7. Process for 2006

As described above, we have laid out our policy direction for rate design for establishing a default critical peak pricing rate with an option to remain on a traditional time-of-use rate with a narrowed peak period. Because we have ongoing rate design proceedings underway for PG&E and SDG&E, it is possible that we will be able to accomplish implementation of this policy direction by Summer 2006 for PG&E and SDG&E. SCE will soon file its next rate design proceeding, so we could implement this policy direction for Summer 2007 for SCE.

In the proposed decision, we directed the assigned ALJs in A.04-06-024 and A.05-02-019 to suspend their current schedules and establish new schedules so that the applicants and parties could prepare revenue allocations and rate designs for PG&E and SDG&E consistent with the above principles. Many parties took issue with suspension of the current schedules. After reviewing the comments we do not require the schedules to be suspended. Instead we clarify, as described in Section 6.2, that the CPP rate design should be an additional rate design exercise performed utilizing the marginal cost studies and revenue allocated to 200 kW and above customers, in addition to the need to perform the rate design as it has traditionally occurred. The effort to develop a CPP tariff should be performed consistent with the principles described in this decision but we do not believe this requires us abandoning our normal process with respect to marginal cost studies and revenue allocation.

Many parties point out that it would be useful for the rate design process to occur for all utilities jointly to promote consistency. We agree, and instead of closing this proceeding, will institute a second phase that will begin with an August 1, 2005 filing by PG&E, SCE, and SDG&E. This consolidated second phase will utilize the principles laid out here to develop a consistent methodology for unbundling the critical peak period costs, calculating the no-call revenue requirement, and establishing both the critical peak and non-critical peak rates. On August 1, 2005, PG&E, SCE, and SDG&E should file their proposed rate designs consistent with the principles described herein relying on the most recently adopted revenue allocated to customers 200 kW and above in the case of SCE, or the revenue proposed to be allocated to these customers in the ongoing rate design proceedings for PG&E and SDGE. As described in Section 6.2, because a new revenue allocation is not required to design the CPP rates, we can simply incorporate whatever revenue is allocated in the normal course of the ongoing Phase 2 GRCS to calculate the actual rates. Workshops may assist in developing this methodology and we encourage the parties to hold such meetings in advance of the August 1, 2005 filing. The focus of this consolidated phase will initially be on the methodology by which these principles should be implemented. The August 1, 2005 filings must propose a method that does not rely on credits or other adjustments to non-critical peak rates for critical peak events.

For SCE, its next revenue allocation and rate design should be filed consistent with the principles adopted today and updated based on the consolidated second phase.

Concurrently, we direct Working Group 2, which was formed as part of R.02-06-001, to conduct workshops during the upcoming summer to assist with development of customer education and support plans (building off Summer 2005 programs) for educating customers about critical peak pricing tariffs and development of a measurement and evaluation plan for both tariff impact assessment and customer education and support efforts. Regarding customer education, these efforts should include educating customers about the time-varying cost of power, the high cost of peak load, along with education about the potential technologies and techniques for managing peak load.

Regarding measurement and evaluation, we are particularly interested in additional work by Working Group 2 on how we can utilize the impact assessment information gained from evaluating CPP and demand response programs can be integrated into the Commission's resource planning process. For example, we are interested in seeing protocols developed, based on M&E results, to allow demand response resources to be counted for resource adequacy purposes. We remind the parties, as we laid out in D.03-06-032, that the CEC will supervise all M&E work in coordination with the utilities and the Energy Division that relates to demand response programs and efforts. As has occurred throughout R.02-06-001, the CEC and the Energy Division must play key roles in the monitoring and evaluation process, to ensure that the appropriate data is collected and made available for analysis to support programmatic evaluation. The Working Group 2 facilitator from R.02-06-001 is designated to work with the utilities and parties who wish to be included in this effort, to maintain the required level of coordination, including review of implementation plans, fine tuning of program implementation mechanics within the scope of this decision, and review of compliance filings or tariffs that may be required. In the event of disagreement that cannot be resolved within the Working Group 2 process, the facilitator will bring the matter to the attention of the assigned ALJ to R.02-06-001 who will resolve the matter in consultation with the Assigned Commissioner.

PG&E, SCE, and SDG&E shall provide all data and background information needed to implement the Working Group 2 monitoring and evaluation plan, under appropriate confidentiality protections, as needed, to those involved in the evaluation process. The utilities shall also make this data available to academic researchers, also under suitable confidentiality protection, to facilitate understanding of demand response. The CEC in coordination with the Energy Division shall supervise this work.