6. Discussion
This application stems from D.06-11-049, which was also the impetus for the applications approved in D.07-05-029. When we approved five PG&E demand response contracts and one SCE demand response contract in D.07-05-029, we relied on concerns about reliability for the summer of 2007, stemming from the previous year's heat storm. In D.07-05-029, we did not factor in cost-effectiveness in our decision to approve those contracts because of the overwhelming concern that sufficient resources be available to meet system and local reliability needs for summer 2007.
However, there are certain differences in this application compared to that in D.07-05-029. First, another year has passed since the 2006 heat storms, with no comparable events occurring in 2007. Second, we have more information about SCE's need for resources in future years. Third, we are further along with considering demand response cost-effectiveness methodologies in R.07-01-041. Fourth, SCE is required to file an application for 2009 through 2011 demand response programs in June 2008. With these considerations in mind, we will review the record in this proceeding.
6.1. Four Contracts Should be Approved
As discussed above, both TURN and DRA's main recommendation is rejection of all the Contracts. Yet, as an alternative solution, TURN believes one of the ASC contracts can be approved at this time based on cost-effectiveness while DRA believes both of the ASC contracts can be approved at this time. The difference between the TURN and DRA recommendations is that one of the ASC Contracts is more cost-effective sooner. However, both ASC Contracts are significantly better in terms of cost-effectiveness than any of the other Contracts.
In comments to the proposed decision, SCE suggests the Commission should consider approving a portfolio approach to cost-effectiveness. SCE's data in Confidential Appendix D of its testimony shows that two of the Contracts (NAPP and ECI day-ahead) can be combined with the two ASC Contracts to form a cost-effective portfolio, under the Framework's methodology.
We have determined that we will neither accept nor reject any of the Contracts solely because of cost-effectiveness results by any of the measures in the record. However, everything else being equal, we look more favorably at Contracts which are more cost-effective. Having reviewed SCE's confidential cost-effectiveness data, we find that the ASC Contracts perform the best on the various cost-effectiveness tests. Therefore, these two Contracts merit further review. We now will consider whether there are additional factors which distinguish either or both of these two Contracts from the four Contracts we reject at this time.
Comparing the ASC Contracts to the other proposed Contracts, the record shows the ASC Contracts structure is performance weighted. Our review of the confidential material in the record shows that participants under the ASC contract will receive a greater part of their incentive monies for performance as opposed to reservation of capacity. This unique structure among the eight Contracts enables the ASC Contracts to exhibit superior cost effectiveness.6 Well-designed performance incentives are an important factor in demand response programs, due to the imperative that the program operates as anticipated when called upon. The ASC Contracts are structured in such a way as to provide greater confidence that the demand response will appear when needed.
Relatively cost-effective demand response programs which confidently can be relied upon to perform as expected are useful to ratepayers and the overall grid even without a reliability need. This usefulness occurs because an effective reasonably-priced demand response program can substitute for more expensive and/or less reliable resources when called upon. We find that the two ASC Contracts will provide overall benefits based upon their combination of program design and relative cost-effectiveness characteristics. Therefore, we will approve the two ASC Contracts.
In addition, the NAPP and ECI day-ahead Contracts, when combined with the ASC Contracts, make up a cost-effective portfolio under the TRC test of the Framework. Neither the NAPP Contract nor the ECI day-ahead Contract exhibit the favorable performance structures of the ASC Contracts. However, our policy preference for moving toward a demand response goal of 5% of system peak load leads us to look favorably upon a portfolio of cost-effective Contracts. Therefore, we will also approve the NAPP and ECI day-ahead Contracts. However, we note that, as the load impact protocols and cost effectiveness measures become more developed, we intend to move away from approval of demand response programs based on a portfolio approach. The improvements to our demand response rules that are currently being developed in R.07-01-041 will add significant transparency to our overall program goals and evaluation of individual contracts and programs.
6.2. The Contracts Include Innovative Demand Response Elements
SCE contends the Contracts meet the Commission's objective to add innovative third-party resources to SCE's portfolio. SCE points to D.06-11-049 and D.07-05-029 as decisions where the Commission demonstrated a commitment to establishing third-party demand response resources that can unleash innovative ways to increase customer participation in price responsive demand response. While SCE admits the third-party Contracts in this application are more costly than traditional demand response resources, SCE contends the Commission has previously taken and should here take a longer-term view of the value of these Contracts, anticipating that the costs may come down over time as the demand response market continues to develop.
