Word Document

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION E-3739

RESOLUTION

Resolution E--3739. This Resolution establishes and implements the Schedule Load Reduction Program (SLRP) mandated by Senate Bill(SB) X1-5, Public Utilities (PU) Code 740.10, by approving Southern California Edison's (SCE), Pacific Gas and Electric's (PG&E), and San Diego Gas and Electric's (SDG&E) proposed Schedule Load Reduction Program (SLRP) filed in Advice Letters 1542-E, 2115-E, and 1324-E respectively, as modified.

By Advice Letter 1542-E, 2115-E, and 1324-E Filed on May 9, 2001.

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SUMMARY

This Resolution approves SCE's, PG&E's, and SDG&E's (UDCs) proposed Schedule Load Reduction Program (SLRP) filed in Advice Letters 1542-E, 2115-E, and 1324-E respectively, with modifications to improve implementation. This resolution orders the UDCs to file supplemental Advice Letters to implement the recommended modifications adopted in this resolution.

BACKGROUND

On April 11, 2001 Senate Bill (SB) X1-5 was signed into law by Governor Gray Davis. SBX1-5 adds Section 740.10 to the California Public Utilities (PU) Code which mandates SCE, PG&E, and SDG&E to develop and offer their customers, on or before May 30, 2001, the opportunity to participate in a Scheduled Load Reduction Program (SLRP). The SLRP program is to provide customers the opportunity to drop a preset amount of load during specific periods coincident with morning or evening system peak conditions, as specified by the California Independent System Operator (CAISO). The incentive prices paid to customers in the SLRP program are to be set by the Commission.

In compliance with SBX1-5, on May 9, 2001, SCE, PG&E, and SDG&E filed Advice Letters 1542-E, 2115-E, and 1324-E, respectively. The SLRP programs proposed by the three UDCs are very similar in structure, operation, and pricing. These programs are discussed below.

Proposed SLRP programs:

The proposed UDCs' SLRP programs would provide customers the opportunity to reduce a pre-set amount of load during pre-scheduled four-hour blocks, from noon to 4pm and 4pm to 8pm, Monday through Friday. To participate in the SLRP program, customers must have an existing interval meter, and commit to reducing 15% of their load, with a minimum load drop of 100 kW for each scheduled time block. Customers can sign-up to curtail one or two times per day, Monday through Friday. The program is voluntary, but curtailment is mandatory. There are no non-compliance penalties, however, customers must curtail 100% of the agreed upon load reduction to receive payment, and failure to comply with three events would result in removal from the program.

The SLRP program would operate during the summer period, and would be in effect through December 31, 2002. PG&E's and SDG&E's proposed SLRP programs would operate from May 1st through October 31st, and SCE's proposed SLRP program would operate from June 1st through October 31st. SCE and PG&E propose capping customer participation at 100 MW per day to evenly distribute the SLRP load for each weekday, and SDG&E proposes a cap of 10 MW per day.

The UDCs propose a two-tier incentive payment, $.05/kWh for the noon to 4pm time block and $.07/kWh for the 4pm to 8pm time block. To calculate the customer's payment and compliance, the UDCs proposes using a baseline that is based on the customer's previous year's average energy usage for the same month, day, and time period that the customer selects to curtail.

NOTICE

Notice of SCE's AL 1542-E, PG&E's AL 2115-E, and SDG&E's AL 1324-E was made by publication in the Commission's Daily Calendar.

PROTESTS

SCE, PG&E, and SDG&E asked that we shorten the protest period on advice letter 1542-E, 2115-E, and 1324-E to five days. On May 10, 2001, Executive Director Wes Franklin issued a letter granting the request and shortening the protest period pursuant to Section XV of General Order 96-A.

SCE's AL 1542-E was timely protested by Agricultural Energy Consumers Association (AECA), the California Farm Bureau (Farm Bureau), and the Alliance for Retail Energy Markets (AReM).

