Comments on Alternate Draft Decision
Rule 77.7 of the Commission's Rules of Practice and Procedure provides for public review and comment for draft decisions and alternates subject to Pub. Util. Code § 311(g). Rule 77.7(f) allows the Commission to reduce the period for public review and comment for alternates under various circumstances.7 Rule 77.7(f)(9) specifically provides for an exemption:
For a decision where the Commission determines, on the motion of a party or on its own motion, that public necessity requires reduction or waiver of the 30-day period for public review and comment. For
purposes of this subsection, "public necessity" refers to circumstances in which the public interest of the Commission adopting a decision before expiration of the 30-day review and comment period clearly outweighs the public interest in having the full 30-day period for review and comment. "Public necessity" includes, without limitation, circumstances where failure to adopt a decision before expiration of the 30-day review and comment period would place the Commission or a Commission regulatee in violation of applicable law, or where such failure would cause significant harm to public health or welfare. When acting pursuant to this subsection, the Commission will provide such reduced period for public review and comment as is consistent with the public necessity requiring reduction or waiver.
Pursuant to Rule 77.7(f)(9), we determine that public necessity requires a reduced period for public review and comment. This comment period provides notice and opportunity to be heard regarding the modification of these decisions.
Comments on the Draft and Alternate Decisions were filed by SDG&E, UCAN, TURN, California Streetlighting Association (Cal-SLA), Western Manufactured Housing Communities Association (WMA), California Manufacturers and Technology Association (CMTA), California Farm Bureau Federation (Farm Bureau), Alliance for Retail Markets (ARM), City of San Diego (City), Southern California Edison Company (SCE), California Industrial Users (CIU), Shell Energy Services, LLC (Shell), The New Power Company (New Power), and Enron Energy Services, Inc. The Natural Resources Defense Council (NRDC) sent a letter on the drafts. The letter has been placed in the correspondence file. In our modifications to this Decision, we address the comments.
SDG&E opposes adoption of either draft decision and proposes an alternative rate stabilization approach which builds off of the Alternate Decision. SDG&E's proposal would adopt the Alternate Decision's approach for a fixed period of time and then would increase the average bill amount for the remainder of the cap period. SDG&E would also provide for numerous automatic adjustments if undercollections in the balancing account reached certain prespecified levels. SDG&E argues that without such modifications, adoption of either proposed decision would constitute a taking. SDG&E argues that both orders violate due process by setting rates without an evidentiary basis and without providing them with an opportunity to be heard. SDG&E also argues that both orders would violate the requirement that SDG&E collect the full FERC-authorized wholesale rate. SDG&E states that either decision will substantially impact its borrowing requirements and potentially, its cost of capital. SDG&E argues that in this decision, the Commission should authorize it to increase its short term borrowing authority from $200 million to $700 million in order to finance any undercollections. SDG&E also argues for a shorter period for a freeze or stabilization plan and against a mandatory level payment plan.
UCAN makes several recommendations and recommends adoption of the Draft Decision of Commissioner Wood despite its reservations about the relief provided. UCAN recommends that the Commission retroactively roll back rates to pre-Summer 2000 rates. Specifically, UCAN recommends rate levels be set at a lower level than either draft decision proposes. UCAN notes that on May 1, 2000 SDG&E's residential rates were approximately 10 cents/kWh with 3.2 cents per kWh of that rate being associated with energy. UCAN recommends that an optional rate cap be made available to all large commercial and industrial customers immediately, rather than waiting to explore the issue in hearings. UCAN also recommends that the Commission clarify that cost recovery associated with wholesale rates will only be allowed to the extent that SDG&E's procurement actions are found prudent. UCAN opposes an "opt-out" level payment plan and supports a rate cap in its place.
TURN recommends "[i]n order to provide real relief to ratepayers in San Diego, the Commission should act immediately to establish a retroactive rate cap at June 1999 levels for all customer classes, adopt a third-tier rate during the summer months in order to revitalize the baseline program, declare the Commission's intent to hold consumers harmless for elevated wholesale prices, establish a memorandum account for tracking uncollected power purchase costs, and direct SDG&E to allow customers to participate in a properly structured levelized payment plan on an opt-in basis." (TURN comments, p. 1.) TURN criticizes portions of both draft decisions that are not consistent with its stated recommendations. TURN argues that the Commission should guarantee that ratepayers, not SDG&E, will be "made whole" and spends some time discussing its contention that the filed-rate doctrine does not obligate the Commission to allow SDG&E to recover all costs associated with its wholesale power purchases. Like UCAN, TURN opposes an "opt-out" level payment plan.
Cal-SLA supports UCAN's comments with the exception of its comments about the level payment plan. Cal-SLA seeks to clarify that both orders provide relief to traffic control and streetlighting customers.
