7. Allocation and Ratemaking
Treatment of SGIP Costs
The Commission implements the SGIP, an incentive program to promote the development of self-generation facilities, such as microturbines, wind turbines, photovoltaic, and fuel cells installed on the customer's side of the meter and that provide a portion or all of the customer's electric load. Although the program affects electric customers primarily, its costs are allocated to both gas and electric customers.
PG&E, TURN and ORA propose that the SGIP costs be allocated on an equal cents per therm basis. PG&E would excuse wholesale customers from assuming a share of the costs because they are excluded from participating in the SGIP program. TURN and ORA observe that the Commission has consistently allocated the costs of environmental programs, such as the SGIP, on an equal cents per therm basis.
CCC/CMTA proposes the Commission allocate SGIP costs using the same allocators its uses for energy efficiency programs. First CCC/CMTA argues that allocation of SGIP costs to electric generator gas rates would result in electric consumers paying twice for SGIP costs, once in their gas rates and again in the cost of gas-fired electric power. CCC/CMTA observes that the Commission has excluded EGs from paying for the Low Income Ratepayers Assistance Program because of the potential for double payment by electric customers. Such a double payment would, according to CCC/CMTA, unreasonably "tip the competitive balance between gas-fired and non-gas fired EGs in favor of the latter." CCC/CMTA's allocation proposal would exclude EGs from the allocation. NCGC supports CCC/CMTA's proposal, offering similar argument.
PG&E's allocation proposal does not result in double recovery. It does, however, require EGs to, in effect, pay twice for the SGIP program. We see no inequity in this in that the Commission could have logically allocated all SGIP costs to electric customers. Consistent with our view that all customers should pay for program that provide environmental benefits, we include wholesale customers in the allocation of SGIP costs as well as EG customers, and adopt PG&E's proposal to allocate the costs on an equal cents per therm basis.
We also address NCGC's objection to PG&E's proposal to recover SGIP costs through a balancing account rather than a memorandum account. NCGC states PG&E did not explicitly propose this change in recovering SGIP funds but its witness disclosed PG&E's intent to make this ratemaking change if the Commission were to adopt its proposal to update gas balancing accounts annually. Currently, PG&E records SGIP costs to a memorandum account and asks to have related expenditures included in rates by way of advice letters. NCGC opposes this change in ratemaking, observing that the Commission is considering issues related to the SGIP in its rulemaking on distributed generation, R.04-03-017. We agree with NCGC's underlying concern that PG&E's spending on the SGIP should be reviewed. On the other hand, we need to adopt a mechanism by which PG&E can recover SGIP expenses that are found to be reasonable. We authorize PG&E to apply for recovery of SGIP expenses in the annual advice letter, as it proposes. For this funding period, ORA has reviewed the accounts and we accept PG&E costs. We will authorize recovery of those expenses in future funding periods only after the reasonableness of those funds have been reviewed by the Commission, either in the SGIP proceeding, R.0403017 or as part of the advice letter process.