AECA and the Farm Bureau also protested PG&E's AL 2115-E. The Farm Bureau also protested SDG&E's AL 1324-E.

AReM's protest to AL 1542-E requests that the SLRP program be opened to direct access customers. AReM states that the SLRP program can be improved by broadening the eligibility criteria so that more customers can participate.

AECA's protest to SCE's AL 1542-E and PG&E's AL 2115-E asks the Commission to reject the UDCs' recommended incentives and to develop the appropriate incentives as called for by SBX1-5. AECA finds the proposed incentive rates inadequate. AECA states that in Application (A.) 00-11-038 the Commission proposes to adopt significantly higher energy charges for TOU agricultural customers, $.2027 per kWh for summer on-peak and $.1103 per kWh for summer mid-peak. AECA further states that the real time imbalance cost-out of out of market prices, information obtained from the ISO's website, ranges from an average $.299 per kWh to $.52 per kWh.

The Farm Bureau's protest to SCE's AL 1542-E, PG&E's AL 2115-E, and SDG&E's AL 1324-E objects to the UDCs' proposed SLRP eligibility constraints placed on customers who are currently participating in other interruptible programs, and the 100 kW minimum load drop eligibility requirement. The Farm Bureau states that SBX1-5 does not place these program restrictions. The Farm Bureau also disagrees with the UDCs' SLRP proposed incentive levels, stating that they should be set at sufficient levels to encourage participation.

SCE responded to the protests of AECA, AReM, and the Farm Bureau on May 17, 2001. SCE states that it proposed to limit the SLRP program to bundled service customers because it considers the SLRP program an energy-use reduction program such as the VDRP, rather than a capacity program. SCE also proposes to limit eligibility to Schedule TOU-8 customers due to the program requirement that a customer must have an interval meter and at least 12 months of hourly data in order to determine program compliance. Furthermore, if a customer was below 500 kW and does not have a meter, the cost of purchasing and installing an interval meter is approximately $1,000.

SCE also adds with respect to the minimum load reduction requirement of 100 kW, that SCE proposed this requirement because of the need to establish a minimum load reduction to make the program meaningful.

SCE, in response to the AECA and the Farm Bureau protest on the incentive level, states that the incentive levels proposed by SCE took into account the fact that the customer continues to receive payments for load reductions regardless of whether such load reductions are actually needed by the CAISO. SCE further states that there are no financial penalties for non-performance as in the interruptible programs.

PG&E responded to the protests of AECA, and the Farm Bureau on May 17, 2001. PG&E states that their proposed SLRP program fully satisfies the intent of SBX1-5. PG&E states that it proposed similar eligibility criteria as those adopted in AL 2099-E-A, and that participation in their proposed SLRP program requires that a customer have installed an interval meter, with 12-months billing history in order to establish the customer's baseline to determine program compliance.

PG&E's response to the protests on the incentive levels, states that an SLRP customer will receive an incentive payment whether or not the selected time period(s) is coincident with the period(s) when load reductions are needed. Further the SLRP pre-scheduled load will be factored in PG&E's forecast, and will not be considered an avoided cost, as it would be under a mandatory unscheduled load reduction program.

SDG&E filed a response to the Farm Bureau protest on SDG&E's AL 1324-E on May 21, 2001. SDG&E's response was rejected because the protest period was closed on May 17, 2001.

DISCUSSION

Energy Division has reviewed the Advice Letters for compliance with SBX1-5. The language and direction provided in BX1-5 is broad and does not provide specificity on the program structure and operation. Energy Division, therefore, used the recently adopted interruptible programs in D.01-04-006 as the basis for reviewing the UDCs' proposed SLRP programs. Based on this analysis, Energy Division recommends several modifications to the proposed SLRP programs which should increase program flexibility, customer participation, and make the SLRP program more consistent with the adopted interruptible programs.

