V. Rehearing and Judicial Review
This decision construes, applies, implements, and interprets the provisions of AB 1X. 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 for judicial review) are applicable. (See Stats. 2001 (1st Extraordinary Sess.), ch. 9, §§ 1 & 2, pp. 79-80.)
1. On November 5, 2001, DWR has submitted to us, pursuant to its authority under Water Code § 80110, a revenue requirement of $10,003,461,000 for the three major California utilities, covering the period January 2001 through December 2002.
2. DWR's revenue requirement was adjusted on February 21, 2002 to $9,045,462,000.
3. There would be a significant magnitude of cost-shifting if DWR costs are borne solely by bundled service customers, and direct access customers are not required to pay a portion of these costs that were incurred by DWR on behalf of all retail end use customers in the service territories of the three utilities during a time when California was faced with an energy crisis.
4. It is reasonable to prevent this cost-shifting by imposing a direct access surcharge or exit fee, rather than adopting an earlier suspension.
5. Consumers, regulated utilities and the economy as a whole benefit when the Commission maintains a regular and consistent regulatory program, which affords the predictability necessary to plan investment and budgetary decisions.
6. California is better served by maintaining the September 20, 2001 direct access suspension date and by imposing a direct access surcharge or exit fee, in lieu of an earlier suspension, to recover DWR costs from direct access customers.
7. The issues concerning direct access surcharges or exits are matters to be considered in A.00-11-038, et al., and such surcharges or exit fees will be developed in that proceeding.
8. Certain direct access contracts include assignment, renewal, and load expansion provisions..
9. A direct access customer who returns to bundled service should not be billed by the utility for bundled service he did not use.
10. Allowing a current direct access customer to choose a new ESP, renew a contract with an ESP, or be assigned to a new ESP will not increase overall direct access load or result in cost-shifting.
11. Certain community choice aggregation programs have signed up direct access customers before September 20, 2001.
12. It is reasonable to interpret a September 20, 2001 date for suspension of direct access to mean that the level of direct access load as of that date (irrespective of whether power had yet flowed under any direct access contract) should not be allowed to increase, apart from normal load fluctuations.
13. D.01-09-060 should be clarified so that new contracts are allowed if a direct access customer switches ESPs.
14. It is reasonable to allow assignment or renewal of a direct access contract, if the assignment or renewal is permitted in the contract, and if does not constitute a new contract or arrangement.
15. Customers who signed a direct access contract as of September 20, 2001 may renew the contract, enter into a new contract with a different ESP for the same load, or may switch ESPs via assignment or other permissible mechanism. The filing of new DASRs to implement such changes is permissible.
16. Addition of any new or additional account that involves installation of an additional meter or requires a new DASR after September 20, 2001 constitute a new direct access contract or arrangement and is not allowed, except to initiate service or to replace or upgrade an existing meter.
17. Community choice aggregation programs should not be allowed to serve direct access customers who signed up after September 20, 2001.
1. Direct access is a legislative and regulatory right, subject to the suspension provisions of AB 1X.
2. In implementing AB 1X, the Commission in D.01-09-060 suspended the right to enter into direct access contracts or arrangements after September 20, 2001.
3. The implementation provisions set forth in this decision are reasonable and consistent with our determinations in D.01-09-060 that suspended the right to enter into direct access contracts or arrangements as of September 20, 2001.
4. This decision is made effective today to allow the suspension provisions to be implemented expeditiously. Thus, it is reasonable to reduce the period for comment and review of the draft decision, pursuant to Rule 77.7(f)(9).
IT IS ORDERED that:
1. This order shall apply to Southern California Edison Company (SCE). Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E).
2. The execution of any new contracts, or the entering into, or the verification of any new arrangements for direct access service pursuant to Public Utilities Code Sections 366 or 366.5, after September 20, 2001, is prohibited, unless specifically allowed on this decision.
3. Direct access surcharges or exit fees shall be developed in A.00-11-038, et. al. so that there is an equitable allocation of the DWR costs, so that direct access customers pay their fair share of DWR costs.
4. SCE, PG&E, and SDG&E shall implement the conditions set forth in this decision which affect those direct access contracts not suspended.
5. SCE, PG&E, and SDG&E shall not accept any direct access service requests for any contracts executed or agreements entered into after September 20, 2001, unless specifically allowed by this decision.
6. If not already done, SCE, PG&E, and SDG&E shall notify their customers that the right of retail end users to acquire direct access service is suspended effective September 20, 2001.
7. If not already done, SCE, PG&E, and SDG&E shall modify any information disseminated to customers that describes direct access service, subject to review by the Public Advisor's office and Energy Division, to explain that the right to acquire direct access service has been suspended.
8. The highlighted sections under "Implementation of the Suspension of Direct Access" are adopted.
9. Within 14 days of the effective date of this order, SCE, PG&E, and SDG&E by letter, shall inform the Director of the Energy Division of the steps they have taken to ensure that no direct access service requests are accepted for any contracts executed or agreements entered into after September 20, 2001.
