III. Other Affidavit Implementation Issues

A. Limitations on Customer Requirement to Provide Contract Copy

AReM argues that the requirement for a customer to provide the Commission a copy of a contract should be restricted only to the situation referenced in Section 5 where "the Commission may conduct spot audits or informal investigative inquiry, as it deems necessary, to deal with any potential disputes concerning the accuracy of Customer's claims concerning contractual volumes."

AReM argues that the requirement to provide a contract should not enable the Commission to request contracts for any reason whatsoever. Just as the utilities are concerned about any disclosure of the terms of their procurement contracts, AReM argues that DA customers and their suppliers are similarly concerned about the confidentiality of their contracts. AReM thus asks that in the final form of approved affidavit, the Commission should limit the requirement to provide contracts to the case where there are, "disputes concerning the accuracy of Customer's claims concerning contractual volumes."

We acknowledge the concerns of AReM as to the confidentiality and commercial sensitivity of information contained in DA /ESP contracts. Accordingly, in connection with any action by the Commission to obtain access to such contracts in connection with spot audits or other investigatory action relating to the affidavit and load growth provisions of this decision, we shall take into account such concerns and apply appropriate confidentiality protections with respect to contract data.

Nonetheless, AReM's proposed restrictions on Commission authority to obtain access to DA contracts would unduly impede the Commission in carrying out its responsibilities. On the one hand, AReM seeks to limit Commission access to confidential data to those instances where there is a dispute as to contract amounts. Yet, AReM also opposes disclosure of specific contract amounts in the affidavit. Thus, AReM fails to explain how it would be possible for a utility even to form a basis for a dispute to the extent that specific contractual volumes are not disclosed in the affidavit.

To the extent the Commission was to be precluded from access to confidential contracts, it would unduly impede our ability to conduct spot audits. While the Commission must exercise due discretion in carrying out its oversight responsibilities, we must not adopt restrictions that will impede our ability to carry out necessary responsibilities. Moreover, restricting our authority to conduct spot audits only to those instances where a specific dispute had arisen would unduly impede the Commission in its ability to enforce applicable DA load growth rules in the context of DA suspension of new contracts. DA customers have an enhanced incentive to comply with the affidavit and related load growth rules knowing there is a possibility of a spot audit, not just in those limited cases where a specific dispute has arisen.

B. Restrictions on DA Customers that
Must Sign the Affidavit

All workshop participants agreed that a minimum load requirement for customer affidavits should be imposed, such that only customers with at least one DA account in excess of 500 kW in demand would be required to sign an affidavit. TURN agreed to this threshold based on SCE's prior filings stating that approximately 70% of DA load in its service territory is due to accounts in excess of 500 kW demand. PG&E and SDG&E confirmed that their percentages are similar.

Parties disagree, however, concerning whether, in addition to the minimum load requirement, a minimum load growth trigger should be applied as a threshold to determine when a customer should be required to submit an affidavit.

AReM proposed originally that an affidavit not be required until the serving utility's DA load had exceeded a 15% growth trigger in 4 of the preceding 12 months, and then only for DA accounts that had demonstrated "significant" growth during the prior year (defined as greater than 15%). Other DA parties support AReM `s proposal, arguing that the affidavit requirement should not apply unless and until the "trigger" amount for overall DA load growth has been exceeded.

TURN and SCE disagree, arguing that nothing in D.04-07-025 supports such requirement. SCE believes the Commission only intended that a 15% aggregate growth trigger apply to the recalculation and reassessment of the 2.7 cents/kWh DA CRS cap under Principle 7. SCE argues that a 15% growth trigger would send the wrong signal to DA customers, erroneously leading them to believe that existing DA load may grow without restriction until the 15% threshold is exceeded.

In comments filed November 15, 2004, AReM offered a compromise between its original position and that of the utilities. Instead of its original proposal for a 4-out-of-12- month requirement for hitting the 15% trigger to account for seasonality, AReM now proposes simply that affidavits be required only in the event the 15% load growth "trigger" is activated.

As a further compromise, AReM proposes that if the load growth trigger is activated, then the affidavit process be applied to those customers over 500 kW shown to have experienced any load growth during the last year, rather than only to those who had experienced 15% load growth.

AReM advocates its proposed load growth trigger, particularly in view of the fact that DA load growth has not been observed on a statewide basis since the Commission suspended DA effective September 21, 2001. AReM thus argues that no actual problem with DA load growth exists, and consequently, the Commission should not mandate affidavit processes that may be unnecessary and unduly burdensome.

We decline to apply a 15% load growth trigger for purposes of limiting whether a DA customer must sign an affidavit. The affidavit shall be mandatory for customers with annual demand over 500 kW, as stated in D.04-07-025. D.04-07-025 specifies that the appropriate criterion for applying the affidavit requirement is a minimum load per customer, irrespective of the utility's aggregate system-average load growth. In this regard, D.04-07-025, Conclusion of Law 11 states:


11. A Rule 22 Working Group Meeting should be scheduled to develop an affidavit process whereby DA customers beyond a designated minimum load must attest to their contractual DA load limits, and that they have not exceeded contractual limits. The Working Group should seek consensus on the appropriate minimum load per customer per utility for applying the affidavit. (Emphasis added.)

