Decision 00-06-034 June 8, 2000
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for Authority to Establish Post-Transition Period Electric Ratemaking Mechanisms. (U 39-E) |
Application 99-01-016 (Filed January 15, 1999) | |
Application of San Diego Gas & Electric Company for Authority to Implement Post Rate Freeze Ratemaking Mechanics (U 902-E) to Review and Recovery Transition Cost Balancing Account Entries from January 1, 1998 through June 30, 1998 and Various Generation-Related Memorandum Account Entries.
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Application 99-01-019 (Filed January 15, 1999) | |
Application of Southern California Edison Company (U 338-E) to: (1) Propose a method to Determine and Implement the end of the Rate Freeze; and (2) Propose Ratemaking Mechanisms which would be in place after the end of the Rate Freeze Period. |
Application 99-01-034 (Filed January 15, 1999) | |
Application of SAN DIEGO GAS & ELECTRIC COMPANY: (1) informing the Commission of the Probable Timing of the End of its Electric Rate Freeze, (2) for Authorization to Change Electric Rates Through Implementation of Interim Ratemaking Mechanisms Concurrent with Termination of the Electric Rate Freeze, and (U 902-E) |
Application 99-02-029 (Filed February 19, 1999) |
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(See Decision 99-10-057 for Appearances.)
TABLE OF CONTENTS
Title Page
FINAL OPINION REGARDING 2
POLICIES RELATED TO POST-TRANSITION RATEMAKING 2
I. Summary 2
II. Background and Procedural History 4
III. Procurement Issues 7
A. Procurement Proposals 8
1. PG&E 8
2. SDG&E 11
B. Summary of Parties' Positions 14
C. SDG&E Proposed Settlement 18
D. Mandatory Buy-Sell Requirement and the Transition Period 24
E. Rate Volatility, Rate Capping, and Balanced Payment Plan 26
F. Discussion 31
1. Procurement Practices 32
a) The Scope of the Proceeding as to Procurement Practices.........43
2. Rate Capping 47
3. Definition of the Transition Period for Buy-Sell Requirement 48
IV. Cost Allocation Issues 54
A. Allocation of Ongoing Transition Costs 54
B. Allocation of Restructuring Implementation Costs 62
C. Nuclear Decommissioning and Public Purpose Costs 64
D. Reliability Must Run Cost Allocation 67
E. Inclusion of Non-CTC Costs on the Ongoing CTC Rate Component 67
F. Rate Group Transition Cost Memorandum Account 69
V. Rate Reduction Bond Issues 71
VI. Other Ratemaking Issues 77
VII. Interaction with Other Proceedings 85
VIII. Comments on Alternate Proposed Decision 88
Findings of Fact 88
Conclusions of Law 99
FINAL ORDER 103
POLICIES RELATED TO POST-TRANSITION RATEMAKING
I. Summary
In this decision, we provide guidance on policies regarding the end of the rate freeze and associated post-transition ratemaking for Pacific Gas and Electric Company (PG&E), Southern California Edison Company (Edison), and San Diego Gas & Electric Company (SDG&E). We take steps designed to ensure a more level playing field in order to promote competition and provide consumers with more options.
As defined in the Scoping Memo for these proceedings, Phase 2 issues include broad rate design policy issues integral to the development of post-transition ratemaking. In this decision, we address the following issues:
1. whether and how to implement a procurement performance-based ratemaking (PBR) mechanism, and whether to accept SDG&E's proposed settlement;
2. if a procurement PBR is not adopted, what regulatory oversight is necessary and how should utility purchases for bundled service customers be determined to be reasonable;
3. when does the mandatory buy-sell requirement end; how does the buy-sell requirement fit into the various procurement options; and what is this Commission's jurisdiction vis-à-vis the jurisdiction of the Federal Energy Regulatory Commission (FERC);
4. how should price volatility be handled, i.e., should bundled service customers and others be subject to the price volatility inherent in the marketplace or should price caps or some type of balanced payment plan be instituted;
5. how should ongoing transition costs be allocated after the rate freeze ends;
6. how should restructuring implementation costs (also known as costs given § 376 treatment) be allocated;
7. how should nuclear decommissioning costs and public purpose program costs be allocated after the rate freeze ends;
8. how should the Rate Group Transition Cost Memorandum Accounts (RGTCOMA) be treated;
9. how should Regulatory Must Run (RMR) costs be allocated;
10. what is the appropriate recovery of costs booked into the Procured Electric Commodity Account (PECA), established in Decision (D.) 99-10-057;
11. how should load retention discounts for SDG&E be handled;
12. how should excess rate reduction bond proceeds be treated; and
13. how do these proceedings interact with the 1999 Revenue Adjustment Proceeding (RAP), the distributed generation rulemaking, and other proceedings.
We consider and reject the settlement regarding a procurement PBR mechanism presented to us by SDG&E, the Office of Ratepayer Advocates (ORA), the Utility Consumers Action Network (UCAN), the California Power Exchange (CalPX) and several other parties. We also reject PG&E's proposal to either adopt a procurement PBR or to establish guidelines for procurement. We do not continue the requirement that all three utilities continue to procure their energy only from the CalPX (also known as the mandatory buy requirement) until PG&E, Edison, and SDG&E have all ended the rate freeze. Instead, during the transition period, the UDCs may now purchase energy through the Cal PX or a mixture of the Cal PX and any qualified exchange, as authorized by future advice letter filings. We also re-affirm our decision in D.95-12-063 that, at the end of the transition period, the mandatory buy requirement is eliminated for bundled customers.
We do not adopt PG&E's rate capping proposal. We prefer that customers understand the impact of the market and the accompanying price signals. We call for the utilities and energy service providers (ESPs) to provide the necessary customer education and information and recommend that hourly interval meters be installed whenever feasible. We also continue the balanced payment plan for residential and small commercial customers. We do not require that such plans be expanded to street lighting customers, rather, we see this as an opportunity for the marketplace to offer solutions.
We make several findings related to cost allocation after the rate freeze ends for each utility. For ongoing transition costs, utilities are directed to file or update applications within 60 days updating the top 100 hours methodology. Restructuring implementation costs and nuclear decommissioning costs should be allocated according to a cents-per-kilowatt methodology. Public purpose program costs related to energy efficiency should continue to be allocated according to a system average percent change (SAPC) methodology.
We also address issues related to SDG&E's rate reduction bonds. The unrealized savings resulting from the excess rate reduction bond proceeds must be refunded to ratepayers at SDG&E's authorized pre-tax rate of return by a refund and/or credit. Finally, we address other issues related to our post-rate freeze policies in the body of this decision.
