COM/MP1/jyc Date of Issuance 11/7/2008
Decision 08-11-030 November 6, 2008
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of San Diego Gas & Electric Company for Authority to Update Marginal Costs, Cost Allocation, and Electric Rate Design (U902E). |
Application 07-01-047 (Filed January 31, 2007) |
DECISION ADDRESSING THE RATE CAP ROLL-OFF PROPOSAL OF
SAN DIEGO GAS & ELECTRIC COMPANY
1. Summary
Assembly Bill 1 of the 1st Extraordinary Session of 2001-2002 (AB1X)1 was enacted in response to California's energy crisis and placed the California Department of Water Resources (DWR) in the position of procuring energy for California's electric utilities. Among other things, AB1X imposed a rate cap on residential rates for usage less than 130% of baseline, which is to remain in place until certain conditions are met. This decision addresses the "roll off" proposal of San Diego Gas & Electric Company (SDG&E) to increase the electric rates, over the next eight years, for Tier 1 and Tier 2 usage.2 By gradually increasing these residential rates, SDG&E's proposal would gradually phase out the rate cap imposed by AB1X, codified in Water Code § 80110 by January 1, 2016.3 This code section capped the electric rates for Tier 1 and Tier 2 (residential usage) at the February 1, 2001 rate levels.
In deciding whether the phase-out proposal should be adopted, we focus our attention on the rate cap language in Water Code § 80110 and the related provisions in Division 27 of the Water Code that were added by AB1X. We conclude that, at a minimum, Water Code § 80110 prohibits any increase in the electric rates for SDG&E's Tier 1 and Tier 2 residential usage while DWR power contracts are still in existence, and SDG&E's end use customers are still paying the power charges associated with those contracts to DWR. Since SDG&E's phase-out proposal would increase the rates of these customers, and because DWR has not yet fully recovered its power charges, SDG&E's proposal is not adopted.
We decline, however, to rule at this time on whether Water Code § 80110 requires that the rate cap be kept in effect after the time DWR ceases procuring power on behalf of SDG&E's customers but before the time when the bonds authorized by AB 1X have been paid off. (See e.g., Reply Brief of SCE Regarding AB1X p. 2.) The Commission's rulings on Water code § 80110 to date have not addressed the precise question presented here. Our ruling on this issue will significantly affect the way electricity is used in California which in turn will have significant impacts on our economy and our environment. Accordingly, the Commission finds that the legal question of how long the rate cap must remain in effect, pursuant to Water Code § 80110, must be considered within the broader context of the economic and policy effects that our ruling on this question will have. Because this will require further development of the record and because we need not answer this precise question in order to dispose of the instant application, we decline to make a ruling at this time.
1 Statutes of 2001, 1st Extraordinary Session, Chapter 4.
2 Tier 1 applies to electric usage for the baseline amount of electricity, and Tier 2 is for electric usage above Tier 1 up to 130% of the baseline amount. The baseline amount for SDG&E's customers varies by summer and winter months, by climate zones, and whether the customer is an all-electric user.
3 We refer to SDG&E's roll off proposal as the "phase-out" proposal in this decision.