WMA is concerned that adoption of an opt-out level payment plan will be binding on master-metered customers. WMA believes that such a plan will be difficult to implement for master-meter customers and will fall to the management of manufactured housing communities to create levelized bills without adequate resources (e.g. credit lines) to do so.
CMTA supports allowing larger customers to opt-in to a rate stabilization program rather than limiting such a program to residential and small commercial customers. CMTA also argues that customers who do not remain bundled customers, and thus do not have SDG&E procuring energy for them, not be responsible for any undercollections associated with wholesale procurement costs. Like UCAN, CMTA would limit recovery of wholesale costs to those found to be prudently incurred. CMTA would limit any rate freeze adopted to March 31, 2002, the statutory maximum period for SCE and PG&E. CMTA does not support mandatory imposition of a level payment plan on customers. With these clarifications, CMTA generally prefers the Alternate Decision to the Draft Decision.
Farm Bureau supports the expansion of the option of a level payment plan to all customer classes and thus prefers the Alternate Decision to the Draft Decision. Farm Bureau does not support requiring customers to opt-out of the level payment plan, rather, it would retain the requirement that customers affirmatively select the option of level payment.
ARM stresses that if either of the draft orders is adopted, direct access customers should be afforded the same ratemaking treatment when prices exceed the capped rates as currently in effect in PG&E and SCE service territories under frozen rate. ARM supports limiting the relief proposed in the orders to customers legislatively defined as residential and small commercial customers. ARM argues that in no event should customers larger than 50 kW be eligible for a rate cap or rate stabilization mechanism in order to ensure that incentives for demand responsiveness remain high. ARM supports limiting the term of any rate cap to no longer than December 31, 2001. Like many parties, ARM opposes an opt-out level payment plan. Shell supports ARM's comments.
Like UCAN, City supports retroactive relief for high prices in San Diego. City recommends that the ending date for the rate freeze in the Draft Decision occur after the end of the winter heating season and would adjust the ending date to March 31, 2004. City points out that the San Diego region has widely varying climates that have very different baseline quantities and that the Alternate Decision's rate cap at 500kWh per month does not take these variations into account. City believes the level payment plan should be expanded, but does not support the opt-out requirement. City also urges expansion of rate relief to large customers, particularly governmental agencies, schools, and hospitals. City also recommends that the Commission explicitly order an examination of the prudency of SDG&E's throughout the summer and until rate relief is adopted.
SCE argues that any measures adopted by the Commission should be interim in nature and limited in duration. SCE supports using I.00-08-002 to consider the long-term impact of interim and other relief proposals. SCE recommends increasing the 110 % cap proposed in the Draft Decision and further discussion about how the percentage was selected. SCE suggests considering expanding relief to medium sized customers. SCE recommends adoption of more specific ratemaking mechanisms to ensure SDG&E is made whole for its purchases on behalf of bundled customers. SCE points out that there can be several interpretations of the Alternate Decision's rate stabilization plan and identifies implementation difficulties using SCE tariffs as an example. SCE believes that if the Alternate Decision intended to cap rates, rather than bills, administration of such a plan would prove extremely complex. SCE also argues that establishing a level payment opt-out plan is premature.
CIU believes that both proposed orders go far beyond the pressing issue of rate relief without stakeholder input and statues its concern over this prospect. CIU prefers the conceptual framework of the Draft Decision if it is modified to impose a cap for all customer classes, terminate the cap on March 31, 2002, retain traditional cost allocation policies for cost recovery, and leave open review of SDG&E's procurement practices to I.00-08-002.
New Power opposes adoption of an opt-out level payment plan. New Power also raises concerns about the duration of the so-called emergency actions being taken in these proposed orders and the impact of such orders on the development of a competitive retail market. New Power does not see that there are changed circumstances since August 3, 2000 when the Commission rejected rate caps. If the Commission does adopt additional measures to address the situation in San Diego, New Power prefers a variant to the Alternate Decision with lower consumption thresholds to promote conservation.
NRDC does not take a position regarding a rate freeze versus a rate stabilization plan but believes that actions taken in these orders may affect incentives for energy efficiency and conservation. As such, NRDC supports the tiered rate approach taken by the Alternate Decision should a rate cap or freeze be instituted.
Findings of Fact
1. Ratepayers in SDG&E's service territory should be shielded from the unreasonably high wholesale electric costs for an interim period.
2. While the Commission did not initiate electric restructuring in order to shield consumers from the market, we must consider the impact of high-energy prices on consumers.
3. We recognize that, in a workably competitive market, masking prices results in incomplete and inefficient market structure and system demand, and compromises system reliability. It is reasonable to implement an interim bill stabilization plan to manage the bills of residential and commercial customers because wholesale electric markets are not workably competitive at this time.
