7. Other Issues

We briefly address other recommendations which we do not adopt at this time.

7.1 Customer Recognition Program

Energy Division recommends a program to recognize and thank all residential and local government customers who reduce load by at least 7% in Summer 2001 compared to Summer 2000. Such customers would be recognized as energy savers. Customers maintaining that level of energy reduction for at least two consecutive months (May to October) would receive a certificate of appreciation from the Governor, and be included in a list of energy savers on a web page maintained by the Commission.

Respondent utilities express their willingness to implement this program, but raise legitimate concerns. For example, no cost-effective technology currently exists to accurately measure voluntary load reductions for the proposed recognition program. Measurement of load reductions would be difficult, with annual usage varying up to 15% based on many factors (e.g., changes in number of family members, changes in work or school hours, temperature fluctuations). Procedures to normalize consumption data may be adopted, but time is limited to develop, test and implement a procedure for mass screening of consumption data over two years for millions of customers.

Neither costs nor benefits for this program are clear. Costs for the printing and mailing of potentially millions of certificates alone could be significant. Questions of confidentiality are unanswered, particularly regarding the list of customer names on a web page maintained by the Commission. Little public support has been expressed for this program. As a result, we think limited resources available to the Commission, respondent utilities, parties, and the State are better spent on other programs.

7.2 Exempting Water and Sewer Districts, and Ancillary Government Services

The Association of California Water Agencies (ACWA), and several individual water districts, request Commission revision of existing essential customer regulations so that water services essential to public health, safety and welfare are exempted from rotating outages. They point out that current regulations allow water and sewer utilities to request partial or complete exemption from rotating outages in times of emergency requiring their services, such as fire fighting. They allege that the exemption is too limited, however, and point out that emergency response by the utility may not be immediate.

In particular, Santa Margarita Water District (SMWD) points out that disruption of sanitary sewage treatment and disposal systems resulting from rolling blackouts would almost certainly result in sewage spills, thereby endangering public health and safety. Moreover, SMWD says loss of electricity creates the danger of losing water system pressure, thereby providing the potential for contaminants to enter the water system. The Health Department requires bacteriological testing whenever pressure is lost in a pipeline, according to SMWD. SMWD says these tests take up to 48 hours, so that a blackout of two hours may result in disruption of water service for two days.

We appreciate these matters being brought to our attention. We received requests for modifications to our essential customer list from many customers. There is virtually no customer without some good argument for the essential nature of their use of electricity.

Expanding the list of essential customers, however, must be balanced with the detrimental effect this has on all non-essential customers (e.g., by increasing the potential frequency and duration of rotating outages for a smaller pool of non-essential customers). In PG&E's case, for example, there are approximately 1,000 circuits that would be impacted by categorically exempting this class of customer from rotating outages. This would cause a significant increase in the potential frequency and length of rotating outages absorbed by all other customers on non-essential circuits.

In this case, we find that water and sewage treatment utilities generally have backup generation or other capacity for operation and storage during power interruption. Rotating outages have not historically been a primary cause of power interruptions. Nonetheless, water and sewer utilities have properly and reasonably prepared for power interruptions due to a number of causes.

ACWA and others caution against reliance on standby generation since its capacity may be limited or unreliable. We recognize there may be limitations. In balancing the many competing interests before us, however, we must rely on water utilities installing and maintaining adequate backup generation and other facilities to permit continued operations during reasonable periods of electricity shortages. These shortages may occur from any number of causes, including weather, equipment failures, or the currently dysfunctional market. We are confident that water and sewer utilities have taken these many contingencies into account.

Further, our existing rules allow water and sewer utilities to request partial or complete rotating outage exemption, or partial or complete service restoration, based on an emergency. We are confident that water and sewer utilities can, and will, communicate clearly with respondent utilities about emergencies, and that respondent utilities will respond properly in the face of an emergency. We recognize the essential nature of water and sewer utilities, but we presently have insufficient evidence to justify expansion or modification of the exemption to which they are currently eligible.

ISD/LAC supports the limited review mechanism that would allow some customers out of interruptible programs when their load significantly affects the public health, safety and welfare. (Energy Division Report, page 47.) ISD/LAC urges that essential support agencies (e.g., data processing, courts) also be considered when considering the public health, safety and welfare role of hospitals and jails.

We decline to adopt the review mechanism.²⁸ We also decline to specifically include support service agencies in our list of essential customers. On balance, without very compelling reasons to the contrary, we need to increase, not decrease, the number of circuits available to absorb mandatory curtailments. In Phase 2, we will consider including jails along with prisons in our essential customer category, and other reclassifications parties may recommend, if sufficient evidence is presented to justify such reclassifications.

