ALJ/DKF/sid Date of Issuance 9/5/2008
Decision 08-09-012 September 4, 2008
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Integrate Procurement Policies and Consider Long-Term Procurement Plans. |
Rulemaking 06-02-013 (Filed February 16, 2006) |
(See Appendix A for a list of appearances.)
DECISION ON NON-BYPASSABLE CHARGES
FOR NEW WORLD GENERATION
AND RELATED ISSUES
TABLE OF CONTENTS
Title Page
DECISION ON NON-BYPASSABLE CHARGES 2
FOR NEW WORLD GENERATION 2
AND RELATED ISSUES 2
1. Summary 2
2. Background 4
3. Guiding Principles 10
4. Applicability of Stranded Cost Recovery and Net Cost
Allocation NBCs 11
4.1. Forecasted Departing Load 11
4.1.1. Positions of the Parties 13
4.1.2. Discussion 14
4.1.3. TURN's Recommendation for a Binding Notice of Intent Process 26
4.1.4. Effect of Large Municipalizations 27
4.1.5. New Western Area Power Administration (WAPA) Departing Load and Split Wheeling Departing Load 30
4.2. AReM's Request for Confirmation Regarding
Customers Currently Eligible to Return to DA 32
4.3. Above-Market Standard Offers for New QF Contracts 37
4.4. Other Applicability Related Issues that Will Not Be Addressed in this Proceeding 38
5. Framework for the D.04-12-048 NBC 39
6. Implementation Issues for Cost Allocation Under D.04-12-048 39
6.1. Total Portfolio and Separate Charge Approaches 40
6.2. Vintaging 59
6.3. Calculation of the D.04-12-048 NBC 68
6.3.1. Areas of Agreement 69
6.3.2. Levelized Fixed Costs 70
6.3.3. Determination of Capacity Adders and Line Loss Adjustments 71
6.4. Cost-Effectiveness 72
6.5. Additional Issues 80
7. Framework for the D.06-07-029 NBC 81
8. Implementation Issues for Cost Allocation Under D.06-07-029 84
8.1. Use of the DA CRS 85
8.1.1. Discussion 86
8.2. Inclusion of the Charge under the DA CRS Cap 86
8.2.1. Discussion 87
8.3. Five-Year Limitation 88
8.3.1. Discussion 90
9. Comments on Proposed Decision 90
10. Assignment of Proceeding 95
Findings of Fact 95
Conclusions of Law 104
ORDER.. 107
APPENDIX A - List of Appearances
APPENDIX B - List of Acronyms and Abbreviations
APPENDIX C - List of Terms
APPENDIX D - Summary of Consumer Responsibility for Various IOU/DWR
Cost Elements
APPENDIX E - Cost Responsibility Surcharge Calculations
DECISION ON NON-BYPASSABLE CHARGES
1. Summary
By this decision, we implement new generation1 non-bypassable charges (NBCs) previously established by Decision (D.) 04-12-048 and D.06-07-029. The applicability and form of these charges are determined for customers of the investor-owned utilities (IOUs)2 that choose direct access (DA)3 service or the services of a community choice aggregator (CCA),4 as well as municipal departing load (MDL)5 and customer generation departing load (CGDL)6 customers. Among other things, this decision:
1. Determines that once departed from bundled service, MDL (with the exception of large municipalizations) and CGDL will not have to pay the new generation related NBCs because, by procuring resources based on LTPP forecasts that exclude CGDL and MDL classes, the IOU will not have incurred costs on behalf of these customers.
2. Determines that for large municipalizations whose loads are included in the adopted load forecasts, the Commission will address the cost responsibility for payment of the new generation related NBCs through an application process.
