2. Background: Proceeding Arose from Decision 10-06-034, which Adopted a Settlement Resolving Issues that Led to the "Double Purchase" of Power to Meet Resource Adequacy Standards
This proceeding had its origins in Phase III of Rulemaking (R.) 07-01-041. The Scoping Memo for Phase III of R.07-01-041 noted:
The Commission has recommended that the CAISO [California Independent System Operator] account for existing DR [Demand Response] in a way that does not promote procurement of redundant supply-side resources. A key to resolving this issue is identifying where there are disconnects or gaps between existing retail DR programs and the CAISO's operational needs for the wholesale market, both at this time and when MRTU [Market Redesign and Technology Upgrade] will be implemented.1
Over the course of Phase III, the CAISO made it clear that its operational needs did not require an emergency-triggered DR program whose size amounted to 3.5% of the system peak. The CAISO instead argued that a program capped at only 2% of system peak was operationally warranted.2 In addition, the CAISO pointed out that although emergency-triggered DR qualified for Resource Adequacy (RA) payments, that
... unlike all other power that counts for Resource Adequacy, the California Independent System Operator currently procures costly "exceptional dispatch energy or capacity" before using this energy resource, a practice that has led to charges that ratepayers "pay twice" for this power.3
Thus, a price responsive Summer Discount Plan (SDP) avoids the need for a "double purchase" of RA power and avoids unnecessary charges that are ultimately passed through to consumers.
In Phase III of R.07-10-041, parties agreed to a settlement that would reduce the amount of emergency-triggered DR to 2% of system peak. As part of this settlement, Southern California Edison Company (SCE) agreed to transition its air conditioning SDP from a program that was triggered only in emergencies to one that was triggered by price. Specifically, SCE agreed to bid into the CAISO's MRTU system for dispatching this DR resource like other price-responsive DR programs.
As part of the settlement in R.07-10-041, SCE agreed that:
SCE will propose a voluntary, price-responsive option for its A/C [air conditioning] Cycling program (called Summer Discount Plan (SDP)) by the end of the second quarter 2010, including an option to allow SDP to be bid into the ISO [CAISO] market. Implementation of transition is expected to occur over the 2011-2014 timeframe. SCE agrees to actively promote customer transition to the price-responsive option through customer communications and by decreasing incentives from current levels for reliability-based MW [megawatts].4
SCE's revised SDP seeks to fulfill this settlement obligation.
2.1. Procedural Background
The procedural history of this application is typical of many proceedings that include evidentiary hearings.
On June 30, 2010, SCE filed Application 10-06-017 (Application) seeking:
... approval to incorporate a price-responsive element into the SDP [Summer Discount Plan] for its 330,000 existing residential customers and ... $26.6 million in incremental funding for 2011 and 2012 to make this possible.5
The Application proposed a schedule that would lead to a proposed decision issuing on April 30, 2011. Simultaneously with its application, SCE served its Testimony in Support of the Application on the service list in this proceeding.6
On July 26, 2010, SCE submitted proof of compliance7 with Rules 3.2(b) and (c) of the Commission's Rules of Practice and Procedure, August 2009 (Rules), which require that applicants for an increase in rates provide notification to certain public agencies and to the general public via a notice in a "newspaper of general circulation."8
Resolution ALJ 176-3258 (July 29, 2010) categorized the proceeding as ratesetting and reached a preliminary determination that hearings would prove necessary to the resolution of this matter.
On July 30, 2010, the Division of Ratepayer Advocates (DRA) filed a protest to the application9. In its Protest, DRA stated that it "intends to conduct discovery and review SCE's Application and supporting testimony, and issue a report with its recommendations."10 In addition, DRA identified seven issues that it concluded warranted further examination.
On August 13, 2010, SCE submitted proof of compliance11 with Rule 3.2(d), which requires that applicants for an increase in rates provide notification to their customers through either a direct mailing or a bill insert.12
On August 16, 2010, SCE filed a response13 to DRA's protest. SCE responded directly to each point raised by DRA and concluded that "SCE's SDP program transition is the best way to introduce an economic trigger while maintaining and utilizing the benefits of such a large and successful DR program."14
On August 31, 2010, a prehearing conference (PHC) was held in San Francisco to address the issues concerning the management of this proceeding, including proposals concerning scheduling. The discussions during the course of the PHC led to a consensus among the parties on a statement of proceeding scope and on a schedule, which was adopted in the Scoping Memo.15
On September 16, SCE served Supplemental Testimony, as requested by DRA to "the extent necessary to comply with the guidance ruling submitted in Rulemaking 07-01-041."16
On October 28, 2010, DRA served its testimony on parties in the proceeding. On November 5, 2010, DRA served amended testimony on parties in the proceeding.17
On November 23, 2010, SCE served Reply Testimony.18
On December 8, 2010, a single day of evidentiary hearings took place at the Commission's offices in San Francisco.