7.3 Continue Networks as Essential Customers

We currently authorize essential customer status to areas served by networks, at the discretion of the utility.²⁹ PG&E operates networks in downtown San Francisco and Oakland, involving approximately 20,000 customers and 400 MW.³⁰

Energy Division recommends that the feasibility of including networks in rotating outages be studied, particularly given advances in technology. PG&E argues that network service should continue to be excluded from rotating outages.

We are persuaded by PG&E to continue to exempt network services, at the discretion of the utility. PG&E does not currently have the capability to isolate a portion of the network. We expect PG&E to study this, however, as a part of the study that it will conduct on isolating essential customers. We do not, however, order any other or further assessment of including networks as a whole in rotating outages.

7.4 Advance Notification

Several parties ask that they be given more than 30 minutes notice before an outage. Some interruptible program proposals are linked to more or less notice.

We decline to order any more notice than respondent utilities are able to now give. The ISO determines when an outage is required, how much, and where. We are persuaded by respondent utilities that they provide as much notice as they can, given the amount of notice they receive from the ISO.

Increasing the notice of an outage increases the uncertainty of the needed curtailment amount. That is, a shortage forecast one-day ahead will necessarily have a larger range of error than a shortage forecast made one hour, or 10 minutes ahead. There is clearly a trade-off between the accuracy of the needed curtailment and the amount of notice.

We will not order the ISO to change its practices. Nonetheless, we recommend that the ISO and utilities study this matter further.

In particular, we direct respondent utilities to study and report on methods and systems they might use to provide more advance notice to customers of likely rotating outages. For example, every morning that outages are likely utilities might use mass media to announce the sequence of block numbers expected to be subject to rotating outages that day, with approximate times. In addition, every morning each utility might post this information on its web site, or other easily accessible site.

Each respondent utility should file and serve this report by May 1, 2001. The document should report on existing methods and systems used by each respondent utility, and any new methods or systems each utility has, or will, implement for Summer 2001.

7.5 Scheduled Load Reduction Program

Joint parties recommend a Scheduled Load Reduction Program (SLRP). (Item II.B.4 in the February 14, 2001 Joint Proposal.) In this program, a participant identifies a specific 2 to 4 hour period, one or two times per week, coincident with ISO-determined morning or evening system peak conditions, when the participant agrees to drop a preset amount of load. The participant would be under a standing order to curtail such load during these times.

We decline to adopt the SLRP for three reasons. First, program benefits are uncertain given no guarantee that load reductions will be needed at scheduled times. As noted above, the further away the forecast of need from actual operating conditions, the larger the likely range of error between scheduled reductions and actual need.

Second, scheduled load reductions may be offset by load shifts to another time. Joint parties state that program compliance would require a participant not shift load to another day, or to a peak load hour when there is no curtailment. No measures are proposed to implement this condition, however, and we are not persuaded that reasonable measurement of, and enforcement against, load shifting can be developed in the short time we have to implement programs for Summer 2001. Some, if not most, participants would feel great pressure to shift load to meet production schedules, or meet other business obligations. There would be an inherent conflict built into this program that is not sufficiently well understood to provide reasonable confidence of program success.

Third, we are uncertain about program cost-effectiveness. Joint parties say that the Commission may determine the per kWh incentives before beginning the program. No specific proposals are made, however. Assuming the payments are made all year, the program may be very expensive for little load reduction coincident with need. Program participation is unknown at moderate price levels reflecting this uncertainty. Other pricing options are not sufficiently developed to evaluate. We think participants in the SLRP are good candidates for the VDRP, and that the VDRP better matches participation with need.

We welcome all creative proposals to help us through Summer 2001 and beyond. We decline, however, to spend the limited time and resources of parties and the Commission to further develop the SLRP given the immediate need to authorize and implement programs for Summer 2001, and given other more promising programs, such as the VDRP. Parties might further develop the SLRP for later consideration and adoption.

Several parties commenting on the DD recommend reversal of the decision to not adopt SLRP. Parties point out, for example, that time of use of interval meters may be used to measure load shifts, with penalties attached as necessary for those shifts. Parties assert that everything must be done to address probable Summer 2001 shortages, and SLRP is one tool of many that should be adopted.

We are not convinced. The SLRP is not yet sufficiently well developed by parties to adopt. We must balance adopting anything and everything proposed that might possibly help, with programs that are most likely to be cost-effective and successful.

We encourage parties to continue to work on the SLRP, and bring back a more developed proposal, including measurement of load shifts, prices for participation, and penalties for load shifts. The proposal may be made by petition for modification presented before Summer 2001, or in Phase 2. While a single party may make such proposal, the most convincing proposal would be one subscribed to by as many parties as possible. Thus, we encourage interested parties to coordinate development of a proposal to the extent feasible.

7.6 Other Recommendations

We carefully considered all other topics, recommendations and arguments raised by parties, but are not persuaded to make any other changes for Summer 2001.