The use of the word "must" implies a mandatory attestation, with only the level of the minimum load per customer cut-off left to be decided. Finding of Fact 14 of D.04-07-025 also affirms the mandatory nature of the affidavit:


14. An affidavit requirement for large DA customers provides a reasonable process for verification of contracted load and attention [sic, should read "attestation"] of compliance with contractual limits. (Id. at 41.)

The issue of a load growth "trigger" appears in an entirely separate section of D.04-07-025 (at pp. 29-30) and, as indicated in Principle 7, deals with the question of when the DA CRS accrual and cap should be subject to review.

Thus, in order to comply with the requirements of D.04-07-025, all DA customers that meet the minimum load threshold must submit an affidavit. By limiting the affidavit requirement to customers with annual demand over 500 kW, we avoid imposing undue burdens on the large numbers of DA customers with demand below the 500 kW threshold. AReM's proposal to further limit the affidavit requirement only to instances where a 15% load growth trigger is met goes beyond what is permitted under D.04-07-025, and thus shall not be adopted.

The issue of affidavit submission criteria was already decided in D.04-07-025. The stated purpose of this phase of the proceeding was only to address the limited issue of how the affidavit form was to be prescribed. It is beyond the limited scope of this decision to relitigate the criteria applicable to DA customers required to submit the DA affidavit. Accordingly, the previously established criteria in D.04-07-025 for the submission of the affidavit form remain in place.

C. IOU Obligations to Review Submitted Affidavits

TURN takes exception to the IOUs' statement, at page 4 of the Working Group Report, indicating that they will not be "reviewing, monitoring, interpreting or making recommendations regarding such volumes" (emphasis added). TURN argues that the IOUs' statement goes well beyond Principle 2 adopted in D.04-07-025, which indicates only that: "Utilities are not required to review, monitor, interpret or make recommendations regarding ESP/customer DA contracts" (emphasis added).

While the IOUs are not expected to review actual contracts, we agree with TURN that the IOU should review the affidavits and notify the Commission of any discrepancies between actual customer usage and the contract maximums stated in the affidavits. Of course, where the customer merely indicates that DA contracts are executed on a "full requirements" basis, there would not be specific numerical figures against which a comparison with contractual totals could be readily made. In any event, we retain the discretion to conduct spot audits on any DA customer contract as a measure to promote compliance and to ensure that DA load growth is consistent with Commission directives.

D. Schedule for Sending, Completing, and Submitting Affidavits

The utilities' proposed affidavit process also included the following steps:

The utilities also proposed that if the utility is made aware of a load growth situation (for a customer with at least one DA account with demand in excess of 500 kW) due to a service upgrade (i.e., a service panel upgrade, a larger transformer, etc.) and the customer has not previously signed an affidavit, the customer will be required to sign an affidavit.

All participants expressed agreement with these processes. We find these proposed processes and schedule to be reasonable and accordingly adopt them.

E. Recourse for Noncompliance with Affidavit Requirements

Workshop participants seek Commission guidance as to the process to be applied if customers do not return or refuse to sign the affidavit. The utilities seek to determine whether they should take further action in such a situation as sanctions. The utilities would like to include a statement in their cover letter describing the consequences of failing to return the affidavit so that customers are aware of what might occur if they do not return the affidavit.

Although parties seek Commission guidance as to the recourse for customers refusing to comply with the affidavit requirements, they have offered no proposals as to what they believe appropriate recourse would be. In the absence of any other record on this issue, we rely upon our statutory authority to impose penalties on corporations and persons, other than public utilities, which or who knowingly violate or fail to comply with an order or decision of this Commission. As prescribed in Public Utilities Code Section 2111, the Commission has the authority in such a case to impose a penalty of not less than $500 dollars nor more than $20,000 for each offense. The utilities should include a statement in their cover letter concerning the Commission's authority and willingness to impose and enforce payment of penalties as prescribed in Section 2111 for DA customers that refuse or fail to comply with the adopted affidavit requirements. Also, the Commission has other remedies available, including contempt under Section 2113, and may do all things necessary to enforce the law and its decisions (Public Utilities Code Section 701).

CLECA/CMTA also propose that utility representatives be required to communicate the affidavit requirements directly to the appropriate DA customer contact. In some corporations, automated systems deal with billing, which means that a communication concerning the affidavit sent to the billing department may go unheeded. Since the customer faces potential penalties of a significant sum, CLECA/CMTA believe the utility should have an obligation to ensure that the forms and instructions are directed to the appropriate contact for each DA customer.

Second, before a customer is listed as being out of compliance with the affidavit process, CLECA/CMTA advocate that the utilities be required to send a second notice to those customers who have not responded at the end of the initial 60-day period. TURN does not object to CMTA/CLECA's suggesions that the affidavit requirement be communicated directly to the customer's designated DA contact, and that customers receive a second notice if they fail to comply. TURN would recommend, however, that the second notice be sent 10 days prior to the expiration of the 60-day compliance period, rather than after the failure to comply has already occurred.

We find it reasonable to impose notification requirements, as proposed by CLECA/CMTA. Accordingly, we shall require that utility representatives communicate the affidavit requirements directly to the appropriate DA customer contact, and to ensure that the forms and instructions are directed to the appropriate contact for each DA customer. We shall also require that before a customer is listed as being out of compliance with the affidavit process, the utilities must send a second notice to those customers who have not responded ten days prior to the expiration of the initial 60-day period for compliance.

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