MEG/hkr 3/19/2003
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of Southern California Gas Company (U904G) for Authority to increase its Gas Revenue Requirements to Reflect its Accomplishments for Demand-Side Management Program Years 1995 and 1997, Energy Efficiency Program Year 1999, and Low-Income Program Years 1998 and 1999 in the 2000 Annual Earnings Assessment Proceeding ("AEAP").
Application 00-05-002
And Related Matters.
Application 00-05-003
Application 00-05-004
Application 00-05-005
Application 01-05-003
Application 01-05-009
Application 01-05-017
Application 01-05-018
Application 02-05-002
Application 02-05-003
Application 02-05-005
Application 02-05-007
ADMINISTRATIVE LAW JUDGE'S RULING
The purpose of this ruling is to set forth the schedule and scope for this proceeding, as discussed at the February 27, 2003 prehearing conference (PHC) and clarified by subsequent e-mail communications.
This consolidated proceeding will address the earnings claims for the 2000, 2001, and 2002 Annual Earnings Assessment Proceedings (AEAPs), as well as the load management cost recovery issues filed in the 2002 AEAP per the Commission's direction. As discussed below, consolidation of the 2003 AEAP into this proceeding is currently under consideration.
Attachment 1 sets forth the schedule for the 2000, 2001, and 2002 AEAPs established by today's ruling.
1. Pre-1998 Energy Efficiency Earnings Claims
Each of the AEAP applications consolidated by this proceeding includes earnings claims related to the shared-savings earnings mechanism adopted for pre-1998 energy efficiency programs. By ruling dated March 13, 2002, Administrative Law Judge (ALJ) Walwyn, in consultation with the Assigned Commissioner's Office, solicited comments on whether the Commission should reopen Rulemaking (R.) 91-08-003/Investigation (I.) 91-08-002 to modify the shareholder incentives adopted in that proceeding. The ruling describes the issue as follows:
"In D.94-10-059, the Commission stated that it wanted to adopt a level of earnings opportunity that was sufficient (and not too much) to off-set the regulatory and financial biases against demand-side management (or in favor of supply-side resources) that the utilities might have in procuring least-cost resources. (57 CPUC 2d at 51.) The mechanism authorized payments over a 7 to 10 year period based on a complex process of measuring long-term energy savings. Over the objections of ORA and The Utility Reform Network (TURN), the Commission set a target shareholder earnings level of 30% of long-term energy savings, without a cap, stating this was a reasonable level in light of the utilities assuming a downside risk of penalties.
"Almost seven years later, our experience under this mechanism shows that (1) no penalties have ever been assessed; (2) the adopted measurement protocols award incentives for events unrelated to any utility actions, such as technical degredation levels of customers' equipment; and (3) SDG&E projects it shareholders will earn a profit of 92.5% on its 1996 programs and 80.8% on its 1995 programs, and PG&E will earn 70.7% on its 1995 programs if the incentive mechanism remains unchanged.
"Based on this information, I find good cause exists to request parties to comment on whether the Commission should, based on these comments, reopen D.94-10-059 for shareholder incentives before us in this and future AEAPs."1
Comments were filed on March 29, 2002 by the California Energy Commission (CEC), Office of Ratepayer Advocates (ORA), Natural Resources Defense Council, Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), The Utility Reform Network (TURN), Women's Energy Matters (WEM) and jointly by Southern California Gas Company (SoCal) and San Diego Gas & Electric Company (SDG&E). Reply comments were filed on April 12, 2002 by all of the parties listed above, except for WEM.
Clearly, the threshold issue for all earnings claims related to the pre-1998 shared-savings mechanism described in the ruling is whether the Commission should revisit the decision that established that mechanism. 2 I have requested information to update and augment the table presented in Attachment A of the March 13, 2002 ruling that I believe is needed in order to consider the issue. Per my direction at the PHC, the supplemental information is due March 17, 2003 and comments on that filing are due March 24, 2003.3 The utilities and interested parties will have the opportunity to file reply comments by April 1, 2003. (See Attachment 1.)
Should the Commission proceed with the pre-1998 incentive claims without reopening Decision (D.) 94-10-059, I believe that the current record needs to be augmented with an evaluation and verification of the underlying retention and persistence studies. The Commission has recently issued a Request For Proposals (RFP) that would, among other measurement and verification tasks, hire an independent contractor for this purpose.4
At the PHC, we also discussed a preliminary list of studies related to pre-1998 earnings claims, which indicated the type of review (review memo or verification report) that ORA has conducted to date for the 1999 and 2000 AEAPs. I directed the utilities to update the listing with the studies that will be completed (and the Commission would need to review) through the 2003 AEAP, and with the reviews ORA has conducted to date for the 2001 AEAP. This information was filed on March 17, 2003. As I directed at the PHC, ORA should indicate what plans it has to conduct a review memo or verification study for the 2001 AEAP pre-1998 earnings claims if none have been completed to date.5 ORA should also indicate the type of review it plans to conduct for the load impact/retention studies underlying the 2002 AEAP pre-1998 energy efficiency earnings claims. ORA should file and serve this information within 10 days from the date of this ruling.
At this point in time, until the Commission addresses the threshold issue of reopening D.94-10-059 and I obtain the additional information outlined above, it is premature to establish a fixed schedule for this phase of the proceeding.
1 March 13, 2002 Administrative Law Judge's Ruling, pp. 1-3.
2 As I discussed at the PHC, the language of the March 13 ruling is clear that the reopening issue relates to the shared-savings incentive mechanism adopted in D.94-10-059, and not to low-income energy efficiency program incentives or post-1997 milestone-based incentives for energy efficiency.
3 See Reporter's Transcript (RT), PHC-4, February 27, 2003 at 235-257 and Attachment 5.
4 See: March 12, 2003 Request For Proposal, Notice to Prospective Proposers For Measurement and Verification of 2003 Utility Statewide Energy Efficiency Programs, which is posted on the Commission's website at www.cpuc.ca.gov.
5 RT at 189-191, 194.