SLRP Customer Eligibility:

The proposed UDCs' SLRP programs restrict the participation of customers that are participating in any other interruptible capacity program (i.e. Base Interruptible Program, the UDCs' non-firm programs, and the CAISO's DRP), until these customers complete their annual obligations. This measure is consistent with the Commission's adopted interruptible programs. Energy Division, therefore, recommends adopting this measure, given that it is administratively unworkable to track load reductions for customers participating in multiple capacity payment programs, and the increased potential for customers receive a double payment for the same load. This recommendation is adopted.

The proposed UDCs' SLRP programs also restrict the participation of customers participating in the Voluntary Load Reduction Program (VDRP), Optional Binding Mandatory Curtailment Program (OBMC), CAISO's Ancillary Services Load Program. This measure is consistent with the current OBMC program and the CAISO's Ancillary Services program and should be adopted. Energy Division, however, recommends allowing SLRP customers participate in the VDRP program during the days when customer's load is not scheduled for curtailment under the SLRP program. Allowing SLRP customers participate in the VDRP program provides another opportunity for these customers to further reduce load and be compensated, and also contribute to decreasing the overall system demand. This recommendation is adopted and the UDCs shall modify their tariffs to implement this recommendation.

Essential use customers would be allowed to participate in the UDCs proposed SLRP programs, but these customers must demonstrate, through a written declaration, that they have adequate back-up generation or other means to interrupt load while continuing to meet their essential needs. Essential use customers would also not be allowed to commit more than 50% of their average firm service load. This measure is consistent with the Commission's adopted interruptible programs and shall be adopted.

Under the UDCs' proposed SLRP programs, customers must have an existing interval meter to participate in the SLRP program. This measure is inconsistent with the Commission's adopted interruptible programs and would significantly limit program participation. Energy Division recommends that a meter be provided and installed at no cost, consistent with the adopted interruptible programs in D. 01-04-006. Customers that receive a meter at no cost must remain in the program for one year and fully comply ten times otherwise customers are liable for the meter and installation costs. Meter costs shall be treated as a program expense. This recommendation is adopted. The UDCs shall modify their tariffs and implement this recommendation.

Under the UDCs' proposed SLRP program, customers are required to reduce their load by 15% from their respective baseline usage, with a minimum load drop of 100kW for the selected time-period(s). This measure is consistent with Commission's adopted interruptible programs and shall be adopted.

SLRP Program Operation:

The proposed UDCs' SLRP programs would operate during the summer season. Energy Division agrees that this is the best time period to operate this type of program, by providing load relief when it is most needed. However, Energy Division recommends that the time period should be consistent among the three UDCs and the Commission adopted Air Conditioning Cycling Program. Energy Division recommends that the SLRP program be in operation from June 1st through September 31st. This recommendation is adopted. The UDCs shall modify its tariffs to implement this recommendation.

Under the UDCs' proposed SLRP programs customers would have the opportunity to select one or two pre-scheduled load reductions four-hour time periods, 12noon to 4pm and 4pm to 8pm, Monday through Friday. SBX1-5, however, requires that the CAISO identify the morning or evening system peak conditions and that the SLRP program be in operation during these periods. In response to SBX1-5, the CAISO has identified the system peak condition period from 8am to 8pm. Energy Division therefore recommends adding a morning four-hour block, from 8am to 12noon, to offer the SLRP in the morning system peak and comply with SBX1-5. This recommendation is adopted. The UDCs shall modify their tariffs and implement this recommendation.

Under the proposed UDCs' SLRP programs, the incentive payment is cancelled if a customer shifts its load to the on-peak and partial peak periods. SCE restricts load-shifting to the on-peak period (12 noon to 6pm), PG&E to on-peak and partial-peak periods (8:30 am to 9:30pm), and SDG&E to on-peak and semi-peak periods. The UDCs would implement this restriction by comparing the customer's monthly usage to last year's usage for the same time period. Energy Division agrees that it is necessary to have this type of measure in place to minimize and prevent load shifting specially to the on-peak period. Energy Division recommends implementing this load-shifting preventive measure for customers with existing meters and the energy usage data. The measure, however, shall only apply and prevent load shifting during the on-peak period. The UDCs in their compliance filings shall implement this measure and shall specify a reasonable limit on the amount of load that would not be considered load shifting based on the customer's average load fluctuations. This recommendation is adopted and shall be implemented in the UDCs compliance filings.

