IV. Scoping Memo

We initiate a rulemaking that will consider the topics identified above. We categorize this proceeding as "ratesetting" as the term is defined in Rule 5(d) in recognition that this will address the development of utility rates for CCA services in addition to resolving broad policies and rules.

The Assigned Commissioner and Administrative Law Judge (ALJ) should promptly convene a prehearing conference to determine how to manage this proceeding, for example, whether to address some issues in advance of others, whether hearings are required and other procedural matters. At this time, we order a round of comments on the proposals and topics presented in this order and any others the parties believe the Commission must consider to implement those portions of AB 117 addressing CCA procurement. The initial schedule in this proceeding is as follows:

Opening Comments October 22

Prehearing Conference/Workshop October 29

The Assigned Commissioner or ALJ may change the schedule for the sake of fair and efficient proceeding management, either by ruling or at a prehearing conference.

At this time we do not anticipate a need for hearings. However, we encourage the parties to address in their opening comments the need for hearings and identify topics that are appropriate subjects for hearing. Parties may also address the need for hearings in response to future pleadings, testimony, Commission decisions or rulings.

Any party filing opening comments may object to (1) the preliminary categorization of this consolidated proceeding as ratesetting (2) the determination that there is no need for hearings and (3) the scope and schedule for the proceeding. Any party who proposes a hearing should describe (1) material issues of disputed fact and (2) the evidence the party would introduce at a hearing.

Anyone wishing to be placed on the service list for this proceeding should inform the Commission Process Office by electronic mail at (ALJ_Process@cpuc.ca.gov) within 20 days of the mailing date of this order or in writing to the Process Office, 505 Van Ness Avenue, San Francisco, California 94102. Parties should refer to this proceeding number and include their name, the name of their representative (if any), address, and telephone numbers. Parties should also provide an e-mail address or indicate that no email address is available. The service list will be posted on the Commission's web site at www.cpuc.ca.gov.

Parties interested in participating in this rulemaking who are unfamiliar with the Commission's procedures should contact the Commission's Public Advisor's Office in San Francisco at (415) 703-2074, or in Los Angeles at (213) 649-4782.

To reduce the burden of service in this proceeding, the Commission will use electronic service, to the extent possible. These electronic service protocols apply to those individuals and entities who are named as respondents and to those who become "appearances" in this proceeding. In accordance with Commission practice, by entering an appearance at a hearing or by other appropriate means, an interested party or protestant gains "party" status. A party to a Commission proceeding has certain rights that non-parties (those in "state service" and "information only" service categories) do not have. For example, a party has the right to participate in evidentiary hearings, file comments on a proposed decision, and appeal a final decision. A party also has the ability to consent to waive or reduce a comment period. Non-parties do not have these rights, even though they are included on the service list for the proceeding and receive copies of some or all documents. When individuals write to the Process Office to request to be on the service list, they should indicate if they wish to be an appearance, and if so, they should indicate how they intend to participate in the proceeding. Electronic service will allow those individuals on the state service and information only categories to easily monitor the proceeding, as we discuss below.

Parties are not required to provide hard copy service to the service list unless a person on the service list requests hard copies. Nevertheless, hard copies of formal pleadings and other documents must be filed with the Commission's Docket Office consistent with Rule 2.

To the extent possible, we intend to use electronic service in this proceeding. All individuals should provide electronic mail addresses and should indicate whether they consent to electronic service. We intend that parties serve documents on appearances, state service, and information only individuals by electronic mail, and in turn, shall accept service by electronic mail. Electronic service allows for convenient, efficient service and can also allow those on the state service and information only portions of the service list to easily monitor the proceeding. In addition, paper copies shall be served on the assigned Commissioner and assigned ALJ.

If a document, including attachments, exceeds 75 pages, parties may serve a Notice of Availability in lieu of all or part of the document, in accordance with Rule 2.3(c) of the Commission's Rules of Practice and Procedure.

These electronic service protocols govern service of documents only, and do not change the rules regarding the tendering of documents for filing. Documents for filing must be tendered in paper form, as described in Rule 2, et seq., of the Commission's Rules of Practice and Procedure.

