Discussion

Parties' dispute concerns the extent to which a customer should be required to pay the CRS where the customer's electric load is met by preference power allocations from WAPA with the remainder of its load met through PG&E bundled service on or after February 1, 2001, and that customer subsequently terminates taking bundled service from PG&E.

We affirm that preference power customers are not responsible for CRS to the extent of that portion of their CRD that has been continuously served by WAPA both before and after DWR began procuring power under AB 1X. On this limited issue, parties agree. To the extent that some preference power customers have received all of their power from WAPA and have never taken PG&E bundled service, such entities do not constitute "departing load" customers as defined under PG&E's existing tariff. As PG&E acknowledges, such customers have no load that could "depart." Moreover, DWR recognized the existence of the WAPA preference power deliveries at the time of its entering into contract commitments to procure the utilities' net short requirements. Prior to December 31, 2000, all preference power customers had committed to the WAPA Post-2004 Plan by executing individual base resource contracts.

Thus, we acknowledge that DWR did not procure power to meet preference power customers' load demand that was already being served by WAPA deliveries prior to February 1, 2001. Thus, since no costs were incurred by DWR to serve such load, no costs are shifted to bundled customers by not imposing a CRS on WAPA power deliveries that were continuously delivered both before and after DWR began procuring power under AB 1X. Thus, we affirm that no CRS shall be imposed on those preference power customers that have met their full requirements through deliveries from WAPA, and have not taken bundled service from PG&E on or after February 1, 2001 to meet a portion of their load.

There remains a dispute, however, concerning the applicability of CRS for so-called "split wheeling" customers that met a portion of their requirements through bundled service from PG&E on or after February 1, 2001 and the remainder through WAPA. Parties dispute whether that portion of the CVP customer requirements constitutes departing load for that portion of their load formerly served under PG&E's retail tariffs.

In its opposition to imposing a CRS on "split-wheeling" customers, the CVP Group concedes responsibility for DWR Bond Charges, but objects to imposition of Power Charges. CVP Group does not dispute that the Commission may choose to levy a DWR Bond Charge on that portion of "split-wheeling" customers' load above their CRD. CVP Group also agrees that the methodology generally described in PG&E's Response may provide a workable basis for assessing such charge. Thus, in recognition of the consensus on this issue, we shall order that "split-wheeling customers" be required to pay a DWR Bond Charge on customers' load above their CRD on the same basis as other departing load.

As a defense against being assessed CRS on the utility portion of the "split-wheeling" load, the CVP Group argues that PG&E lacks current tariff authority to collect such charges. PG&E relies upon its Preliminary Statement BB to claim that "split-wheeling" customers come within the definition of departing load subject to a CRS, including DWR charges. CVP, however, cites an admission by PG&E, noted in Commission Resolution E-3813, dated June 19, 2003, indicating that PG&E did not currently possess tariff authority to collect even CTC from its departing load customers, and had not done so since Schedule E-Depart expired on March 31, 2002. CVP Group thus argues that PG&E's own tariffs and admissions disprove PG&E's claims that it is entitled to collect DWR and CTC from "split-wheeling" customers.

We find no bar to PG&E recovering otherwise eligible CRS on the applicable portion of split-wheeling customer loads, however, merely due to expiration of PG&E tariff authority on March 31, 2002, as noted in Commission Resolution E-3813. In D.03-07-028, (page 44, footnote 64), the Commission noted the March 31, 2002 expiration of PG&E's E-Depart tariff authority, but authorized PG&E to resume billing authority under the expired tariff schedule in implementing the municipal departing load CRS, as provided for in that order. Thus, CVP's argument that PG&E's expired tariff authority bars it from imposing otherwise applicable CRS on split wheeling customers is not persuasive. PG&E now has Commission authorization pursuant to D.03-07-028 to reactivate its expired tariff authority in order to bill and collect CRS from departing load customers.