The proposed UDCs' load-shifting measure is unworkable for customers without an existing interval meter because the customer's energy usage data for the previous year is not available. Therefore, the UDCs in their compliance filings to this resolution shall propose a method for monitoring and preventing load shifting for these customers.

Under the proposed UDCs' SLRP programs, the customer's baseline is calculated using the customer's previous year's average for the same month, day, and time period for which the customer would scheduled load curtailment. This method of calculating baseline is unworkable because the hourly energy usage data is not available for customers without an existing interval meter. A baseline will also need to be established for customers receiving a new interval meter. Energy Division therefore recommends using the same methodology adopted by the Commission for the VDRP program, using a 10-day rolling average, similar days, excluding days scheduled for curtailment. This recommendation is adopted and shall be implemented by UDCs in their compliance tariff filing to this resolution.

The UDCs propose capping the amount of load scheduled for curtailment on any given day to evenly distribute the scheduled load reduction for each weekday. SCE and PG&E propose a cap of 100 MW per day, and SDG&E at 10 MW per day, enrollment would be on a first-come first-served basis. Energy Division does not agree with the level of these caps, given that there are now three time blocks and these caps would not provide significant load reduction. Energy Division recommends increasing the cap for PG&E and SCE from 100 MW to 300 MW per day and for SDG&E from 10 MW to 30 MW. Energy Division also recommends that the load be evenly distributed among the three time blocks. This recommendation is adopted. The UDCs shall modify their tariffs to incorporate this modification.

SLRP Incentive Prices:

SBX1-5 requires that the Commission develop the appropriate incentives for customers to participate in the SLRP program. The UDCs propose a two-tier incentive payment, $.05/kWh for the 12 noon to 4pm time block and $.07/kWh for the 4pm to 8pm time block. AECA and the Farm Bureau in their protest to UDCs AL filings disagreed on the level of the incentives, however no recommendations were presented.

Energy Division agrees that the proposed UDC incentive levels are low and may discourage customer participation. However, Energy Division does not agree that the Commission should adopt for the SLRP program the rate levels AECA presented in its protest letter to SCE's AL 1542-E and PG&E's AL 2115-E for TOU agricultural customers. While most interruptible programs operate only when load reductions are required, the SLRP will operate every week regardless of system conditions. Consequently, the SLRP incentives should be less than those for other interruptible programs. In addition, SLRP customers reducing their energy consumption during the scheduled curtailments and will most likely qualify for compensation in the Governor's 20/20 program.

Energy Division recommends adopting an incentive level of $.10/kWh for all time periods. Energy Division believes that this is a more reasonable incentive level, which should encourage additional program participation. This recommendation is adopted and shall be implemented by the UDCs in their compliance filing for this resolution.

COMMENTS

Public necessity required that the 30-day comment period be waived in order for the Commission to permit PG&E, SCE, SDG&E to implement this program immediately. We conclude that we cannot properly implement the SLRP program on the timeline specified by the legislature in SBX1-5, as codified at Public Utilities Code § 740.10, while still allowing a comment period. We have balanced the public interest in avoiding the possible harm to public welfare flow from delay in considering the Resolution against the public interest in having the full 30-day period for review and comment, as required by Rule 77.7(f)(9), and concluded that the former outweighs the latter. We conclude that failure to adopt a decision before the expiration of the 30-day review and comment period would cause significant harm to public welfare, and be inconsistent with the legislative desire to implement the SLRP program by May 30, 2001.