As an aid to review of documents served electronically, appearances should follow these procedures:


· Merge into a single electronic file the entire document to be served (e.g., title page, table of contents, text, attachments, service list).


· Attach the document file to an electronic note.


· In the subject line of the note, identify the proceeding number; the party sending the document; and the abbreviated title of the document.


· Within the body of the note, identify the word processing program used to create the document if anything other than Microsoft Word. (Commission experience is that most recipients can readily open documents sent in Microsoft Word 6.0/95.)

If the electronic mail is returned to the sender, or the recipient informs the sender of an inability to open the document, the sender shall immediately arrange for alternative service (regular U.S. mail shall be the default, unless another means-such as overnight delivery-is mutually agreed upon).

Parties should exercise good judgment regarding electronic mail service, and moderate the burden of paper management for recipients. For example, if a particularly complex matrix or cost-effectiveness study with complex tables is an attachment within a document mailed electronically, and it can be reasonably foreseen that most parties will have difficulty printing the matrix or tables, the sender should also serve paper copies by U.S. mail, and indicate that in the electronic note.

The current service lists for active proceedings are available on the Commission's web page, www.cpuc.ca.gov. To obtain an up-to-date service list of electronic mail addresses:


· On the "Legal Documents" bar choose "Service Lists."


· Scroll through the "Index of Service Lists" to the number for this proceeding (or click "edit," "find," type in R001002, and click "find next").


· To view and copy the electronic addresses for a service list, download the comma-delimited file, and copy the column containing the electronic addresses.

The Commission's Process Office periodically updates service lists to correct errors or to make changes at the request of parties and non-parties on the list. Parties should copy the current service list from the web page (or obtain paper copy from the Process Office) before serving a document.

Differences among word-processing software can cause pagination differences between documents served electronically and print outs of the original. (If documents are served electronically in PDF format, these differences do not occur, although PDF files can be especially difficult to print out.) For the purposes of reference and/or citation (e.g., at the Final Oral Argument, if held), parties should use the pagination found in the original document.

Any customer or representative of customers who intends to seek compensation should file and serve a notice of intent to claim compensation not later than 30 days after the prehearing conference in Phase I of this proceeding (Pub. Util. Code § 1804(a)(1)). The assigned ALJ may make exceptions to this deadline consistent with Section 1804. The ALJ will address each requesting party's eligibility to claim compensation in subsequent rulings.

In this ratesetting proceeding, Ex parte communications are permitted only if consistent with the restrictions set forth in Rule 7(c), and are subject to the reporting requirements set forth in Rule 7.1.

Findings of Fact

1. AB 117 requires the Commission to implement the procedure to facilitate the purchase of electricity by certain local entities on behalf of local citizens.

2. AB 117 identifies such entities as "Community Choice Aggregators."

Conclusions of Law

1. The Commission should open this rulemaking to fulfill specified aspects of AB 117 as set forth herein.

2. All jurisdictional electrical corporations should be made respondents to this rulemaking.

ORDER

IT IS ORDERED that:

1. The Commission hereby initiates a rulemaking to implement the provisions of Assembly Bill 117 as set forth herein.

2. Pacific Gas and Electric Company, Southern California Edison Company, and SDG&E shall file opening comments on issues as set forth herein and other parties may file comments on October 22.

3. All jurisdictional electrical corporations are made respondents to this proceeding.

4. The Executive Director shall serve a copy of this order on all jurisdictional electrical utilities and all California cities and counties.

5. A workshop and prehearing conference is scheduled for October 29 at the Commission Courtroom in San Francisco, California and will commence at 10:00 a.m. The schedule described herein for this proceeding may be modified by the Assigned Commissioner or Administrative Law Judge.

This order is effective today.

Dated October 2, 2003, at San Francisco, California.