10. SCE, PG&E, and SDG&E shall within 90 days after the effective date of this order, return any direct access customers not in conformity with this order to bundled service.
11. This Rulemaking is closed.
This order is effective today.
Dated March 21, 2002, at San Francisco, California.
HENRY M. DUQUE
GEOFFREY F. BROWN
MICHAEL R. PEEVEY
Commissioners
I dissent.
/s/ LORETTA M. LYNCH
President
I will file a dissent.
/s/ Carl W. Wood
Commissioner
Appendix A | ||||||||||||||||||
Table 1 | ||||||||||||||||||
DWR Revenue Requirement | ||||||||||||||||||
For the Period January 17, 2001 through December 31, 2002 | ||||||||||||||||||
($000s) | ||||||||||||||||||
Quarter |
Retail Sales (GWhs) |
A&G |
Other |
DSM |
Contract Power |
Residual Net Short |
Ancillary Services |
Total Commitments |
(Lag) Lead Accrual to Cash |
Total Operating Expenditures |
Financing Cost |
Total Expenditures |
Revenue Lead (Lag) |
Spot Sales Revenue |
Estimated Quarterly Fund Balance |
Total DWR Revenues Needed |
Net Borrowed Proceeds |
Customer Revenue Requirement |
A |
B |
C |
D |
E |
F |
G (Sum of A thru F) |
H |
I (= G + H) |
J |
K (= I + J) |
L |
M |
N |
O (=K - L -M + N) |
P |
Q (=O - P) | ||
Q1, 2001 |
12,360 |
7,848 |
- |
- |
- |
3,581,465 |
367,847 |
3,957,160 |
(1,619,382) |
2,337,778 |
- |
2,337,778 |
(544,097) |
- |
293,176 |
3,175,051 |
2,400,000 |
775,051 |
Q2, 2001 |
19,620 |
10,162 |
- |
482 |
627,601 |
3,884,229 |
419,215 |
4,941,690 |
6,302 |
4,947,991 |
- |
4,947,991 |
(1,030,866) |
- |
4,239,624 |
9,925,305 |
7,908,729 |
2,016,576 |
Q3, 2001 |
16,054 |
11,346 |
3,734 |
226,446 |
888,404 |
1,135,727 |
57,667 |
2,323,324 |
(55,479) |
2,267,845 |
(10,481) |
2,257,364 |
(329,133) |
- |
3,182,822 |
1,529,696 |
(116,300) |
1,645,996 |
Q4, 2001 |
10,365 |
8,998 |
4,008 |
61,968 |
670,470 |
248,590 |
43,889 |
1,037,923 |
550,427 |
1,588,350 |
- |
1,588,350 |
223,483 |
20,884 |
2,963,069 |
1,124,230 |
- |
1,124,230 |
Q1, 2002 |
9,313 |
15,104 |
3,667 |
- |
652,644 |
169,756 |
51,551 |
892,722 |
1,543,844 |
2,436,567 |
(45,976) |
2,390,591 |
879,565 |
24,819 |
2,499,879 |
1,023,017 |
- |
1,023,017 |
Q2, 2002 |
7,957 |
15,104 |
3,211 |
- |
665,651 |
129,830 |
42,678 |
856,474 |
(19,771) |
836,703 |
471,932 |
1,308,635 |
20,355 |
39,279 |
2,128,890 |
878,012 |
- |
878,012 |
Q3, 2002 |
12,312 |
15,104 |
4,895 |
- |
946,735 |
220,184 |
64,080 |
1,250,998 |
(25,251) |
1,225,748 |
400,807 |
1,626,555 |
(257,440) |
45,879 |
1,643,471 |
1,352,697 |
- |
1,352,697 |
Q4, 2002 |
10,812 |
15,104 |
4,249 |
- |
832,758 |
164,417 |
54,752 |
1,071,280 |
20,493 |
1,091,773 |
464,959 |
1,556,732 |
194,995 |
26,043 |
1,495,658 |
1,187,882 |
- |
1,187,882 |
Total |
98,793 |
98,771 |
23,764 |
288,896 |
5,284,264 |
9,534,199 |
1,101,678 |
16,331,571 |
401,184 |
16,732,755 |
1,281,242 |
18,013,997 |
(843,139) |
156,903 |
20,195,890 |
10,192,429 |
10,003,461 | |
- Notes
1. Total Commitments equals sum of A&G, Other (Uncollectables), DSM, Contract Power, Residual Net Short, and Ancillary Services
2. Total Operating Expenditures equals Total Commitments plus (Lag) Lead Accrual to Cash
3. Total Expenditures equals Total Operating Expenditures plus Financing Cost
4. Total DWR Revenues Needed equals Total Expenditures minus Revenue Lead (Lag), minus Spot Sales Revenue, plus Estimated Quarterly Fund Balance
5. Customer Revenue Requirement equals Total DWR Revenues Needed minus Net Borrowed Proceeds
Appendix B
(Page 1)
Water Code Sections
80000. The Legislature hereby finds and declares all of the
following:
(a) The furnishing of reliable reasonably priced electric service
is essential for the safety, health, and well-being of the people of
California. A number of factors have resulted in a rapid, unforeseen
shortage of electric power and energy available in the state and
rapid and substantial increases in wholesale energy costs and retail
energy rates, with statewide impact, to such a degree that it
constitutes an immediate peril to the health, safety, life and
property of the inhabitants of the state, and the public interest,
welfare, convenience and necessity require the state to participate
in markets for the purchase and sale of power and energy.
