Discussion
A. Definition of "hard-to-reach customers"
We approved the BEC program for the purpose of reaching customers "who have not participated in demand response programs to this point." D.05-01-056 identified these customers as office building customers, while PG&E's approved Advice Letter 2681-E expands the definition of eligible customers to include hospitality and high-tech customers as well. Although we approved increases to the program's target load and geographic scope in D.06-03-024 and D.06-11-049, we did not revisit the issue of customer eligibility until Resolution E-4079. In that resolution, we recognized that hard-to-reach customers may exist across all sectors, and we therefore approved PG&E's request to make the program available to those customers regardless of sector. However, in so doing, we neglected to provide a clear definition of what constitutes "hard-to-reach" customers.
TURN supports reinstating the limitation on BEC program eligibility to office, hospitality and high-tech customers, arguing that the BEC program was intended to target commercial office buildings because of their large potential for reducing commercial air conditioning load.5 We do not interpret our approval of the BEC program so narrowly. We have consistently identified the BEC program's purpose as being to target hard-to-reach customers. Although we previously identified office buildings as being hard-to-reach customers, they are not necessarily the only customers that can be characterized as "hard-to-reach."
Indeed, as TURN suggests in its response, peak period load-shifting by large commercial buildings in response to time-of-use rates may indicate that even office-building customers may not necessarily be hard to reach. Defining "hard-to-reach customers" by reference to their behavior rather than to customer sector appropriately excludes "easy-to-reach" office-building customers who do not require the BEC program's special attributes in order to participate in a demand response program.
PG&E contends that the application to modify the resolution should be denied because the Joint Petitioners do not identify factual or legal error. PG&E is correct that, pursuant to § 7.7.2 of General Order (GO) 96-B, an application for rehearing of a resolution must identify error. However, the Joint Petitioners' application to modify the resolution is governed by § 7.8, which subjects it to Rule 16.4 of the Commission's Rules of Practice and Procedure regarding applications for modification.6 Petitions for modification are not required to allege error.
PG&E contends that the petition to modify D.06-11-049 (and presumably, with the explanation above, Resolution E-4079 as well) should be denied as there is no change in circumstances since the decision and resolution were issued that would support the requested modifications. Although changed circumstances may support a petition for modification, neither Rule 16.4 of the Commission's Rules of Practice and Procedure nor D.07-01-007, which PG&E cites in support of its contention, requires them.
PG&E suggests that the Commission approved the expansion of the BEC program beyond the office, hospitality, and high-tech sectors well before Resolution E-4079. Specifically, although Schedule E-BEC originally limited eligibility to customers "in the office, hospitality, and high-tech sectors," PG&E points out that Advice Letter 2804-E, submitted in compliance with D.06-03-024 approving demand response programs for 2006-2008, revised the tariff language to expand the program to customers in "sectors such as office, hospitality, and high-tech" (emphasis added). We note that PG&E did not propose this expanded program scope in its testimony on demand response programs for 2006-2008 or identify it in the text of Advice Letter 2804-E; PG&E continued to characterize the BEC program as limited to hard-to-reach customers in its August 30, 2006 proposal to enhance the BEC program and in its September 15, 2006 comments in response to the Administrative Law Judge's request; PG&E did not undertake to correct our description of the program, in D.06-11-049, as "designed to subscribe hard-to-reach customers;" and PG&E characterized its request in Advice Letter 2980-E as seeking to expand the program eligibility "to sectors beyond the current office, hospitality, and high-tech" (emphasis added). Our -- and PG&E's -- apparent oversight in allowing this changed tariff language in Advice Letter 2804-E without deliberation does not preclude us from reviewing it now.