Attachment A

Reference Decisions and PG&E Rules, Schedules, and Forms

From the Procurement Proceeding (R.01-12-024)

D.02-10-062: http://www.cpuc.ca.gov/word_pdf/FINAL_DECISION/_Toc23299394

From Section V "Resource Mix":

In modifying their procurement plans, the utilities should undertake a resource planning effort to include procurement from a mixture of different sources with various environmental, cost, and risk characteristics. Utilities fully responsible for meeting their customers' resource needs should plan among all of the following options: conventional generation sources (with a variety of types of ownership structures), renewable generation (including renewable self-generation), distributed and self-generation, demand-side resources, and transmission. In addition, utilities should plan to meet a reserve requirement. Each of these elements is discussed briefly below.

In making plans to procure a mixture of resources, the utilities should take into account the Commission's longstanding procurement policy priorities - reliability, least cost, and environmental sensitivity. While each of these priorities is important individually, they are also strongly interrelated. Increased reliability may increase procurement costs. Diversifying the resource mix may meet environmental priorities, but may also increase costs. Thus, the utilities should explicitly address these tradeoffs in their long-term procurement plans.

To assist with that process, we provide the following general guidance:

D.02-12-074 http://www.cpuc.ca.gov/word_pdf/FINAL_DECISION/22128.doc

Section H "Reserve Levels":

Based on our review and the comments filed, we find the 7% operating reserves level proposed by the utilities in their short-term plans to be adequate for 2003.

From the CRS Proceeding (R.02-01-011)

D.02-11-022 http://www.cpuc.ca.gov/word_pdf/FINAL_DECISION/20929.doc

Section IV, "Scope of Costs Subject to CRS:"

In compliance with D.02-03-055, charges must be imposed on DA customers sufficient to ensure that bundled service customers do not bear higher costs due to the migration of a significant number of customers from bundled to DA service between July 1 and September 20, 2001. This migration of DA load reduced the bundled customer base over which costs could be spread. Unless DA customers pay their respective share of such costs, bundled customers would have to make up the shortfall through higher bills, thus, resulting in a cost shifting.

By ALJ ruling dated March 29, 2002, parties were put on notice that the Commission would address in this proceeding "the full range of costs" necessary to avoid such cost shifting from DA to bundled PG&E customers. The ALJ Ruling defined the scope for determining surcharges, stating: "In order to ensure that the Commission is able to consider a fully compensable surcharge, a record must be developed that takes into account all possible cost responsibilities including but not limited to DWR purchase costs . . . attention will be focused on how such cost responsibility can be formulated." DWR purchases are the obligations of retail end-users within the service territories of the three electric utilities. (See Water Code § 80104.) In D.02-03-055, we noted that these purchases included those made by DWR on behalf of DA customers who returned to bundled service and also those bundled service customers who later entered into DA arrangements. In D.02-03-055, the Commission observed that: "There would be a significant magnitude of cost-shifting if DWR costs are borne solely by bundled service customers, and direct access customers are not required to pay a portion of these costs that were incurred by DWR on behalf of all retail end use customers in the service territories of the three utilities during a time when California was faced with an energy crisis."

DWR costs may be divided into two broad categories for purposes of assessing DA cost responsibility: (1) "historic" costs incurred between January 17, 2001 and the issuance of this decision, and (2) prospective costs (that will continue to be incurred under long-term DWR contracts from January 1, 2003 going forward until contract termination projected to be 2011. "Historic" costs may further be subdivided into costs incurred (1) between January 17, 2001 and September 20, 2001 and (2) between the suspension date of September 21, 2001 and December 31, 2002.

Among the other potential categories of additional costs noted in the ALJ ruling as being subject to DA CRS were purchased power costs from qualifying facilities (QFs) and costs related to the utilities' retained generation. In D.02 04 067, the Commission referenced the scope of additional non-DWR costs noted in the March 29, 2002 ALJ ruling, and expressly clarified D.02-03-055 to make clear that the CRS will take into account recovery of relevant non-DWR costs and that DA customers will be held responsible for such costs as required by AB 1X and other statutes (e.g., AB 1890). (See D.02-04-067, Ordering Paragraph (OP) 1e.) D.02-04-067 affirmed that nowhere in D.02-03-055 are DA customers relieved of their responsibility for AB 1890 transition costs, including those transition costs collected by SCE and PG&E during the rate freeze.