Moreover, we find that PG&E's Preliminary Statement BB supports the contention that the split wheeling customer load comes within PG&E's tariff definition of departing load. Section 3c of PG&E's Preliminary Statement BB describes the limited "exception" from departing load responsibility for CTC, as follows:

Those reductions in load that result when a customer who was purchasing a portion of its electricity supply from the Western Area Power Administration under the provisions of Contract 2948-A as of December 20, 1995, and subsequently received increased allocations of such federal preference power in a manner contemplated under that existing contract, will not be classified as Departing Load.⁵ [Emphasis added.]

Consistent with this language, as long as fluctuations in the load are contemplated under the WAPA contract, such fluctuations would not be considered departing load. In the case of "split wheeling" customers who take service from both PG&E and WAPA and subsequently terminate bundled service from PG&E at the expiration of Contract 2948A at the end of 2004, however, such termination of bundled service was not "contemplated under that existing contract." As such, changes in load in excess of the CRD were not "contemplated under that existing contract," and thus properly constitute departing load under the tariff.

Our treatment of this issue in D.96-11-041 (69 CPUC 2d 264) supports this conclusion. In that proceeding, some customers who took service from both PG&E and federal power agencies sought a specific exemption from the definition of departing load due to concern that the month-to-month fluctuations in deliveries from PG&E and the federal power sources would be construed as "departing load" subject to CTC. (See 69 CPUC 2d at 274.) In D.96-11-041, we rejected the requested exemption on the following grounds:

[T]hese customers do not fall within the definition of departing load, since they continue to be PG&E customers under the same arrangements that governed their service from PG&E before December 20, 1995, and any reductions in load that fall within the existing arrangements are not "subsequently served with electricity from a source other than PG&E." This conclusion may not apply if the existing arrangements were altered in a way that reduced service from PG&E and substituted service from another source. (D.96-11-041, 69 CPUC 2d at 275, emphasis added.)

We subsequently affirmed this conclusion in D.97-06-060 by stating:

No exemption [to the definition of departing load] is necessary in PG&E's tariffs, because the definition of departing load does not apply to [WAPA] customers who are merely shifting their allocation of federal preference load and PG&E load in a manner contemplated under the existing contract. While no exemption is necessary in this instance, PG&E should clarify the tariff language included in its Preliminary Statement to further define "departing load" in accordance with this decision. (D.97-06-060, 72 CPUC 2d 736, 774-775, emphasis added.)

Thus, termination of PG&E bundled service under the split wheeling arrangements at the end of 2004 and substitution of other replacement power would, in fact, constitute departing load that would alter existing contract arrangements, in the manner described in D.96-11-041.

CVP alleges there is a factual dispute, however, concerning whether or to what extent DWR may have taken into account the load of "split-wheeling" customers and new preference power allottees in contracting for and procuring power pursuant to its authority under AB 1X. As noted by the CVP Group, the Commission has previously limited the applicability of DWR Power Charges to certain categories of Customer Generation Departing Load based on evidence that DWR took such departing load into account in its power procurement.⁶

CVP Group has not demonstrated, however, that DWR subtracted the bundled utility component of load demand of split wheeling customers in its forecasts and procurement of contract power. CVP Group cites DWR's recent filing of its Supplemental Determination of 2003 revenue requirements in which DWR indicates that it has consistently modeled power sales and purchases between PG&E and WAPA as a bilateral contract obligation of PG&E that reduces total URG energy available to serve retail customers. The cited passage is silent, however, concerning whether or to what extent DWR explicitly excluded the portion of "split wheeling" customer load that was served with bundled utility power rather than WAPA power.

We find no basis to conclude that DWR subtracted any split wheeling component of bundled load in its forecasts of procurement requirements. Moreover, we find no justification for further evidentiary hearings to determine the applicability of CRS to the portion of the split-wheeling load served by PG&E. We shall, however, grant the motion of CVP for late-filed receipt into the record of a sworn declaration of Dan L. Carroll together with a CVP data request and response from Navigant Consulting, Inc. the data response into the record is hereby granted. CVP filed its motion on August 28, 2003, for an order setting aside submission to receive into the record this declaration and Navigant data response.⁷ Navigant consulted with DWR during the period that it was procuring power to meet the net short requirements of PG&E.