FINDINGS

1. On April 11, 2001 Senate Bill (SB) X1-5 was signed into law by Governor Gray Davis.

2. SBX1-5 adds Section 740.10 to the California Public Utilities (PU) Code, which mandates SCE, PG&E, and SDG&E to develop and offer its customers, on or before May 30, 2001, the opportunity to participate in a Scheduled Load Reduction Program (SLRP).

3. The SLRP program is to provide customers the opportunity to drop a preset amount of load during specific periods coincident with morning or evening system peak conditions, as specified by the California Independent System Operator (CAISO).

4. In response to SBX1-5, the CAISO has identified the system peak condition period from 8am to 8pm.

5. The incentive prices paid to customers in the SLRP program are to be set by the Commission.

6. In compliance with SBX1-5, on May 9, 2001, SCE, PG&E, and SDG&E filed Advice Letters 1542-E, 2115-E, and 1324-E, respectively.

7. The SLRP programs proposed by the three UDCs are very similar in structure, operation, and pricing.

8. The proposed UDCs' SLRP programs would provide customers the opportunity to reduce a pre-set amount of load for one or two pre-scheduled four-hour blocks, from noon to 4pm and 4pm to 8pm, Monday through Friday.

9. This resolution adopts these two-periods, plus a morning period from 8am to noon in compliance with ABX1-5. The UDCs shall modify their tariffs to incorporate this change.

10. The proposed UDCs' SLRP programs would operate during the summer period and would be in effect through December 31, 2002.

11. The SRLP program shall be in operation from Jun 1st through September 31st. The UDCs shall incorporate this change in their compliance tariffs for this resolution.

12. The UDCs propose a two-tier incentive payment, $.05/kWh for the noon to 4pm time block and $.07/kWh for the 4pm to 8pm time block.

13. The UDCs' proposed incentive payments are low and may discourage customer participation.

14. We adopt an incentive level of $.10/kWh for all time periods. The UDCs shall modify their tariffs and implement this modification.

15. To calculate the customer's payment and compliance, the UDCs propose using a baseline that is based on the customer's previous year's average energy usage for the same month, day, and time period that the customer selects to curtail.

16. Under the proposed UDCs' SLRP programs, the incentive payment is cancelled if a customer shifts its load to the on-peak and partial peak periods.

17. The UDCs would implement the load-shifting restriction by comparing the customer's monthly usage to last year's usage for the same time period.

18. This load shifting measure shall be implemented, and shall only apply to prevent load shifting during the on-peak period.

19. The UDCs shall specify, in their compliance filings, a reasonable limit on the amount of load that would not be considered load shifting based on the customer's average load fluctuations.

20. The UDCs proposed baseline is unworkable for customers without an existing interval meter and for customers receiving a new meter.

21. The proposed UDCs' load-shifting measure is unworkable for customers without an existing interval meter because the customer's energy usage data for the previous year is not available.

22. The UDCs in their compliance filings for this resolution shall propose a method for monitoring and preventing load shifting for customers receiving a new interval meter.

23. We adopt a baseline that uses a 10-day rolling average, similar days, excluding days scheduled for curtailment. The UDCs shall implement this modification in their compliance filing for this resolution.

24. SCE, PG&E, and SDG&E asked that we shorten the protest period on advice letters 1542-E, 2115-E, and 1324-E to five days.

25. On May 10, 2001, Executive Director Wes Franklin issued a letter granting the request and shortening the protest period pursuant to section XV of General Order 96-A.

26. SCE's AL 1542-E was timely protested by Agricultural Energy Consumers Association (AECA), the California Farm Bureau (Farm Bureau), and the Alliance for Retail Energy Markets (AReM).

27. AECA and the Farm Bureau also protested PG&E's AL 2115-E. The Farm Bureau also protested SDG&E's AL 1324-E.

28. SCE responded to the protests of AECA, AReM, and the Farm Bureau on May 17, 2001.

29. PG&E responded to the protests of AECA, and the Farm Bureau on May 17, 2001.

30. SDG&E filed a response to the Farm Bureau protest on SDG&E's AL 1324-E on May 21, 2001. SDG&E's response was rejected because the protest period was closed on May 17, 2001.