The determination of a DA CRS thus must take into account all relevant costs that would otherwise result in cost shifting from DA to bundled customers of customers of the three major IOUs. The scope of costs include those of DWR pursuant to AB1X and PG&E Retained Generation (URG)-related costs. We also take into account relevant companion proceedings where the Commission either has already adjudicated and adopted charges for DA cost responsibility or is in the process of adopting such charges for DA.

Section XV: CRS Mitigation: Capping or Levelizing CRS

In the absence of any positive evidence to the contrary other than subjective assertions of certain witnesses, we conclude that an initial cap set at the level of 2.7 cents/kWh represents an appropriately cautious starting point for a cap, particularly at the very beginning of instituting these charges. In the interest of caution, we find it prudent not to impose any abrupt change from the level the Commission has previously observed as a possibly reasonable cap value. An initial cap at this level will promote a bridge on continuity with the preliminary policy assessment on this issue that we made in D.02-07-032. Thus, we conclude that an initial cap of 2.7 cents/kWh is consistent with the overall goal of seeking to preserve the economic viability of the DA program.

D.02-12-045

http://www.cpuc.ca.gov/word_pdf/FINAL_DECISION/22038.doc

Direct Access Cost Responsibility Surcharge Section

Consistent with the Joint Ruling, language is added to this decision directing each of the utilities to file advice letter compliance tariffs to implement the 2.7 cents/kWh DA CRS on an interim basis to become effective on January 1, 2003. A ruling addressing the schedule and process for the workshop and implementation of the resulting DA CRS will be issued shortly.

D.03-05-034 http://www.cpuc.ca.gov/word_pdf/FINAL_DECISION/26070.doc

"Switching Costs" Decision

Section 2 "Discussion"

We shall adopt appropriate restrictions on DA customers' switching options using the framework described in this section. While the rules for the switching by DA customers should guard against placing any burden on bundled customers, the rules should also promote customer choice and economic efficiency. DA customers should not have the indiscriminate ability to come and go from bundled service without regard to the cost-shifting effects that may result. On the other hand, DA customers should not be unduly constrained from selecting the most economically efficient service option, consistent with avoidance of cost shifting. We shall require existing DA customers who wish to switch to bundled service (other than for purposes of a temporary "safe harbor" while switching ESPs) to make the election for a minimum three-year period.

From Section 2b

"Applicability of Switching Rules to Large vs. Small Customers"

We find it reasonable to conclude that the movement of a few large customers with a disproportionately large load could have a greater impact on PG&E procurement than that of the same number of smaller customers. Yet, the difference appears to be a matter of degree rather than of kind. While there are differences in how PG&E procurement is impacted by large versus small customers, we do not believe that the record is sufficiently developed to quantify how those differences would translate into procurement decisions or size-specific rules. Moreover, certain restrictions that we adopt aimed at preventing incentives for arbitraging or other related activities are not necessarily a function of customer size.

Accordingly, we decline to adopt a different set of rules for large customers in contrast to small customers at this time. The rules we adopt in this order shall apply uniformly to all DA customers irrespective of size. In the proceedings that we order herein, we may consider further how customer size differences may be relevant in designing and implementing rules relating to DA switching between bundled and DA service on a prospective basis.

Energy Service Provider Agreement

Available only in pdf format.

http://www.pge.com/006_news/pdfs/esp_ag.pdf

Adopted in D.97-10-087, Appendix B.

Direct Access Rule 22 (PG&E and SCE)

http://www.pge.com/customer_services/business/tariffs/doc/ER22.doc

Direct Access Rule 25 (for SDG&E)

http://www.sdge.com/tm2/pdf/ERULE25.pdf

Schedule E-ESP

http://www.pge.com/customer_services/business/tariffs/doc/E-ESP.doc

SCHEDULE E-ESP-SERVICES TO ENERGY SERVICE PROVIDERS APPLICABILITY: This schedule applies to energy service providers (ESPs) who provide direct access service to Customers, as defined in electric Rule 1 and Rule 22.

TERRITORY: The entire PG&E service territory.

RATES:

1. METER INSTALLATION. If an ESP requests that PG&E install a meter for its Direct Access Customer, the rates will be as set forth in Schedule E-EUS.

