DISCUSSION
The Commission remains committed to the energy conservation objectives of the EAP and EAP II.
We are committed to the principles expressed in the EAP and EAP II and are determined to pursue effective ways for Californians to save energy. This determination guided our actions last year when we adopted PG&E's initial gas bill rebate program. At that time we were faced with the prospects of exceedingly high winter natural gas prices due to Hurricanes Katrina and Rita. Responding to this crisis, we authorized measures to intensify energy conservation efforts including last winter's PG&E gas bill rebate program. Fortunately, we are not presently confronted by such dire circumstances although the hurricane season has yet to pass. Nonetheless, our challenge to attain ever increasing levels of energy conservation remains.
PG&E customers achieved natural gas savings and earned gas bill rebates under last winter's program.
We approved PG&E's WGSP last year with the expectation that eligible customers would respond to the incentive of a gas bill rebate and significantly lower their natural gas usage. Our view was premised on the program's considerable customer benefits. First, they would get a 20 percent rebate on the cumulative amount of their January through March 2006 gas bills if they met the 10 percent conservation threshold. This would lower their expenses since recovery of the rebates was spread over all of PG&E's residential and small commercial customers (assuming not all eligible customers earned a rebate). Second, their gas bills would be less because the customer consumed less natural gas. An indirect benefit was the possibility that reduced natural gas usage resulting from the program coupled with other conservation measures would decrease overall demand leading to lower natural gas prices.
Consistent with our expectations, it is apparent from PG&E's assessment of last winter's WGSP that a considerable number of customers took advantage of the program. In AL 2753-G, PG&E reported the results of last winter. The utility said that, despite cold weather in February and March 2006, approximately one in five residential and small commercial customers earned a gas bill rebate and that natural gas consumed during the 3 month period from these customers was on average 28 percent lower than the same period last year.
We find that these results indicate wide customer acceptance of PG&E's WGSP and that residential and small commercial customers are receptive to the opportunity to earn a gas bill rebate for reduced natural gas usage. It is reasonable to assume that these customers would again seek to enjoy the benefits of such a program in the future.
The changes to PG&E's 10/20 Plus WGSP from last winter's program are positive.
The basic concept of the proposed 10/20 Plus WGSP is the same as last winter's program - to offer eligible customers a gas bill rebate for a reduction in natural gas usage. However, there are several notable changes to the proposed program. First, eligibility has been expanded to include all commercial customers. Second, customers reducing their consumption of natural gas below 10 percent will earn a gas bill rebate. Third, weather effects on natural gas consumption will be considered in an attempt to reward earnest efforts to save natural gas. Finally, a three year average of past natural gas usage will be used to determine natural gas savings.
We find that these modifications represent an improvement over last winter's program. Potentially more natural gas will be conserved since large and medium commercial customers are eligible to qualify for a gas bill rebate. Additional natural gas savings may be generated through the lowered conservation threshold needed to earn a gas bill rebate. As such, customers already minimizing their natural gas usage will have an incentive to seek further incremental reductions. Weather normalization serves to ensure that only true conservation efforts will be rewarded. Using a three year average of prior natural gas usage will provide customers who rigorously conserved natural gas in response to last winter's program with a better opportunity and the impetus to earn a gas bill rebate next winter as well.
In addition to these enhancements, the aforementioned customer benefits of last winter's program - saving natural gas and an opportunity to reduce household utility expenses - are also an attribute of the proposed 10/20 Plus WGSP.
The agreement between PG&E and DRA, with TURN's concurrence, is reasonable and is adopted.
PG&E and DRA have agreed to revise PG&E's original proposal regarding the recovery of 10/20 Plus WGSP rebates and costs from residential customers. Rather than collecting this money over a 12 month period beginning January 2007, it was agreed to change the collection period to April through October 2007. TURN also concurred with this revision. The change was made because the agreed to period is a timeframe when residential gas bills tend to be lower as compared to the winter.
We find the agreement reasonable and adopt it. PG&E will be ordered to file a supplemental advice letter to include this modification to its proposed 10/20 Plus WGSP.
