III. Applicability of the New MDL Exception in the
Geographic Area Covered by Transferred Load

CMUA seeks confirmation from the Commission that the scope of the exemption provided to new MDL located within the geographic areas served by Publicly-Owned Utilities' (POUs) named in the PG&E Bypass Report is not limited by any volumetric energy cap, but is only limited by the geographic area covered in the Bypass Report forecast. CMUA seeks this confirmation in response to PG&E's position, expressed for the first time in its opening comments in the MDL billing and collection phase, claiming that the total combined amount of transferred and new MDL exemptions should be capped at the numerical level shown in the PG&E Bypass Report. CMUA argues that PG&E's new interpretation is contrary to D.04-11-014 and D.04-12-059, as well as PG&E's own earlier pleadings.

CMUA argues that in D.04-11-014 and D.04-12-059, the Commission provided two categories of exemptions related to the Bypass Report: (1) transferred MDL exemptions, limited to the energy amounts shown in the Bypass Report and (2) new MDL exemptions, limited to new load within the geographic areas served by the publicly owned utilities named in the Bypass Report. The decisions referred to the transferred MDL exemption as "corresponding" to the explicit energy adjustment contained in the Bypass Report:


"[I]n the case of PG&E, an explicit adjustment was made in its load forecast provided to DWR to recognize future bypass due to anticipated transfers of existing IOU load to irrigation districts and municipalities. We conclude that a corresponding CRS exclusion is warranted to recognize the effects of this MDL `transferred load' component...." (D.04-11-014 at p. 4.)

Based on this reference, CMUA infers that the transferred MDL exemption was capped at the energy levels in the Bypass Report and was made specifically applicable to just transferred MDL. In this regard, D.04-12-059, Ordering Paragraph (OP) 1.i stated: "[A] CRS exception [is created] applicable to transferred load within the PG&E service territory corresponding to the estimates set forth in PG&E's August 2000 Bypass Report." (Modifying D.04-11-014 at p. 58, OP 4.)

D.04-11-014 also provided for a separate category for exemptions for new MDL served by POUs named in the Bypass Report. CMUA interprets this exemption as being an additional category of exemptions specifically applicable to new MDL located in the geographic areas served by publicly owned utilities named in the Bypass Report citing the Commission's statement: "We further conclude that any new load served by publicly-owned utilities within the annexed areas covered by the PG&E transferred load should likewise be excluded from paying the CRS." (D.04-11-014 at pp. 4-5, emphasis added.) CMUA argues that this new MDL exemption was not capped by energy, but rather was limited to the geographic areas served by public-owned utilities, and made specifically applicable to new MDL. In this regard, the Commission stated" "[w]e shall grant a limited exception for new load limited to that occurring within the annexed or condemned geographic areas covered by the transferred load identified in PG&E's Bypass Report." D.04-12-059 at p. 21.)

PG&E interprets the language of D.04-12-059 to provide that new MDL, in combination with associated transferred MDL, receive only an exemption from the DWR Power Charge capped at the level of transferred load set forth in PG&E's Bypass Report.

PG&E argues that D.04-12-059, OP 1.i, capping the new MDL exemption at the level forecast in PG&E's Bypass Report, is consistent with the Findings of Fact (FOF) and COL in D.04-11-014 that justified the limited new MDL exemption to an "implicit" level of new MDL in PG&E's Bypass Report. See. e.g., D.04-11-014, Findings of Fact 4, 6, 10-12, Conclusion of Law 3. PG&E also notes the Commission's discussion in D.04-12-059, justified the new MDL exemption based on the implicit inclusion of new MDL in the IOUs' sales forecast. (See D.04-12-059, pp. 19-23.) To the extent that new MDL was implicitly included in PG&E's bypass estimates, PG&E thus believes the combined level of transferred and new MDL exempted from the DWR Power Charge should be capped at those estimates.

In reply comments on billing and collection issues, various POUs cited D.04-12-059, OP 1.g (adding OP 17) to support their claim that new MDL served by those entities named in PG&E's Bypass Report should receive an exemption from the DWR Power Charge without any specified energy cap. PG&E disagrees. PG&E notes that OP 1.g was adopted in response to Modesto and Merced ID's "request for clarification of the limited exception from certain cost responsibility surcharges for new load." (D.04-12-059, p. 32 emphasis added.)

OP 1.g clarified that the exemption granted to new MDL served by POUs named in the Bypass Report applies, not only to new MDL in territory annexed by the POU (as D.04-11-014 originally stated), but also to new MDL in "geographic areas where an IOU still had an obligation to serve" (as stated in D.04-12-059, p. 33).

PG&E argues that the limited nature of the new MDL exemption is further demonstrated by footnote 16 of D.04-12-059, which states:


In its response to the rehearing applications filed by Modesto ID and Merced ID, PG&E contends that there is no justification to extend the CRS exception to the shared service territories where the irrigation districts are...competing with PG&E for new customers. We disagree. In D.04-11-014, we addressed similar arguments raised by PG&E and determined that new MDL of Merced ID did qualify for the CRS exception. Further, PG&E's arguments are simply a disagreement with our policy determination that the CRS exception for transferred load in shared service territories would apply equally to new load. [D.04-12-059, p. 33, n.16, citations omitted, emphasis added.]

Accordingly, since the CRS exception for transferred MDL is capped at the level set forth in PG&E's Bypass Report, and the transferred exception is to "apply equally to new load," PG&E infers that the new MDL exception must (in combination with the transferred MDL exception) also be capped at the level set forth in PG&E's Bypass Report.

At the billing and collection workshop, the POUs argued that PG&E's interpretation of D.04-12-059 focused exclusively on OP 1.i, but failed to acknowledge OP 1.g. PG&E's claims, however, that its interpretation harmonizes the two ordering paragraphs.

PG&E argues that the POUs' claim of an unlimited new MDL exemption gives meaning to only OP 1.g, but ignores (and renders meaningless) OP 1.i, and fails to recognize the specific request for clarification that gave rise to OP 1.g. PG&E thus interprets OP 1.i as establishing a limited exemption from the DWR Power Charge for both new and transferred MDL served by POUs named in PG&E's Bypass Report. PG&E interprets OP 1.g as clarifying that new MDL in both annexed and shared service territories are eligible for this limited exemption.

PG&E acknowledges that, prior to D.04-12-059, it had interpreted D.04-11-014 to provide for only two kinds of exemptions: (1) an exemption for transferred MDL for those POUs named in PG&E's Bypass Report up to the amounts forecast in the Report (with leftover exemptions to be used by certain other POUs), and (2) an exemption for new MDL of POUs without transferred load serving at least 100 customers by July 10, 2003, the date issuance of D.03-07-028 up to an interim amount of 150 megawatt (MW) in the PG&E and SCE territories. On rehearing, however, PG&E claims the exemptions were changed by (1) allowing new MDL associated with the transferred MDL shown in PG&E's Bypass Report to qualify for the first exemption (again, up to the amounts forecast in the Report), and (2) reducing the level of the "greenfield only" exemption for 150 MW to 80 MW.

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