2. METER TESTING. If an ESP requests that PG&E test a meter for its Direct Access Customer, the rates will be as set forth in Schedule E-EUS.

3. METER REMOVAL. If an ESP requests that PG&E remove the existing PG&E meter, as set forth in Rule 22, the charge shall be as set forth in Schedule E EUS.

4. INSPECTION OF ESP-INSTALLED METERING EQUIPMENT. If PG&E inspects ESP-installed metering equipment pursuant to Rule 22 and the ESP Service Agreement, the charge shall be as set forth in Schedule E-EUS.

5. METER DATA MANAGEMENT AGENT (MDMA) SERVICES

a. Meter Reading Set-up charge, Per Meter $16.00. This charge applies to ESP's when PG&E performs MDMA services to ensure ESP's meter communication system is compatible with PG&E's meter reading system.

b. MDMA services include data validation, editing and estimating to settlement quality form, data reads and data transfer to the MDMA Server If PG&E performs MDMA services for an ESP the charge shall be: per meter, per month $7.00 (R)(R).

c. Unscheduled Meter Read. Monthly meter, per meter read, per occurrence $12.00, Interval meter, telephone line retrieval, per meter read, per occurrence $25.00 Interval meter, on site data retrieval, per meter read, per occurrence $90.00.

6. CONSOLIDATED PG&E BILLING

a. Rate-Ready Billing. If an ESP requests that PG&E calculate the charge and bill the ESP's Direct Access Customers for the energy supply portion of the Customer's bill, the prices shall be:

(a) Price change, per rate schedule per change $5.00

b. Bill-Ready Billing. If an ESP requests that PG&E bill the ESP's Direct Access Customers for the energy supply portion of the Customer's bill as calculated by the ESP, the prices shall be:

7. DELIVERY OF MANDATED NOTICES

A. Electronic transmission of text (electronic mail) for mandated notice no charge

B. For delivery of printed mandated notices to ESP's billing facility:

C. For delivery of printed mandated notices to ESP's billing facility: If an ESP performing Consolidated ESP billing requests that PG&E mail mandated notices to its customers, the following rates shall apply:

8. LATE PAYMENT FEE

A. If an ESP is performing Consolidated ESP billing and the bill to PG&E is not paid within 17 calendar days of transmittal of PG&E's customer charges, PG&E will assess late charges at the rate of one percent per month of the outstanding balance owed to PG&E, as set forth in the ESP Service Agreement.

Schedule E-EUS

http://www.pge.com/customer_services/business/tariffs/doc/E-EUS.doc

SCHEDULE E-EUS-END USER SERVICES

APPLICABILITY: This schedule applies to any Customer electing Direct Access (DA) or Hourly Pricing Option, as defined in electric Rule 1 and Rule 22.

TERRITORY: The entire PG&E service territory.

RATES: If PG&E performs any metering service for a Customer pursuant to Rule 22, the following charges shall apply:

1. Interval Meter-Cost

2. Per-Event Metering Service Charges

a. Metering Service Base Charge, per meter $90. This charge is incurred by the customer when PG&E goes to the meter to perform a DA metering service activity(ies). Any PG&E Meter Service Charges listed below that are incurred by the customer while PG&E is at the meter are added to this Metering Service Base Charge. Metering Service Charges:

b. Meter Installation, per meter $100. This charge is incurred by the customer each time PG&E installs an interval meter. This rate includes costs for the installation of the interval meter. This service does not include the interval meter cost, metering transformer material and installation cost, telecommunications equipment, installation or service costs. Meter removal, testing, and programming charges, described below, would also be charged for a typical meter installation.

c. Meter Removal, per meter $45. This charge is incurred by the customer each time PG&E removes an interval meter or a meter to be replaced by the interval meter. It includes costs for removal and processing of the existing meter.

d. Meter Test, per meter $60. This charge is incurred by the customer when PG&E tests the interval meter.

e. Meter Programming, per meter $25. This charge is incurred by the customer when PG&E programs the interval meter.

