San Francisco, California.

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