3. Determines that the new generation NBC authorized by D.04-12-048 should be implemented as a component of the cost responsibility surcharge (CRS).7 The revised CRS shall be calculated on the following bases:
· With a few exceptions, use of a total portfolio approach that accounts for the ongoing CTC, DWR power charges and D.04-12-048 charges.8 This includes netting the individually calculated annual charges and carrying over any negative total charge to offset positive charges in subsequent years. Further, we determine that pre-restructuring resources9 should continue to be included in the portfolio of resources used in determining any ongoing CTC and D.04-12-048 charges, once cost recovery of the DWR contracts ends. Finally, we will address the effects of the 10-year limitation on cost recovery of new non-renewable portfolio standard (RPS) generation resources on bundled customer indifference, on a case-by-case basis, if and when the IOUs request cost recovery extensions, pursuant to the provisions of D.04-12-048.
· Use of the market benchmark adopted in D.06-07-030, as modified by D.07-01-030, to determine above-market costs.
· Use of a vintaging methodology based on the calendar year in which customers depart and on whether they depart in the first or second half of the calendar year.
1 New generation includes generation from both fossil fueled and renewable resources contracted for or constructed by the investor-owned utilities subsequent to January 1, 2003.
2 Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E) and Southern California Edison Company (SCE).
3 DA load customers purchase electricity from an independent electric service provider (ESP) and receive transmission and distribution service from the IOU.
4 CCAs are governmental entities formed by cities and counties to serve the energy requirements of their local residents and businesses. The IOU continues to provide transmission and distribution service.
5 Departing load (DL) generally refers to retail customers who were formerly IOU customers but now receive energy, transmission and distribution services from publicly owned utilities, self-generation or other means. MDL refers to DL served by a "publicly owned utility" (POU) as that term is defined in Public Utilities Code Section 9604(d), including municipalities or irrigation districts. There are two categories of MDL: transferred MDL and new MDL. Transferred MDL is load that was served by an IOU on or after December 20, 1995, and subsequently departed to be served by a POU. (Resolution E-4064, p. 1, fn. 1.) MDL also includes new MDL, which is load that has never been served by an IOU but is located in an area that had previously been in the IOU's service territory (as that territory existed on February 1, 2001) and was annexed or otherwise expanded into by a POU." (Resolution E-4064, p. 1, fn.1.)
6 The term "Customer Generation" refers to cogeneration, renewable technologies, or any other type of generation that (a) is dedicated wholly or in part to serve a specific customer's load; and (b) relies on non-utility or dedicated utility distribution wires rather than the utility grid, to serve the customer, the customer's affiliates and/or tenant's, and/or not more than two other persons or corporations.
7 The other components include the ongoing competition transition charge (ongoing CTC), and Department of Water Resources (DWR) power and bond charges. For PG&E, DA and non-exempt MDL are responsible for the Energy Charge Recovery Amount (ECRA), formerly the regulatory asset charge, which recovers PG&E's bankruptcy-related costs pursuant to D.03-12-035. This charge was included as an element to be collected from CRS in D.04-02-062. Pursuant to D.04-11-015, the ECRA superseded and replaced the regulatory asset charge on March 1, 2005. For SCE, DA and DL were responsible for the historical procurement charge (HPC), which recovers costs from a settlement of the filed rate case in federal court. SCE has fully recovered this charge, and the HPC is no longer being collected.
8 Public Utilities Code Section 367(a) sets forth the method for the calculation of the ongoing CTC. Also, in some situations, there will be departing load customers who do not pay the DWR power charges, and thus, the total portfolio method (indifference calculation) is not applicable in calculating ongoing CTC. (See D.07-01-020, p. 5 & D.06-07-030, pp. 35-38; see also D.05-01-035, p. 3.) (Order modifying Resolution E-3831 and denying rehearing of Resolution, as modified.)
9 For purposes of this decision, "pre-restructuring resources" refers to those current IOU resources that existed prior to March 31, 1998 and are not subject to ongoing CTC treatment. These resources consist principally of the IOUs' retained generation (i.e., hydro, coal and nuclear plants). Power from these resources tends to be cheaper when compared to the costs related to ongoing CTC, the DWR contracts and new generation.