On September 12, 2003, PG&E filed an opposition to the motion for late-filed receipt. PG&E argues that the motion is moot since CVP has already had the opportunity for the Commission to consider the significance of these materials through citations made to the data response in its comments on the Draft Decision. PG&E also argues that the data response offered by CPV is irrelevant and that no new evidence is provided by the materials in question.

Notwithstanding PG&E's arguments, the materials were used by CVP in support of its arguments in its comments on the Draft Decision. Parties have had the opportunity to comment upon the substance of claims made by CVP concerning the late-filed data response in their opening and reply comments on the Draft Decision. In the interests of providing a full opportunity for CVP to make its showing and clarity of the record, we shall accordingly receive this material into the record.

CVP characterizes the receipt into evidence of its attached declaration and additional Navigant data response as "thus providing the Commission with a full record with which to make its decision."⁸ By its own statement, CVP thus acknowledges that with the receipt of the declaration and Navigant data response, the record is now complete as a basis for the Commission to render a decision on the applicability of the DWR power charge to the split wheeling load. We agree there is sufficient basis to resolve the treatment of split wheeling and there is no merit in belaboring this issue by ordering additional evidentiary hearings.

CVP argues that the data response from Navigant provides relevant evidence that WAPA load was not included in DWR's load assumptions. The Navigant data response relates to DWR's treatment of WAPA customers in forecasts underlying its power purchases for customers in the PG&E service territory. The data response indicates DWR did not procure power on behalf of WAPA load which it characterizes as "a bilateral obligation of PG&E's utility retained generation" that was not considered part of PG&E's net short.

As further stated in the data response, DWR assumed there would be no further obligation by PG&E for bilateral power to WAPA customers after 2004 when the PG&E/WAPA power supply contract arrangement expires. As a result of the assumptions that it made regarding PG&E's bilateral obligation to WAPA, DWR believed that it had no responsibility to purchase power to directly supply WAPA requirements.

PG&E disagrees with the inferences that CVP draws from the DWR data response, arguing that CVP focuses on an irrelevant provisions of the WAPA contract, as referenced in the Navigant data response to support its claims that no CRS obligation should apply to split-wheeling load.

The relevant issue in dispute here is the treatment of split wheeling load. The data response, however, offers no evidence that DWR excluded the split wheeling component from bundled load in making its power purchases on behalf of PG&E customers. In its data request, CVP did not identify split wheeling by name nor seek confirmation that DWR in fact subtracted the split wheeling load in determining its procurement requirements. The data response, likewise, fails to indicate that DWR excluded "split wheeling" load in determining procurement obligations. PG&E, in its reply comments on the Draft Decision, notes that "[g]iven the very modest amount of bundled service that WAPA split-wheeling customers receive from PG&E, it is likely that DWR was not even aware that "preference power customers" were included within PG&E's bundled load."⁹

Rather than addressing the split wheeling load issue, CVP argues that the data response "confirms that DWR did not plan to serve the loads for which PG&E was providing firming power under Contract 2948-A."¹⁰ In various references to the Navigant data response, CVP focuses on PG&E's "firming" obligations under Contract 2948A.¹¹ Article 12(b)(2) and Article 21(b), (c), and (d) of Contract 2948A require PG&E to supply "additional energy" to WAPA to "firm" the CVP's own hydropower generation. PG&E agrees that DWR did not purchase power in anticipation of fulfilling PG&E's "firming" obligations, but argues that such obligations are irrelevant to the treatment of split wheeling. As noted by PG&E, its "firming" obligations relate to wholesale power requirements rather than to the retail load requirements that were met through split wheeling.

The provision of split-wheeling is separately addressed in Article 14(c)(2)(ii) of the contract which requires PG&E to supply "all additional requirements" for federal preference power customers "under [PG&E's] applicable rates and rules on file with and authorized by the regulatory commission having jurisdiction." The data response thus contrasts WAPA loads as distinct from retail loads for which DWR was authorized to serve.