31.

32. The proposed UDCs' SLRP programs restrict the participation of customers that are participating in any other interruptible capacity programs. This measure is adopted.

33. The proposed UDCs' SLRP programs restrict the participation of customers participating in the Voluntary Load Reduction Program (VDRP), Optional Binding Mandatory Curtailment Program (OBMC), CAISO's Ancillary Services Load Program (ASLP). This measure is adopted for the OBMC and CAISO's ASLP programs.

34. SLRP customers shall be allowed to participate in the VDRP program during the days when customer's load is not scheduled for curtailment under the SLRP program. The UDCs shall implement this measure in their compliance filings.

35. Essential use customers shall be allowed to participate in the SLRP programs as proposed by the UDCs in their AL filings.

36. Under the UDCs' proposed SLRP programs, customers must have an existing interval meter to participate in the SLRP program. This measure is inconsistent with the Commission's adopted interruptible programs and would significantly limit program participation.

37. SLRP customers shall receive an interval meter at no cost, if needed, but must remain in the program for one year and fully comply ten times otherwise customers are liable for the meter and installation costs. UDCs shall implement this measure in their compliance filings.

38. Meter costs shall be treated as a program expense.

39. Under the UDCs' proposed SLRP program, customers are required to reduce their load by 15% from their respective baseline usage, with a minimum load drop of 100kW for the selected time-period(s). This measure is consistent with Commission's adopted interruptible programs and shall be adopted.

40. SCE and PG&E propose a cap of 100 MW per day, and SDG&E at 10 MW per day, enrollment would be on a first-come first-served basis.

41. SCE and PG&E shall increase the cap from 100 MW to 300 MW per day and for SDG&E from 10 MW to 30 MW, the load shall be distributed evenly among the three time blocks. The UDCs shall modify their tariffs to incorporate this modification.

42. Public necessity requires that the 30-day comment period be waived in order for the Commission to permit PG&E, SCE, SDG&E to implement this program immediately.

43. We conclude that we cannot properly implement the SLRP program on the timeline specified by the legislature in SBX1-5, as codified at Public Utilities Code § 740.10, while still allowing a comment period.

44. We balance the public interest in avoiding the possible harm to public welfare flow from delay in considering the Resolution against the public interest in having the full 30-day period for review and comment, as required by Rule 77.7(f)(9), and conclude that the former outweighs the latter.

45. Failure to adopt a decision before the expiration of the 30-day review and comment period would cause significant harm to public welfare, and be inconsistent with the legislative desire to implement the SLRP program by May 30, 2001.

THEREFORE IT IS ORDERED THAT:

1. SCE's, PG&E's, and SDG&E's proposed Scheduled Load Reduction Programs (SLRP) filed in Advice Letters 1542-E, 2115-E, and 1324-E, respectively be adopted with the modifications specified in this resolution.

2. SCE, PG&E, and SDG&E shall file supplemental Advice Letters by May 29, 2001, implementing the adopted modifications in their tariffs.

3. These Advice Letter filings shall be come effective on May 30, 2001, after they have been reviewed for compliance with this resolution by the Energy Division.

4. Public necessity requires that the 30-day comment period be waived in order for the Commission to permit PG&E, SCE, SDG&E to implement this program immediately.

5. We conclude that we cannot properly implement the SLRP program on the timeline specified by the legislature in SBX1-5, as codified at Public Utilities Code § 740.10, while still allowing a comment period.

6. We balance the public interest in avoiding the possible harm to public welfare flow from delay in considering the Resolution against the public interest in having the full 30-day period for review and comment, as required by Rule 77.7(f)(9), and conclude that the former outweighs the latter.

7. Failure to adopt a decision before the expiration of the 30-day review and comment period would cause significant harm to public welfare, and be inconsistent with the legislative desire to implement the SLRP program by May 30, 2001.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on May 24, 2001; the following Commissioners voting favorably thereon:

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