Each Contract involves a third-party aggregator which would target specified customers for dispatchable demand response programs for aggregated bundled Direct Access and Community Choice Aggregation customer loads to reduce demand at peak times in ways appropriate for those customers. AER notes that the Contracts have firm, dispatchable, ramping trigger provisions that enable activation by a direct dispatch signal or by response to price. The Contracts vary in their delivery periods, the duration per event, the maximum number of events per month and year, and their pricing terms.
SCE is correct that we support innovative third-party demand response programs, just as we also support innovative third-party energy efficiency programs (and innovative utility programs). In D.07-05-029, we stated that the contracts in the underlying demand response applications "have resulted in innovative demand response agreements,"7 and found that "the agreements may provide valuable experience with alternative ways of procuring and managing demand response programs."8 The third-party Contracts in this application have similarities to the contracts approved in D.07-05-029. SCE has shown that the Contracts have terms (some of which are confidential) that provide SCE both operational flexibility and the ability to be dispatched for reliability and price response needs. We are encouraged to find these Contracts contain innovative terms. However, innovation is not sufficient to allow approval. We consider this a supporting factor in considering the Contracts, not a dispositive factor.
6.3. The Contracts Help SCE Meet its 5% Goal of Price Responsive Demand Response, but this Goal Alone is Not a Sufficient Rationale for Approving all of the Contracts
SCE contends the Contracts are needed in 2008 to help achieve the Commission's goals for price responsive DR in 2008. Extending out from the goals set forth in D.03-06-032, SCE cites the Commission's demand response goal for 2008 of 5% of total system peak load. While the Commission's 2007 goal was 5%, the Commission has not adopted a demand response goal for 2008.9 For reasons of resource adequacy, D.07-12-052 adopted the 5% goal for 2008 stating, "We emphasize here that the IOUs should continue to aggressively increase their DR portfolios to meet the 5% system peak demand goal until the goal is otherwise modified in R.07-01-041 or any subsequent DR proceedings."10
SCE calculates a 5% demand response goal to equal nearly 1,200 MW for 2008. SCE's testimony shows that, as of August 31, 2007, its portfolio had approximately 256 MW of price responsive load. With the proposed Contracts and other programs, SCE shows a potential of reaching the 1,200 MW goal by 2013.11
SCE's desire to meet the Commission's demand response goal is commendable. Demand response is one of the priorities in the loading order we endorsed in the Energy Action Plan, after energy efficiency. However, movement toward our quantitative demand response goal cannot be considered in a vacuum. For example, TURN believes the demand response goals assume that such price responsive demand will be cost-effective.12 As discussed herein, TURN's view is supported by D.06-11-049 (the original impetus for this Application), in which the Commission stated that "seeking proposals directly from customers and aggregators could potentially unleash innovative and cost-effective demand response technologies and activities."13 This argument is also supported by D.07-05-029, which stated "The Commission hoped that the utilities' solicitations would result in cost-effective demand response proposals."14 Thus, SCE's argument that we should approve the Contracts to help meet demand response goals is useful more as a supporting argument for approval of the Contracts than as a primary rationale.
The Commission's 5% demand response goal was created in 2003 to add a "tool to our regulatory tool chest."15 The goal was adopted while the Commission was contemplating dynamic pricing tariffs for large commercial and industrial customers.16 At the same time, the Commission was contemplating the implementation of the Advanced Metering Initiative.17 The related goals of 5% of peak demand reduction, price responsive demand response, and dynamic pricing for large commercial and industrial customers were adopted by the Commission as a vision document entitled "California Demand Response: A Vision for the Future (2002-2007)." Thus, the 5% percent goal was set when it was "anticipated many customers would have the advanced metering necessary to participate in price-responsive programs."18 This is not yet the case in SCE's territory.
Our primary interest in setting the demand response goals was to support the use of demand response resources as part of a clean, reliable, cost-effective, integrated set of utility resources. We did not, and do not now, intend for our demand response goals to be an open door through which any demand response program may enter, regardless of adherence to cost, reliability and related critical criteria. To the extent that the Contracts are appropriate based on such criteria as cost and reliability (or other appropriate criteria), the Contracts will help meet our demand response goals for SCE. To the extent that the Contracts do not meet our other criteria, we will not approve them simply to move toward these goals.