f. Meter Battery Change, per meter $30. This charge is incurred by the customer when PG&E replaces the interval meter battery.

g. Metering Inspection, per meter $55. This charge is incurred by the customer each time PG&E inspects the interval metering facility.

h. Metering Services Hourly Labor Rate $65. Metering services performed by PG&E which are not covered by the above service charges or any other PG&E fees or contracts will be charged this hourly rate, plus the Metering Service Base Charge described above, plus materials costs. Application of Per-Event Metering Service Charges: When PG&E performs any of the above services, the Metering Service Base Charge and applicable service charge(s) apply. For example, if an interval meter malfunction requires repair and testing of the meter, the customer would incur the Metering Service Base Charge, Unscheduled Metering Maintenance Charge, and the Meter Test Charge. Once the customer has communicated to PG&E that the interval meter site is ready for interval meter installation, if the interval meter site is not prepared at the time PG&E attempts to perform the interval meter installation, the customer will be charged the Metering Service Base Charge and the Metering Inspection Charge. If conditions at the DA meter site require an exceptional amount of material and/or time to perform meter services, the customer will be charged for the additional material cost and the hourly rate for the additional time. DA customers who purchase already-in-place PG&E-owned DA capable metering facilities will be required to pay the interval meter cost, the charges associated with meter installation, and labor and materials cost for any other components of the interval metering facility.

3. Meter Service Contract, per year per meter $145. Meter Service Contract is only available for interval meters for which PG&E has performed the interval Meter Installation of a PG&E approved meter. This charge is non refundable and will not be prorated. The Meter Service Contract includes services required to maintain the interval meter. The per-event service charges will not apply to customers served under a Meter Service Contract, with the exception of charges associated with meter installation, customer requested unscheduled meter tests, meter removal, and metering inspections.

4. Hourly Pricing Option MDMA SERVICES (The Hourly Pricing Option is suspended.)

a. Hourly Pricing Option Meter Reading Set-up charge, Per Meter $20.00. This charge applies to customers when PG&E performs MDMA services for Hourly Pricing Option, to ensure that all systems are updated so interval meter can be read.

b. Hourly Pricing Option MDMA services include data validation, editing and estimating to settlement quality form per meter per month $27.00.

5. Hourly Pricing Option BILLING (The Hourly Pricing Option is suspended.)

a. Hourly Pricing billing set up per Service Account $20.00

6. CONSUMPTION DATA. If PG&E provides historical Service Account specific consumption data pursuant to Rule 22, the following charges shall apply per account per request free up to two (2) times per year, $40 per request per service thereafter.

Schedule E-DASR

http://www.pge.com/customer_services/business/tariffs/doc/E-DASR.doc

SCHEDULE E-DASR-DIRECT ACCESS SERVICES REQUEST FEES

APPLICABILITY: This schedule applies to energy service providers (ESPs) who provide direct access service to Customers, as defined in electric Rule 1 and Rule 22.

TERRITORY: The entire PG&E service territory.

RATES:

1. DIRECT ACCESS SERVICE REQUEST (DASR) CHARGES:

a) Switching. An ESP submitting a DASR as required by the ESP Service Agreement will be charged per account per DASR submittal. This charge applies to all accepted DASRs for switches from bundled service to DA, switches between ESPs, switches in metering agents, and switches in billing agents. This fee does not apply to rejected DASR's DASR Charge, per account per DASR submittal no fee

b) Billing Set-Up

1. Consolidated PG&E Billing Set Up refer to Schedule E ESP2) Consolidated ESP Billing Set Up refer to Schedule E-ESP3) Separate Billing Set Up no fee

c) Billing Option Switches

1. Consolidated ESP to Consolidated PG&E Billing

2. Consolidated PG&E to Consolidated ESP Billing

3. Separate Billing to Consolidated ESP Billing

4. Separate Billing to Consolidated PG&E Billing

5. Consolidated ESP to Separate Billing

2. CONSUMPTION DATA. If PG&E provides historical Service Account specific consumption data pursuant to Rule 22, the following charges shall apply per account per request free up to two (2) times per year, $40 per request per service account thereafter.

(END OF ATTACHMENT A)

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