SCE and DRA filed Opening Briefs on January 10, 2011. Neither party requested oral argument in this matter. With the filing of Reply Briefs on January 31, 2011, the proceeding was submitted. In addition, on January 31, 2011, DRA filed a Motion To File Confidential Attachment of its Reply Brief Under Seal. 19
2.2. Statutory Provisions Most Relevant to this Proceeding
The SCE proposal for a new SDP changes both the rates for this program and the conditions of service. The Pub. Util. Code requires that:
451. All charges demanded or received by any public utility, or by any two or more public utilities, for any product or commodity furnished or to be furnished or any service rendered or to be rendered shall be just and reasonable. Every unjust or unreasonable charge demanded or received for such product or commodity or service is unlawful. ... All rules made by public utility affecting or pertaining to its charges or service to the public shall be just and reasonable.20
The Pub. Util. Code also requires that the Commission actively supervise changes in existing programs:
454(a) Except as provided in Section 455, no public utility shall change any rate or so alter any classification, contract, practice, or rule as to result in any new rate, except upon a showing before the commission and a finding by the commission that the new rate is justified.21
Furthermore, the Pub. Util. Code actively endorses the use of programs to reduce demand:
454.5(b)(9)(C) The electrical corporation will first meet its unmet resource needs through all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible.22
These three provisions of the Pub. Util. Code shape the Commission's assessment of SCE's application. Specifically, the Commission must review the proposed rates and conditions of service to ensure that they are "just and reasonable" while also recognizing the priority assigned by statute to demand reduction programs that are "cost effective, reliable, and feasible."23
1 Assigned Commissioner's and Administrative Law Judge's Amended Scoping Memo and Ruling, (R.07-10-041) July 18, 2008 at 2.
2 D.10-06-034 at 10.
3 Id. at 2.
4 Joint Motion of California Independent System Operator Corporation, California Large
Energy Consumers Association, Division of Ratepayer Advocates, Enernoc, Inc., Pacific Gas and Electric Company (U39E). San Diego Gas and Electric Company (U902E) and Southern California Edison Company (U338E) and The Utility Reform Network (Settling Parties) for Adoption of Settlement (Joint Motion) February 22, 2010, at 9-10.
5 Application at 1.
6 This testimony became Exhibit (Ex.) SCE-1
7 Southern California Edison Company's (U338E) Proof of Compliance with Rule 3.2(b) and (c) of the Commission's Rules of Practice and Procedure, July 26, 2010.
8 Commission Rules of Practice and Procedure, ( http://docs.cpuc.ca.gov/word_pdf/RULES_PRAC_PROC/105138.pdf ), Rule 3.2(b) and (c) at 17.
9 Protest of the Division of Ratepayer Advocates on Southern California Edison Company's Application for Summer Discount Plan (Protest), July 30, 2010.
10 Id. at 3.
11 Southern California Edison Company's (U338E) Proof of Compliance with Rule 3.2(d) of the Commission's Rules of Practice and Procedure, August 13, 2010.
12 Rules, Rule 3.2(d) at 18.
13 Southern California Edison's Company's (U338) Response to Protest, August 6, 2010.
14 Id. at 12.
15 Assigned Commissioner's Ruling and Scoping Memo (Scoping Memo), September 15, 2010. In addition, the Scoping Memo required that requests for Oral Argument be made simultaneously with the filing of Opening Briefs.
16 TR 5:5-7. SCE's Supplemental Testimony became Ex. SCE-2.
17 DRA's Amended testimony became Ex. DRA-1 and replaced the testimony served on October 28.
18 SCE's Reply testimony became Ex. SCE-3.
19 In Opening Comments on the Proposed Decision, SCE argued that the data DRA seeks to protect is public and therefore the Commission should deny DRA's motion. In Reply Comments on the Proposed Decision, DRA withdrew its motion and filed the information of concern as a public attachment to its Reply Comments on the Proposed Decision. These actions render the issue of confidential treatment of this information moot.
20 § 451.
21 § 454(a).
22 § 454.5(b)(9)(C).
23 Id.