6.4. Relationship of the Contracts to Long Term Procurement, System Reliability Needs and the 2009-2011 Program Proposals
In D.07-12-052, the Commission's most recent decision on long-term portfolio plans (LTPP), the Commission looked at the need for additional resources from the perspectives of system reliability and bundled customer need. The system reliability need involves determining whether there are sufficient existing and anticipated resources available in the utility's overall electric service territory, in conjunction with the state's other electric utilities, to meet the Commission's established 15-17% planning reserve margin and allow all Load Serving entities (LSEs) access to a sufficient pool of resources to meet their individual resource adequacy needs. If existing and anticipated physical resources are deemed insufficient, utilities are authorized by the Commission to develop new system reliability resources. The bundled customer need requires the utility to meet the procurement needs of its bundled service customers in the near term and meet its individual Resource Adequacy obligations, including a 15-17% planning reserve margin, by contracting for new and existing physical system resources. Consequently, even if sufficient physical resources exist within a utility's service territory for system reliability purposes, it is possible for the utility to have a contractual need that could be filled with a new resource, such as a demand response program, rather than contracting with available existing physical resources such as older inefficient gas-fired plants.
In granting authority for new procurement, D.07-12-052 also states that, "(w)e make abundantly clear that any procurement authority granted herein shall in no way be used by the IOUs to instead reduce or adversely impact procurement of EE, DR, renewables, or QF resources to the maximum extent feasible." (D.07-12-052, p. 103.) Due to the long lead time needed to develop new electricity plants, the LTPP proceeding approves sufficient conventional resources to meet the PRM, up to 7 years in advance of when the resources are actually needed. Conversely, the Energy Action Plan resources are planned for on a shorter term program and development cycle. Accounting for these two planning mechanisms separately or in isolation may result in a preferred loading order resources shortfall or possible exclusion.
To ensure that procurement authority granted in the LTPP proceeding is consistent with the policies developed in the EAP and does not instead crowd out the development of future DR, SCE should strive to continue its efforts to encourage third party participation in its demand response procurement through its planning for demand response programs in the 2009-2011 program plans. The recent Administrative Law Judge's Ruling Providing Guidance on Content and Format of 2009-2011 Demand Response Activity Applications, along with guidance on load impact and cost-effectiveness, should be used to provide the specific direction on program design and Commission expectations consistent with this decision.
DRA contends the Contracts are not needed for 2008. DRA notes that SCE admits that it owns or has under contract approximately 430 MW of additional resources over and above its required planning reserve margin. Further, DRA points out that SCE's LTPP does not count an additional 40 MW of demand response resources for 2008.19
TURN claims that SCE has no need for the additional resources of the Contracts for at least 2008 and 2009, either for system reliability purposes or to meet the Resource Adequacy requirements of bundled service customers.20 TURN notes that D.07-12-052 did not identify any physical need for SCE until the year 2013.21 That Decision also found a resource surplus of 925 MW in the SCE territory in 2008, projected to increase to 1065 MW in 2009.22 Thus, TURN claims the SCE service territory will have sufficient resources to meet all customer demand and more than cover the 15-17% planning reserve margin without any of the resources provided under the Contracts for 2008 and 2009, or for several years thereafter.23 Further, TURN argues that SCE does not have a contractual need for the Contracts in order to meet its bundled customers' System or Local Resource Adequacy requirements in 2008 or 2009.24 This claim is based on confidential information provided to Florio via his participation in SCE's Procurement Review Group, and set forth in Confidential Appendix A to Florio's testimony. In reviewing the confidential material, we find factual support for TURN's claim.
SCE agrees that its planning reserves are at adequate margins for the summer of 2008. SCE also acknowledges that D.07-12-052 found there was no need for new physical resources in Southern California during the period of the Contracts.25 Responding to questions from the Administrative Law Judge (ALJ), SCE claims that the Contracts will help address its need for additional resources to meet expected reserve margins for 2009 through 2012.26 However, even though SCE's response to the ALJ references SCE's Testimony, the Testimony itself provides no support for this statement other than a reiteration of the statement. SCE's Testimony states:
As for resource adequacy needs, SCE's planning reserves for 2008 are at adequate margins. The Contracts will help SCE meet its planning reserves for 2009-2012. Although, SCE has met its planning reserve margin for 2008, SCE believes that the issue of whether the Contracts are needed for system planning purposes is overridden by the Commission's preference for clean, environmentally friendly alternatives to meet peak requirements.27
SCE further contends that, while it does not need the Contracts for system reliability purposes, the Contracts will help to meet resource adequacy capacity needs in the 2008-2012 period.28 SCE explains that this capacity need refers to the capacity SCE is required to own or have under contract to meet the needs of its bundled customers. However, SCE provides no evidentiary support for any resource adequacy capacity needs it asserts the Contracts will help meet, instead again citing several other purported benefits of the Contracts (e.g., meeting demand response goals).