4. Residential and commercial bill caps should be ordered to apply to billing for energy consumed commencing on or after June 1, 2000. In order to implement the bill caps for the period prior to issuance of this Decision, SDG&E should provide a credit on future bills issued no later than September 30, 2000. The credit for each such customer should consist of the amount previously billed in excess of the bill caps imposed by today's order. The credit should be provided whether or not the customer has paid the prior bill. Concurrently with providing the bill credit, SDG&E should credit its TCBA in an equivalent amount.
1. It is reasonable to modify D.00-06-034 to require the implementation of a bill stabilization program for SDG&E's residential and small commercial customers for an interim period.
2. The Commission should consider further adjustments to the program, retroactive to June 1, 2000, to ensure the caps fairly and equitably treat medium-sized commercial customers, and allow for differences in geographic climate zones. Implementation of the residential bill cap program should be in prorated manner so that low-income users of lesser amounts of energy also obtain the benefits of capped prices.
3. Pursuant to Rule 77.7(f)(9), we determine that public necessity requires a reduced period for public review and comment. The comment period provides notice and opportunity to be heard.
4. The bill cap provisions of this order should be effective June 1, 2000 to mitigate the bill shock experienced by SDG&E customers. In other respects this order should be effective today, so that these requirements may be implemented expeditiously.
5. The Commission should further study the bill stabilization plan as to direct access customers.
IT IS ORDERED that:
1. Decision (D.) 00-08-021 is modified to order San Diego Gas & Electric Company (SDG&E) to implement a bill stabilization plan described herein for its residential and small commercial customers.
2. D.00-08-021 is further modified to order SDG&E to file comments by September 30 proposing a plan to transition all customers to levelized payment plan as described herein.
3. SDG&E shall file a petition to modify the usage caps and applicability of the plan to medium-sized commercial customers.
4. The following findings of fact in Decision (D.) 00-08-021 shall be modified:
1. UCAN's motion to re-institute the rate freeze for SDG&E for the months of August, September, and October could lead to unintended consequences and higher winter bills; however, we recognize that immediate bill relief is requested now by the Governor.
2. UCAN's proposal should not be examined and evaluated in the context of the OII order we vote upon today.
5. D.00-08-021 is modified to add the following two findings of fact:
9. A bill stabilization plan can offer stable bills to residential and commercial customers during this period of price volatility.
10. We will hold evidentiary hearings in the context of the OII we order today on recovery of any revenue shortfall that may arise from a bill stabilization plan, but will ensure that SDG&E is made whole, subject to Commission review of the prudence of SDG&E's procurement decisions.
6. D.00-06-034 is modified to require San Diego Gas & Electric Company (SDG&E) to cap rates for its residential, small commercial, and lighting customers on an interim basis. The following findings of fact shall be modified and now read as follows:
21. We reject PG&E's proposal that it is necessary to cap rates in order to protect residential and small commercial customers from potential price volatility and corresponding rate increases, however, it is reasonable to adopt an interim bill stabilization plan for SDG&E.
22. We did not initiate electric restructuring in order to shield consumers from the market. We agree with Weil and TURN that customers need accurate price signals in order to react and protect themselves against periodic price spikes, however, an interim bill stabilization plan is required to provide immediate rate relief for ratepayers in SDG&E's service territory.
23. In a workably competitive market, we recognize that masking prices results in incomplete and inefficient market structure and system demand, and compromises system reliability. Only through accurate price signals can customers understand how their usage impacts the system and make economically efficient choices; however, it is reasonable to implement a bill stabilization plan on an interim basis for SDG&E.
7. Within five days of the effective date of this decision, SDG&E shall file an advice letter to implement the interim rate stabilization plan in compliance with this decision and to book revenue shortfalls into the TCBA for future recovery of the net shortfall. The advice letter shall be effective on fling subject to Energy Division determining that it is in compliance with this Order.
8. By September 30, 2000, SDG&E shall file comments addressing the implementation of a plan for a transition of all customers to a Levelized Payment Plan as described herein.
9. Residential and commercial bill caps should be ordered to apply to billing for energy consumed commencing on or after June 1, 2000. In order to implement the bill caps for the period prior to issuance of this Decision, SDG&E should provide a credit on future bills issued no later than September 30, 2000. The credit for each such customer shall consist of the amount previously billed in excess of the bill caps imposed by today's order. The credit shall be provided whether or not the customer has paid the prior bill. Concurrently with providing the bill credit, SDG&E shall credit its TCBA in an equivalent amount.
This order is effective today.
Dated August 21, 2000, at San Francisco, California.
HENRY M. DUQUE
JOSIAH L. NEEPER
RICHARD A. BILAS
Commissioners
We will file a dissent.
/s/ CARL W. WOOD
Commissioner
/s/ LORETTA M. LYNCH
President
