IX. Assignment of Proceeding
Carl Wood and Geoffrey Brown are the Assigned Commissioners and Thomas Pulsifer is the assigned ALJ in this proceeding.
1. D.02-03-055 determined that, as a condition of retaining the DA suspension as effective after September 20, 2001, a surcharge must be imposed on DA customers sufficient to prevent cost shifting to bundled customers as a result of DA migration between July 1 and September 20, 2001.
2. By ALJ ruling dated March 29, 2002, the scope of this proceeding was expanded to consider cost responsibility surcharges for "Departing Load" in order to prevent cost shifting to bundled customers.
3. Pursuant to Rule 51.1, a joint motion was filed for approval of a Settlement Agreement proposing disposition of various contested issues in this proceeding relating to cost responsibility surcharges applicable to Departing Load served by Customer Generation.
4. The Settlement Agreement is offered as an integrated document, and not as a collection of separate agreements on discrete issues. Each party has reserved the right to withdraw support of the Agreement if the Commission makes modifications or makes approval conditional upon modifications.
5. Although various parties raised concerns as to the effect of CRS on creating economic disincentives to develop various forms of alternative generation, no party demonstrated that imposition of CRS, as adopted in this order, is contrary to law or prohibited under Commission policy.
6. To the extent that economic incentives or subsidies to encourage the development of alternative generation is not reflected in the Settlement Agreement, the Commission has the issue before it in R. 99-10-025 concerning the nature and extent, if any, of such incentives that may be warranted to develop alternative forms of Customer Generation.
7. The CRS elements that are at issue for Customer Generation include DWR historic and ongoing charges, "tail" CTC charges, and the HPC for SCE.
8. The imposition of a "Shortfall Charge" as called for under the Settlement would be inconsistent with the Commission's findings in D.02-11-022 regarding integrated relationship between the reserve accounts and historic shortfall, and would permit Customer Generation to escape from paying their full share of Bond-related costs in comparison to bundled and DA load. Therefore, the proposed Settlement must be modified, as delineated in Ordering Paragraph 4.
9. The provisions for ongoing DWR power charges under the Settlement Agreement provides a reasonable recognition of forecasted Customer Generation that was taken into account in determining contractual commitments for the procurement of power by DWR during 2001.
10. The MW cap values as identified in Appendix A of the Settlement are based upon the forecast of Customer Generation available to DWR at the time its contracts were being negotiated.
11. The MW caps set forth in the Settlement form a logical basis for determining the exclusion of going-forward DWR costs applicable to Customer Generation.
12. DWR began procuring electricity on behalf of retail end use customers in the service territories of the California utilities: for PG&E and SCE on January 17, 2001, and for SDG&E on February 7, 2001.
13. AB 1X provides for DWR to collect revenues by applying charges to the electricity that it purchased on behalf of all retail customers, as a direct obligation of DWR.
14. The provisions of the Settlement that make DWR charges applicable to qualifying customers that departed from utility service after January 17, 2001 are consistent with applicable provisions of AB 1X and AB 117.
15. The provision for a "tail" CTC covering those cost categories defined in § 367 (a)(1)-(6), as proposed in the Settlement is consistent with Commission and legislative mandates for customers to bear their share of responsibility for the above-market component of utility purchased power and QF contracts.
16. The provision in the Settlement Agreement for recovery of a Historic Procurement Charge from Customer Generation in the SCE service territory, covering a share of the costs authorized in D.02-07-032, reasonably relates customer responsibility to a customer-specific analysis of contributions to SCE's shortfall and revenues that customers have already contributed toward recovery of those costs.
1. It is consistent with the intent of D.02-03-055 to impose cost responsibility surcharges on Customer Generation Departing Load to the extent necessary to prevent cost shifting to bundled customers based on generally similar principles as apply to DA load as set forth in D.02-11-022.
2. The Commission has broad authority under general provisions of Public Utilities Code Section 701 to regulate public utilities and to "do all things...which are necessary and convenient in the exercise of such power and jurisdiction."