While the Contracts as a group are not necessary at this time for reliability, the impetus for our exhortation in D.06-11-049 for SCE and others to seek out further demand response contracts was concern about reliability for the summer of 2007. SCE did sign one demand response contract for 2007, approved in D.07-05-029. In D.07-05-029, we stated "SCE should continue pursuing negotiations with other potential counterparties and file an application to seek Commission approval for any additional executed demand response agreements."29 SCE was able to show a need for its 40 MW demand response contract in 2007. SCE has not shown a need for an additional 118 MW in eight new demand response Contracts for 2008 (increasing up to 453 MW in 2011).
6.5. Approval of Four Demand Response Contracts will further the Commission's Goal of Increasing Cost Effective Demand Response While Balancing the Need to Guard Against Shortages During Summer Peak Periods
Demand response can act as a buffer, not only against peak energy prices, but against resource shortage. We have long considered it prudent for electric utilities to maintain resources above the level necessary to meet expected peak demand. Our current policy explicitly requires a planning reserve margin of 15-17% above expected peak levels. This planning reserve margin provides a reasonable level of what can be considered "insurance" to protect against extreme weather, generation outages and other contingencies.
SCE cites D.07-01-041 as an example of the Commission approving a power purchase agreement for SCE to come on line in summer 2007, even though the Commission found that SCE had already met its planning reserve margin for that summer. In D.07-01-041, the Commission found it prudent and reasonable for SCE to acquire capacity above planning reserve margins to provide an "insurance policy" against rolling outages during summer peak periods.30 SCE claims experience in July 2006 and September 2007 demonstrated that the weather is unpredictable and system reliability events can occur as a result of extreme temperatures. SCE contends the Contracts can provide firm demand response resources that can be called upon in short notice (the Contracts are mostly dispatchable "day-of" resources) in the event of unplanned and unexpected events in 2008.31
TURN notes that D.07-12-052 shows a projected planning reserve margin for SCE's service territory above 20% until 2011. TURN points out that the planning reserve margin provides a 15-17% margin of safety above projected peak demand, thus already providing the amount of insurance that is prudently required to prevent blackouts. TURN claims that to add additional resources beyond the planning reserve margin would force customers to pay for more insurance than they want or need. 32
SCE has presented no evidence that either Commission policy or industry conditions require resources as additional insurance above and beyond the planning reserve margins already embedded into SCE's resource mix. For example, in D.07-05-029, the Commission found that "the CAISO anticipates a small but significant probability of a Stage 3 emergency occurring in Summer 2007."33 No similar evidence for 2008 or beyond was presented in this proceeding. Further, the evidence shows that SCE already has sufficient resources to meet and exceed its planning reserve margin through at least 2012. We find there is no need for the Contracts as a whole as insurance against rolling outages during summer peak periods.
6.6. Cost-Effectiveness Data Should be Used as Supporting Evidence
In D.06-11-049, the Commission believed that "seeking proposals directly from customers and aggregators could potentially unleash innovative and cost-effective demand response technologies and activities."34 In D.07-05-029, the Commission expressed its hope "that the utilities' solicitations would result in cost-effective demand response proposals,"35 while acknowledging a lack of sufficient information to determine whether or not the contracts in that Application were cost effective.