The distinction indicates that it is wholesale load obligation (and not utility retail obligations) that was excluded by DWR. Split wheeling load is a component of retail load, therefore, and not part of wholesale obligations as addressed in the data response. The data response does not indicate any reduction in retail load requirements was made to reflect any "split wheeling" component. Rather, the response affirms that Division 27 of the Water Code authorized DWR to meet retail load. Since the split-wheeling component of the WAPA contract is a retail load component, DWR's procurement to meet retail load logically included split wheeling load.

As pointed out by PG&E, moreover, customers that received service pursuant to split wheeling were separately billed by PG&E for the portion of their power served under PG&E bundled retail tariff. Thus, payments for load under the WAPA contract would be separate from split wheeling load that was served by bundled utility tariff. By contrast, provisions of the WAPA contract dealing with PG&E's obligations to firm the CVP's load is not relevant, however, to treatment of split wheeling retail load. Thus, our consideration of the Navigant data response provides no basis to change our conclusion that split wheeling was included in the load for which DWR procured power.

Moreover, there is no dispute that the split-wheeling load on which PG&E proposes to impose a CRS constitutes bundled service on and after February 1, 2001. Likewise, the CVP group does not dispute that cost responsibility in fact applies to the bundled portion of the split wheeling load in excess of the CRD, but merely argues over the scope of elements included within that responsibility. Specifically, CVP Group concedes that split-wheeling customers should bear a DWR Bond Charge for bundled service deliveries in excess of the CRD, but merely objects to extending this responsibility to include the DWR power charge. Yet, DWR costs for which reimbursement is required are not limited to the Bond Charge but also include the Power Charge. As required by AB 117, customers that took bundled service from the utility on and after February 1, 2001 must bear their "fair share" of such DWR costs to prevent cost shifting. AB 117 expressly states that the "fair share" includes "electricity purchase contract obligations incurred..." Such contractual obligations are incorporated into the ongoing DWR Power Charges that are imposed on direct access and departing load customers to avoid shifting stranded costs to bundled customers.

Correspondingly, consistent with AB 117 requirements, we conclude that "split-wheeling" customers should bear both the DWR Bond Charge and Power Charge for the applicable bundled service volumes in excess of the CRD.

CVP Group argues that PG&E's proposed method to determine CRS for "split-wheeling" customers and new allottees is not completely developed. For example, PG&E has not specified how it proposes to calculate CRS where the part of the customer's load that exceeds its CRD has significantly varied over the years, or within a given year. CVP Group argues that in some cases, the load may exceed CRD so infrequently that application of a CRS would be administratively burdensome. The CVP Group believes that factual development would show that such circumstances occur for "split-wheeling" customers, and thus proposes that the PG&E methodology be examined more closely.

We agree that some additional explanation of the methodology to determine specific volumes of departing load of split wheeling customers subject to the CRS is in order. While the hypothetical example offered by PG&E illustrates the principles under which the CRS would be applied, it is not clear as a practical matter precisely what portion of each customer's load would be treated as being above the CRD and thus subject to a per-kWh CRS as "departing load." Yet, we view this as a technical implementation matter rather than a generic issue that rises to the level requiring additional evidentiary hearings.

Accordingly, in the interests of providing more certainty to preference power customers as to their CRS obligation for departing load, we shall direct representatives of PG&E and CVP Group members to meet and confer to define outstanding questions that CVP Group Members have concerning the manner in which volumes subject to the CRS would be identified and billed. UC/CSU shall also be included in the meet-and-confer process. To the extent the parties cannot reach timely agreement as to the manner in which the quantification of departing load volumes will be identified and billed in accordance with the principles outlined in this order, either party may file a subsequent motion for clarification of the methodology for identifying and billing CRS to the applicable portion of split wheeling load.

Once disposition is reached concerning the manner in which the volumes of split wheeling load subject to CRS, then PG&E shall promptly file and advice letter with the Commission with the necessary tariff amendments specifying the manner in which the applicable volumes of split wheeling load subject to CRS will be identified and billed.