2. Procedural History
By ruling dated March 13, 2002, the assigned ALJ, in consultation with the Assigned Commissioner, solicited comments on whether the Commission should reopen R.91-08-003/I.91-08-002 to modify the shared-savings incentive mechanism adopted in that proceeding. The ruling described the issue as follows:
"In D.94-10-059, the Commission stated that it wanted to adopt a level of earnings opportunity that was sufficient (and not too much) to off-set the regulatory and financial biases against demand-side management (or in favor of supply-side resources) that the utilities might have in procuring least-cost resources. (57 CPUC 2d at 51.) The mechanism authorized payments over a 7 to 10 year period based on a complex process of measuring long-term energy savings. Over the objections of ORA and The Utility Reform Network (TURN), the Commission set a target shareholder earnings level of 30% of long-term energy savings, without a cap, stating this was a reasonable level in light of the utilities assuming a downside risk of penalties.
"Almost seven years later, our experience under this mechanism shows that (1) no penalties have ever been assessed; (2) the adopted measurement protocols award incentives for events unrelated to any utility actions, such as technical degradation levels of customers' equipment; and (3) SDG&E projects its shareholders will earn a profit of 92.5% on its 1996 programs and 80.8% on its 1995 programs, and PG&E will earn 70.7% on its 1995 programs if the incentive mechanism remains unchanged.
"Based on this information, I find good cause exists to request parties to comment on whether the Commission should, based on these comments, reopen D.94-10-059 for shareholder incentives before us in this and future AEAPs."3
Comments in response to the ruling were filed on March 29, 2002, by the California Energy Commission (CEC), Office of Ratepayer Advocates (ORA), Natural Resources Defense Council (NRDC), PG&E, SCE, TURN, Women's Energy Matters (WEM) and jointly by SoCal and SDG&E. Reply comments were filed on April 12, 2002, by NRDC, PG&E, SCE, jointly by SDG&E and SoCal, and TURN.
On February 27, 2003, a further prehearing conference (PHC) was held before Judge Gottstein in this consolidated proceeding.4 In response to requests made by Judge Gottstein during and after the PHC, the utilities filed supplemental information related to the issue of reopening D.94-10-059 on March 17, March 18, May 19, July 23, and August 1, 2003.5 This information included updated data on shared-savings incentives as a percentage of authorized program budgets and net resource benefits, supplemental information on avoided cost calculations, shared-savings incentives paid to date as well as pending and future shared-savings claims for pre-1998 programs, and the status of measurement and evaluation studies.
3 ALJ Ruling dated March 13, 2002, pp. 1-3. 4 The 2000 and 2001 AEAPs were reassigned from Judge Walwyn to Judge Gottstein in January 2003, and were consolidated with the 2002 AEAP in this proceeding. See ALJ Ruling dated January 24, 2003. 5 Filing of PG&E, SCE, SDG&E, and SoCal Providing Additional Information Requested by ALJ Meg Gottstein, March 17, 2003; Supplement to Filing, March 18, 2003; See also the utilities' May 19, 2003 responses to Energy Division's May 5, 2003 Data Request. Corrected and updated data related to pre-1998 programs was submitted jointly by the utilities on July 23, 2003, and August 1, 2003, at the direction of Judge Gottstein.