There is not currently a Commission-approved cost-effectiveness methodology specifically for demand response resources. The cost-effectiveness tests that have been used in recent years for demand response resources are derived from energy efficiency cost-effectiveness measures. These are the Total Resource Cost (TRC) test, the Ratepayer Impact Model (RIM) and the Program Administrator Test (PAC). The energy efficiency Standard Practice Manual (SPM) TRC test was used by SCE in Application 07-02-033, SCE's recent demand resource response purchase agreement application, leading to D.07-05-029. As EnerNOC discusses, the TRC test does not fully account for all of the benefits of demand response resources. For example, it does not take into account environmental benefits, transmission and distribution benefits, or updated capacity value benefits.36
The Commission is currently developing of a more robust cost-effectiveness methodology for demand response programs in R.07-01-041. No decision has been reached yet. However, a Demand Response Cost Effectiveness Evaluation Framework (the Framework) was filed on November 19, 2007 in R.07-01-041 as a consensus document among parties in that proceeding. Among other things, this Framework incorporates additional benefits beyond the TRC test, including a default transmission and distribution adder, updated avoided cost values, and changes to the avoided cost calculation. However, the Framework does not provide consensus quantification of each element of the methodology (most notably, the avoided cost input), leaving calculations based on the Framework to include inputs developed differently by different parties. Furthermore, we have yet to reach a decision in R.07-01-041 on whether to approve the Framework. Therefore, while the Framework provides further information for evaluating cost-effectiveness in this proceeding, we cannot dispositively rely on Framework-based calculations here.
SCE's testimony shows the Contracts collectively are not cost-effective under the energy efficiency SPM TRC test, the RIM test, or the PAC test, either for 2008 or any other year.37 However, as discussed in D.07-05-029, the Commission acknowledges that these tests may miss many potential benefits of demand response agreements.38 SCE also performed two analyses of the cost-effectiveness of the Contracts based on the Framework (with certain non-consensus SCE-provided inputs), using updated information for greenhouse gas benefits in one, and for greenhouse gas benefits and transmission and distribution benefits in the other.39 Again, collectively, SCE's testimony shows that the Contracts are not cost-effective under the Framework's SPM TRC test, the RIM test, or the PAC test, either for 2008 or any other year under either scenario.40
DRA and TURN recommend that all of the Contracts be rejected based on lack of cost-effectiveness. However, TURN believes it would be reasonable for the Commission to approve one contract based on a confidential cost-effectiveness analysis developed by SCE under the Framework (although TURN questions SCE's assumptions in its Framework cost-effectiveness analysis).41 This is the day-ahead contract with Ancillary Services Coalition (ASC). DRA suggests that the Commission, if it did not wish to reject all the Contracts, could approve both the day-ahead and day-of contracts with ASC based on SCE's confidential cost-effectiveness data.
SCE contends the Contracts are, on a portfolio basis, comparable in cost effectiveness, and are similar in their operation and design, to SCE's Capacity Bidding Program for third party aggregators. SCE states that since R.07-01-041 has not yet articulated specific cost-effectiveness requirements for DR program authorization, the Commission could approve third-party DR resources that are not cost-effective by the Framework's (or other ) methodology if the Commission finds the resources are innovative, nascent programs that hold the promise of long-term ratepayer value.42 SCE points to D.07-05-029 in which the Commission approved eight demand resource contracts, even though the Commission could not determine if they were cost-effective.43 Similarly, EnerNOC asserts that it is unreasonable to reject the Contracts as not cost-effective based on the Framework, as it is untested and has not yet been approved by the Commission.44 EnerNOC, AER and NAPP argue that the Framework does not capture all of the benefits of demand resources.45
We find that the Contracts are not cost-effective based on currently-adopted SPM cost-effectiveness methodologies. However, as in D.07-05-029, we will not reject the Contracts solely on the basis of energy efficiency-based tests of cost-effectiveness, because we cannot find that these tests are fully appropriate for demand resources. As noted, we are considering adopting a new, more robust and appropriate demand resource cost-effectiveness test in R.07-01-041. Yet, we have not yet adopted a new test. Moreover, as a whole, the Contracts do not pass the Framework's cost-effectiveness test. We find that six of the individual Contracts do not meet the proposed Framework's cost-effectiveness test which is being considered in R.07-01-041, while two of the Contracts (the ASC Contracts) may or may not meet this test (depending on confidential data and differing assumptions). 46 We find that under any of the tests, the ASC Contracts have the best cost-effectiveness scores.
We will not reject any of the Contracts which do not pass the cost-effectiveness test based on the proposed Framework in R.07-01-041 solely on the basis of not passing this test. Nor will we approve any of the Contracts based on passing this test. It is too speculative to assume the Commission will adopt this test, the Framework appears not to be fully developed as yet, and, if adopted, we will not apply the Framework retroactively. At the same time, the Framework constitutes the most robust cost-effectiveness test in the record. We will consider the cost-effectiveness evidence in this case as a factor, but not as the determining factor. In this way, we look more favorably upon the two ASC contracts which perform the best under the Framework test.