3. The Commission has authority under AB 1X to impose CRS on Customer Generation Departing Load to recover DWR-related costs.
4. Consistent with the Commission's above-noted broad authority to regulate, together with §§ 451 and 453 prohibiting discrimination, bundled customers may not be arbitrarily charged for obligations that rightfully are the responsibility of Customer Generation Departing Load.
5. Pursuant to AB 1X and §§ 701 and 366(d), as well as the provisions of D.02-02-051, the Commission has legal authority to apply DWR Bond Charges on Departing Load Customer Generation that departed from utility service after DWR began procuring power on behalf of retail utility customers.
6. Under Rule 51.1(e), the Commission must find a settlement, whether contested or uncontested, to be "reasonable in light of the whole record, consistent with the law, and in the public interest" before it may approve a settlement.
7. As prescribed in D.01-12-018, when a contested settlement is presented and where hearings have been held on contested issues, the Commission is free to consider such settlements under Rule 51.1(e) or as joint recommendations that may or may not be supported by record evidence.
8. The Settlement Agreement as modified in this order is reasonable in light of the whole record, consistent with the law, and in the public interest, with the exception of the proposed treatment of Bond Charges.
9. The surcharges as determined by the Settlement Agreement reasonably reflect the cost responsibility applicable to Customer Generation.
10. In order to meet requisite criteria for approval and adoption by the Commission, the Settlement Agreement should be amended with respect to the "Shortfall Charge" as prescribed in Ordering Paragraph 4.
11. Parties sponsoring the Settlement should be provided an opportunity to elect to accept the modified terms of the Settlement, as set forth in this order, or to request other relief, as provided for under Rule 51.7.
12. If a Customer Generation unit serving new or incremental load can pass the physical test adopted in D.98-12-067, showing that the load is being met through a direct transaction does not otherwise require the use of transmission or distribution facilities owned by the utility, that load will not considered to be departing, and will not be obligated to pay a CRS in accordance with § 369.
13. In the passage of AB 2228, the Legislature specifically considered and elected to exempt biodigester projects from any net metering or other charges for departing the utility system. Accordingly such biodigester projects should be exempt from the CRS adopted in this order.
14. Pursuant to Section 4.3 of the Settlement, parties reserve the right to make whatever arguments they wish regarding the applicability and implementation of DWR and utility charges to net metered customers under AB 58. Accordingly, there is no need to address those issues at this time.
15. This decision construes, applies, implements, and interprets the provisions of AB 1X (Chapter 4 of the Statutes of 2001-02 First Extraordinary Session). Therefore, Public Utilities Code Section 1731(c) (applications for rehearing are due within 10 days after the date of issuance of the order or decision) and Public Utilities Code Section 1768 (procedures applicable to judicial review) are applicable.
IT IS ORDERED that:
1. This order shall apply to the service territories of Southern California Edison (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E).
2. A mechanism for the determination of a Cost Responsibility Surcharge (CRS) applicable to Departing Load served by Customer Generation is hereby adopted, as set forth below.
3. The terms of the Proposed Settlement Agreement, and attached as Appendix A hereto, regarding the imposition of a surcharge mechanism is hereby approved, with the modifications set forth below.
4. In order to meet Commission standards for approval, Section 5.3.1 and 5.3.2 of the Settlement Agreement must be amended as follows. These sections must be revised to provide for payment of the full Department of Water Resources (DWR) Bond Charge on the same basis as bundled and DA customers, rather than providing only for a "Shortfall Charge" equal to 72% of the full DWR Bond Charge.
5. Departing Load Customer Generation shall pay its share of DWR ongoing power charges in accordance with the provisions set forth in Section 6 of the Settlement Agreement.
