4. Joint Petition and Comments
In the Joint Petition, the utilities contend that modifications to D.06-06-063 are required to ensure that there is no double-counting of costs for midstream/upstream programs or for direct-install programs under the current Commission's formulation of the TRC test.
In particular, the utilities express concern that the Commission's direction to treat direct-install costs as program administration costs (i.e., in the PRC term) does not recognize that participant costs (i.e., the PC term) should commensurately decrease to reflect the participant's lower out-of-pocket costs. They request that the decision language be clarified to indicate that the PC term would now effectively be zero. Alternatively, they recommend that the Commission modify D.06-06-063 to permit inclusion of direct-install costs in the PC term, and then adjust that term by the NTG ratio to exclude the direct-install costs associated with free riders.
The utilities also express concern that making midstream/upstream program costs part of program administrative costs without reducing the participant cost term would double count the costs of the energy-efficient measures involved. At a minimum, they suggest that D.06-06-063 be clarified to recognize that the PC term should be reduced by the amount of the retail price reduction attributable to the midstream/upstream payments.
As an alternative to the above recommendations, the utilities propose (and prefer) that the Commission allow transfer payment treatment for midstream/upstream incentives and direct-install program costs, without any adjustments to the PC term. They urge the Commission to clarify the theoretical basis for treating some incentives as transfer payments, while not others, and whether it wants incentive payments made to free riders included in the TRC calculation or not.
In its comments, Ecology Action and NRDC share the general concerns raised in the Joint Petition. In particular, Ecology Action believes that the Commission's direction in D.06-06-063 and in the Compliance Ruling would give traditional mail-in rebate programs an unwarranted TRC advantage over successful direct-install program.
DRA supports the Commission's directives in D.06-06-063 and the Compliance Ruling on how to calculate the TRC test. In DRA's view, foundational documents, including the SPM and the policy rules, define the correct treatment of program costs for all distribution methods (traditional rebate, direct-install and upstream/midstream programs), and that no one method is either advantaged or disadvantaged by the application of the TRC prescribed in D.06-06-063. However, noting that D.06-06-063 is silent on how to treat "free rider" costs in calculating TRC costs, DRA observes that there could be a disadvantage imposed on non-direct rebate programs, depending on how this issue is resolved.20 More generally, DRA recommends that specific clarifications to the SPM or policy rules should be made to reflect the proper treatment of program costs, and to develop additional numerical examples for direct rebates, direct-install and upstream/midstream programs in spreadsheet format to facilitate comparisons under various scenarios.
20 As discussed above, the comments on the Joint Petition were submitted before we issued D.07-09-043, which addresses how free riders would be accounted for in TRC costs.