PG&E has adequately addressed WMA's protest, but the utility should follow through on its intention to notify its master-metered customers concerning the distribution of gas bill rebates to sub-metered tenants.
WMA claimed that PG&E's proposal violated D. 04-11-033 regarding the procedures for the distribution of refunds to the sub-metered tenants of mobilehome park owners. The protestant also seeks clarification that natural gas usage under the plan will be measured through the master-meter.
PG&E responded saying that Special Condition 10 of tariff Schedule 10/20 filed with AL 2753-G adequately addresses these concerns. The utility also said it intends to send a letter to all master-metered customers with sub-metered tenants explaining the nature of the gas bill rebate and provide examples of how the rebate should be passed through.
In consideration of PG&E's reply, WMA notified ED and PG&E that its concerns have been satisfied.
We have reviewed this matter and conclude that PG&E's response is consistent with D.04-11-033 provided the utility acts on its intention to issue the notification it describes to mobilehome park owners (the utility said it would issue the notification to all of its master-metered customers).4 Therefore, we order PG&E to follow through on its intention and to issue a notification to all of its master-metered customers with sub-metered tenants explaining the nature of the gas bill rebate and illustrating how the rebate should be passed through to their sub-metered tenants.
Further, it is important for sub-metered tenants to understand that PG&E will issue gas bill rebates according to the aggregate quantity of natural gas a facility's tenants used as measured by the master-meter. As a consequence, an individual sub-metered tenant might not get a gas bill rebate although they conserved natural gas. To heighten sub-meter tenant awareness of this possibility and the benefits of acting collectively, PG&E should prepare a notice clearly explaining the conditions by which sub-metered tenants would earn a gas bill rebate.5 This notice should be provided to the utility's master-metered customers with the suggestion that copies of it should be furnished to their sub-metered tenants or that it is prominently posted in a common area of the master-metered facility. PG&E shall confer with our Public Advisor's Office to draft appropriate language.
Moreover, our examination of this issue suggests the need for a better method for distributing gas bill rebates to sub-metered tenants. Under the current methodology that is consistent with P.U. Code section 739.5(b), sub-metered tenants with the highest level of natural gas usage will receive the greatest proportion of any gas bill rebate. This outcome seems counter to the program's objective of rewarding customers who minimize their natural gas usage.
We note that D. 04-11-033 contemplated that refunds to sub-metered tenants related to "special programs" might require different, more tailored allocation methods.6 The nature of the 10/20 Plus WGSP is suggestive of a "special program" and the issue discussed above indicates that alternative gas bill rebate distribution methods should be considered. However, we will not delay our approval of PG&E's proposal on this point, but will request that if PG&E submits a similar proposal in the future that the utility provide us with alternative ways gas bill rebates can be allocated to sub-metered tenants. These alternatives should be designed to meet the objective of equitably rewarding those sub-metered tenants that conserve natural gas and be consistent with P.U. Code section 739.5(b). PG&E may consult with WMA and others in this effort.
PG&E's 10/20 Plus WGSP as modified by its agreement with DRA is adopted.
Because the 10/20 Plus WGSP should benefit PG&E's residential and commercial customers and will promote the conservation of natural gas, we approve the program as modified by its agreement with DRA. Amounts collected and unspent by PG&E for marketing and implementing the program shall be retuned to the utility's residential and commercial customers.7
4 We note that the requirement of D.04-11-033 Ordering Paragraph 9 applies only to mobilehome park owners.
5 Such a notice could be in the form of a brochure or other suitable type of printed media. PG&E may also include in the notice a reminder to their master-metered customers of their obligation under P.U. Code section 739.5(e) to post the utility's applicable prevailing residential gas and electric rate schedules in a conspicuous location - this includes Schedule G- 10/20 Plus - Winter Gas Savings Program.
6 D. 04-11-033, Ordering Paragraph 10.
7 In AL2753-G, PG&E is requesting $5 million for these activities.