6. The DWR ongoing power charges shall apply in accordance with the provisions set forth in Section 6.2 of the Settlement Agreement. Departing Load will qualify for an exemption from the DWR ongoing power charges pursuant to Section 6.2.2 of the Settlement Agreement to the extent it does not exceed the annual megawatts (MW) cap allowances as set forth in Appendix A of the Settlement Agreement.
7. If, on a utility-specific basis, the actual Departing Load is less than the applicable annual MW cap specified in Appendix A, the difference between the annual MW cap and actual Departing Load shall be carried forward and added to the following year or years' determination in accordance with the procedures outlined in Sections 2 and 3 of Appendix A of the Settlement Agreement.
8. The determination of whether a Departing Load falls within the prescribed annual MW cap allowances shall be made by the California Energy Commission, on a first-come, first-served basis referenced to the date of load departure pursuant to the process outlined in Section 4 of Appendix A of the Settlement Agreement.
9. At the point in time when the CEC initiates public comment on the process it will use for determining customers' exemption status pursuant to Appendix A of the Settlement, the CEC shall so apprise the Commission by letter to the Director of the Commission's Energy Division. The Commission reserves its options to take whatever steps may be deemed necessary at that time to ensure the process is administered fairly and consistent with the adopted provisions of the Settlement.
10. To the extent that Departing Load customers are responsible for paying a DWR ongoing power charge under the Settlement Agreement, such charge shall be set equal to the corresponding cents/kilowatts (kWh) surcharge component in effect on the date of departure as determined pursuant to the Direct Access (DA) phase of R.02-01-011 and related or successor proceedings.
11. To the extent that the Commission determines that (a) any Commission-imposed DA CRS cap has resulted in an undercollection by the utility of any applicable DA nonbypassable charges, and (b) individual DA customers shall remain responsible for a portion of the undercollection if they return to bundled utility service, then these DA customers shall remain responsible for the same portion of the undercollection when they become Departing Load.
12. At the discretion of the departing direct access customer, the undercollected amount referenced above shall be collected through either a lump sum or through monthly billings by the utility with the total amount of each monthly charge for both DA undercollections and any applicable Departing Load surcharges subject to the DA CRS cap.
13. SCE is authorized to recover an Historical Procurement Charge (HPC) from Departing Load that was receiving bundled service at the time of the departure as prescribed in Section 7.1 of the Settlement Agreement. The HPC shall be computed and applied on a customer-specific basis using the methodology specified in Appendix B of the Settlement Agreement.
14. Departing Load exempt from competition transition charges (CTC) pursuant to any statute, including without limitation Pub. Util. Code §§ 372 and 374, as the legislation existed on the execution date of the Settlement Agreement, shall be exempt from "tail" CTC, as provided for in Section 8.1 of the Settlement Agreement.
15. Departing Load not otherwise exempt, as specified above, shall pay a "tail" CTC calculated as specified in Section 8.3 of the Settlement Agreement. If Departing Load commences payment of the charge and thereafter qualifies for a statutory exemption under Public Utilities Code § 372 as that statute existed on the execution date of the Settlement Agreement, the CTC shall be discontinued effective on the date of qualification.
16. Parties sponsoring the Settlement are authorized, as part of their comments of the ALJ's Proposed Decision, to indicate whether they elect to accept the alternative terms as modified herein, or to request other relief, as provided for under Rule 51.7.
17. The recovery of the CRS element relating to recovery of bond charges shall be implemented once this decision becomes final and unappealable. During the interim, the bond charge component shall be tracked through the subaccount process established in D.02-10-063 and D.02-11-074.
18. PG&E, SCE, and SDG&E, respectively, are hereby directed to file necessary tariff revisions to incorporate and implement the other surcharge elements adopted in this order. The utilities shall make compliance advice letter filings within five days of the effectiveness of this order, to implement the CRS element, other than bond charges, as adopted in this order. The advice letters shall be effective on filing, subject to post-filing review by the Energy Division.
This order is effective today.
Dated , at San Francisco, California.
Pulsifer Comment Dec. Attachment A Settlement Agreement