The Contracts can also be evaluated for cost-effectiveness on a portfolio basis. That is, combinations of Contracts may be cost-effective as a group, even if some of the individual Contracts in the group are not cost-effective. From SCE's testimony (Confidential Appendix D), using the most generous measurement (the TRC test) in the Framework methodology, a cost-effective portfolio includes the ASC Contracts, the NAPP Contract and the ECI day-ahead Contract. Substituting any other Contract for any of these, or adding any other Contract to this list, results in a portfolio which is not cost-effective under this methodology or any other methodology in the record.
6.7. There is Insufficient Evidence to Evaluate Environmental Factors
SCE claims the Contracts would further California's policy of providing reliable energy resources while mitigating environmental impacts. SCE claims this would occur because the Contracts provide additional on-peak capacity for summer days with smaller environmental impact than those of peaker plants or emergency generators that would otherwise be called upon to meet this load.47 DRA questions whether these benefits will occur, citing what it characterizes as underutilization of SCE's current demand response contract with EnerNOC.48
It is possible that the Contracts would provide environmental benefits, depending upon when, where and how the programs associated with the Contracts would perform. However, SCE provides no specific evidence of environmental improvements to support its claims. NAPP claims that demand response is a clean energy source that can reduce greenhouse gas emissions, and can also eliminate other air pollutants emitted by power plants.49 We agree that the potential environmental benefits of demand response programs are one of our motivations for development of demand resource programs in California. However, NAPP presents no specific evidence concerning particular environmental benefits of the Contracts in this application.
6.8. Four of the Contracts Should Not be Approved at this Time
Four of the Contracts are not cost-effective by any measure in the record. Two of the Contracts are individually cost-effective under Framework assumptions. On a portfolio basis, four of the Contracts are cost-effective (including the two which are individually cost-effective), under Framework assumptions. In sum, there is no compelling rationale for approval of four Contracts which are not cost-effective individually or as part of any portfolio under any methodology in the record.
We maintain our policy of generally encouraging innovative demand response programs, consistent with the Energy Action Plan50 and our demand response goals. We encourage SCE to propose new/renegotiated 3rd party contracts for each of the programs associated with the four unapproved Contracts in its June 1, 2008 Application for 2009 through 2011 demand response programs, to the extent that these programs can be made cost-effective based on whatever methodology is adopted in R.07-01-041. This will allow the Commission the opportunity to evaluate all of SCE's existing and proposed demand response programs together, while looking more comprehensively at SCE's demand response needs.51
Our action here is in no way meant to signal a Commission preference for or against 3rd party aggregators in our overall Demand Response program. Indeed, we see benefit to moving forward with programs that are administered by both 3rd parties as well as our utilities. Our decision simply demonstrates the inherent difficulty in balancing state policy preferences (such as 5% price responsive DR) with our responsibility to provide reliable, cost effective electricity service to California's ratepayers.
6.9. SCE's Cost Recovery Proposal is Reasonable
SCE proposes cost recovery for the Contracts through the existing Base Revenue Requirement Balancing Account (BRRBA). In addition, SCE proposes to establish a one-way Demand Response Purchase Agreement Balancing Account (DRPABA) to record the difference between the authorized administrative costs associated with the Contracts and the actual administrative costs. This one-way balancing account would return to ratepayers any excess administrative costs above actually incurred administrative costs. When the Contracts' resources are dispatched and the resulting reduced energy is used by SCE to meet bundled service energy requirements, SCE proposes the costs of such energy will be recorded in SCE's Energy Resource Recovery Account (ERRA). The details of SCE's cost recovery proposal are explained in SCE's Testimony.52 No party disputes SCE's cost recovery proposal.
Overall, SCE's proposed ratemaking is reasonable because it ensures that SCE recovers no more and no less than the actual, reasonable capacity payments and administrative costs of the Contracts. Because we are approving only four of the eight Contracts at this time, SCE's cost recovery mechanism will apply only to the four approved Contracts. The approved costs are those delineated in SCE's Confidential Appendix D of its October 17, 2007 testimony for the four approved Contracts, plus associated administrative costs.