PG&E argues that limiting the BEC program to hard-to-reach customers is inconsistent with the Commission's goals to increase demand response. We disagree. We approved the BEC program for the purpose of procuring demand response load reductions from customers whose needs had not been met by our other demand response programs, which is consistent with our overall goal to increase demand response. We have not expanded the BEC program purpose by any prior order or resolution. To do so now would require the consideration of facts and issues that cannot be resolved on the current record, e.g., the design of the BEC program, the relative cost and effectiveness of the BEC program, and the impact of a broader BEC program scope on the aggregator demand response contracts.7
We believe that one of the attractions of demand response as a resource is the dispatchability that it can provide the system. To have customers enroll in programs but never act - never actually reduce load - negates a very important benefit of these programs. Enrolled customers who have not participated in a demand response event may be induced to actively participate in a demand response program through the additional level of customer service and instruction that the BEC program provides. In actuality, these customers could be persuaded to participate in demand response events if any demand response provider provided additional services to them. These "passive" demand response customers represent valuable MW reductions that could be achieved if demand response providers put forth an extra effort to reach these customers.
However, if we adopt the definition of hard-to-reach put forth by the Joint Petitioners, the BEC, and only the BEC, would be prohibited from reaching certain customers that represent potential MW savings. PG&E and the joint Petitioners would still be able to market to these customers. The state of California has extremely aggressive demand response goals that will only be achieved if all providers are innovative and aggressive in achieving targets.
Therefore, we find merit in the proposed definition of what constitutes "hard-to-reach" customers proffered by both the Joint Petitioners and PG&E. As such, we modify Resolution E-4079 to define "hard-to-reach customers" as customers that (a) have never participated in a PG&E demand response program event and (b) have rejected participation in at least one PG&E demand response program other than the BEC program. This definition includes customers who may have enrolled in another of PG&E's demand response program, but have not actively participated.8 This definition reasonably identifies the customers that the BEC program is intended to target. This definition also furthers the Commission's goals of achieving actual load reductions through available demand response programs and not simply enrolling customers in programs.9
Further, we deny the Joint Petitioners' request to also reinstate the program's previous limitation to customers in the office, hospitality and high-tech sectors. The purpose of the BEC program is to reach hard-to-reach customers. While the phrase "office, hospitality and high-tech customers" has served as a reasonable proxy for "hard-to-reach customers," it inevitably excludes hard-to-reach customers in other sectors. Modifying Resolution E-4079 to define "hard-to-reach customers" as discussed above adequately limits the BEC program to its approved purpose while enabling it to increase demand response consistent with the Commission's goals.
B. Application for Seven-Year Extension
We deny, without prejudice, the Joint Petitioners' request that we modify D.06-11-049 to require PG&E to request a seven-year extension of the BEC program as part of an application for authorization of its 2009-2011 demand response programs, rather than by separate application. It may be appropriate to review PG&E's proposal in the context of our review of the 2009-2011 demand response programs. However, it is premature to make that determination today without seeing PG&E's proposal. The Joint Petitioners may protest PG&E's separate application to extend the BEC program on the grounds that they state here, if and when PG&E files one. We modify D.06-11-049 to clarify that we do not require PG&E to request extension of the BEC program by a stand-alone application, but merely require that PG&E seek any such extension as part of a formal application.
5 TURN remarks that it would question including "high-tech" as an eligible sector.
6 Some confusion may be attributed to the fact that a "petition" for modification of a resolution must be filed as an "application" in order for the Commission's Docket Office to assign it a docket number. Nevertheless, the pleading is substantively treated as a petition for modification under Rule 16.4.
7 As directed by D.06-11-049, these broader issues are to be addressed when PG&E applies for authorization to extend the BEC program.
8 For the purposes adding additional clarification to the definition above we define 'never participated' to mean that a customer has not dropped load from the system in response to a demand response event (irrespective of whether a bid was made or not).
9 See, Energy Action Plan II, September 21, 2005. Key Actions #5 - Create standardized measurement and evaluation mechanisms to ensure that demand response savings are verifiable. Page 5. Available at: http://www.energy.ca.gov/energy_action_plan/2005-09-21_EAP2_FINAL.PDF