SCE proposes to administer the Contracts as part of its existing 2006-2008 demand response program portfolio as well as its 2009-2011 demand response portfolio, which SCE expects to seek Commission approval of in 2008, and its 2012-2014 portfolio, of which SCE expects to seek Commission approval in 2011. As such, SCE requests that the demand reductions achieved by the Contracts count towards the Commission's goals for SCE's demand respond program portfolios if and to the extent such goals are adopted by the Commission. SCE's request is unopposed and is similar to authority found reasonable in D.07-05-029.53 We find SCE's request to be reasonable here as well, as applied to the four approved Contracts.
6 The supporting information is found in both redacted and unredacted form in SCE's Testimony of L. Oliva, Table III-1.
7 D.07-05-029 at p. 12.
8 D.07-05-029, Finding of Fact 6.
9 In R.07-01-041, the Assigned Commissioner's and Administrative Law Judge's Scoping Memo and Ruling, dated April 18, 2007, discussed extending the 2007 goal of 5% of system peak load to 2008.
10 D.07-12-052 at pp. 63-64.
11 SCE Testimony of L. Oliva, pp. 15-16.
12 TURN Prepared Direct Testimony of Michel Peter Florio, p. 7.
13 D.06-11-049 at p. 44.
14 D.07-05-029 at p. 12.
15 D.03-06-032 at p. 11
16 See D.03-06-032, pp. 17-26.
17 See Attachment A, D.03-06-032
18 Id. at pp. A-4 - A-5.
19 DRA Prepared Testimony of David Peck, p. 7.
20 TURN Prepared Direct Testimony of Michel Peter Florio, p. 2.
21 See D.07-12-052, p. 117.
22 Id.
23 TURN Prepared Direct Testimony of Michel Peter Florio, p. 4.
24 Id., p. 4-5.
25 SCE December 28, 2007 Rebuttal Testimony of L. Oliva, p. 1.
26 SCE December 14, 2007 Supplemental Testimony, Responding to Questions of the Administrative Law Judge, p. 1.
27 SCE Testimony of L. Oliva, p. 16.
28 SCE Rebuttal Testimony of L. Oliva, pp. 1-2.
29 D.07-05-029 at p. 15.
30 See D.07-01-041, Finding of Fact 17 and Conclusion of Law 4.
31 SCE Testimony of L. Oliva, pp. 16-17.
32 TURN Prepared Direct Testimony of Michel Peter Florio, pp. 5-6.
33 D.07-05-029 Finding of Fact 3.
34 D.06-11-049 at p. 44.
35 D.07-05-029 at p. 12.
36 Response of EnerNOC to SCE Application, pp. 4-6.
37 SCE December 14, 2007 Supplemental Testimony, Responding to Questions of the Administrative Law Judge, Table II-2.
38 D.07-05-029 at p. 13.
39 We note there has been a general acceptance among the parties in R.07-01-041 that transmission and distribution and greenhouse gas adders should be factors included in the cost effectiveness protocols. However, there has not been a Commission decision on their inclusion in the cost effectiveness protocols nor how to include them. Thus, SCE inclusion of them in their evaluation of the application is useful as a metric, but not conclusive.
40 SCE December 14, 2007 Supplemental Testimony, Responding to Questions of the Administrative Law Judge, Table II-3 and Table II-4.
41 TURN Testimony of Jeffrey Nahigian, pp. 3-4.
42 SCE December 28, 2007 Rebuttal Testimony of L. Oliva, pp. 3-5.
43 See D.07-05-029, at p. 12, 14.
44 EnerNOC December 28, 2007 Rebuttal Testimony of Richard H. Counihan, pp. 8-9.
45 NAPP Brief, pp. 5-6.
46 SCE Testimony, Confidential Appendix D
47 SCE Testimony of L. Oliva, p. 17.
48 DRA Prepared Testimony of David Peck, p. 12.
49 NAPP brief, p. 3.
50 See Energy Action Plan II, October 2005, p. 2.
51 The June 1, 2008 SCE Application for 2009-2011 demand response programs, along with simultaneous Applications by other utilities, will be guided by our forthcoming decisions in R.07-01-041. Nothing in today's Order should be considered precedential for future demand response proceedings.
52 See SCE Testimony of D. Snow, pp. 22-25.
53 D.07-05-029, Conclusion of Law 4.