(b) In order for the department to adequately and expeditiously
undertake and administer the critical responsibilities established in
this division, it must be able to obtain, in a timely manner,
additional and sufficient personnel with the requisite expertise and
experience in energy marketing, energy scheduling, and accounting.
80002.5. It is the intent of the Legislature that power acquired by
the department under this division shall be sold to all retail end
use customers being served by electrical corporations, and may be
sold, to the extent practicable, as determined by the department, to
those local publicly owned electric utilities requesting such power.
Power sold by the department to retail end use customers shall be
allocated pro rata among all classes of customers to the extent
practicable.
80104. Upon the delivery of power to them, the retail end use
customers shall be deemed to have purchased that power from the
department. Payment for any sale shall be a direct obligation of the
retail end use customer to the department.
80108. The commission may issue rules regulating the enforcement of
the agency function pursuant this division, including collection and
payment to the department.
Appendix B
(Page 2)
80110. The department shall retain title to all power sold by it to
the retail end use customers. The department shall be entitled to
recover, as a revenue requirement, amounts and at the times necessary
to enable it to comply with Section 80134, and shall advise the
commission as the department determines to be appropriate. Such
revenue requirements may also include any advances made to the
department hereunder or hereafter for purposes of this division, or
from the Department of Water Resources Electric Power Fund, and
General Fund moneys expended by the department pursuant to the
Governor's Emergency Proclamation dated January 17, 2001. For
purposes of this division and except as otherwise provided in this
section, the Public Utility Commission's authority as set forth in
Section 451 of the Public Utilities Code shall apply, except any just
and reasonable review under Section 451 shall be conducted and
determined by the department. The commission may enter into an
agreement with the department with respect to charges under Section
451 for purposes of this division, and that agreement shall have the
force and effect of a financing order adopted in accordance with
Article 5.5 (commencing with Section 840) of Chapter 4 of Part 1 of
Division 1 of the Public Utilities Code, as determined by the
commission. In no case shall the commission increase the electricity
charges in effect on the date that the act that adds this section
becomes effective for residential customers for existing baseline
quantities or usage by those customers of up to 130 percent of
existing baseline quantities, until such time as the department has
recovered the costs of power it has procured for the electrical
corporation's retail end use customers as provided in this division.
After the passage of such period of time after the effective date of
this section as shall be determined by the commission, the right of
retail end use customers pursuant to Article 6 (commencing with
Section 360) of Chapter 2.3 of Part 1 of Division 1 of the Public
Utilities Code to acquire service from other providers shall be
suspended until the department no longer supplies power hereunder.
The department shall have the same rights with respect to the payment
by retail end use customers for power sold by the department as do
providers of power to such customers.
Appendix B
(Page 3)
80130. The department may incur indebtedness and issue bonds as
evidence thereof, provided that bonds may not be issued in an amount
the debt service on which, to the extent payable from the fund, is
estimated by the department to exceed the amounts estimated to be
available in the fund for their payment. The department may
authorize the issuance of bonds (excluding notes issued in
anticipation of the issuance of bonds and retired from the proceeds
of those bonds) in an aggregate amount up to the greater of thirteen
billion four hundred twenty-three million dollars ($13,423,000,000)
or the amount calculated by multiplying by a factor of four the
annual revenues generated by the California Procurement Adjustment,
as determined by the commission pursuant to Section 360.5 of the
Public Utilities Code; provided, such aggregate amount shall not
exceed thirteen billion four hundred twenty-three million dollars
($13,423,000,000). Nothing in this section shall prohibit the
department from issuing bonds prior to the effective date of this
bill based upon the authorization granted to the department by the
provisions of Chapter 4 of the Statutes of 2001-02 First
Extraordinary Session. Refunding of bonds to obtain a lower interest
rate shall not be included in the calculation of the aggregate
amount. In addition, before the issuance of bonds in a public
offering, the department shall establish a mechanism to ensure that
the bonds will be sold at investment grade ratings and repaid on a
timely basis from pledged revenues. This mechanism may include, but
is not limited to, an agreement between the department and the
commission as described in Section 80110.
Appendix B
(Page 4)
80134. (a) The department shall, and in any obligation entered into
pursuant to this division may covenant to, at least annually, and
more frequently as required, establish and revise revenue
requirements sufficient, together with any moneys on deposit in the
fund, to provide all of the following:
(1) The amounts necessary to pay the principal of and premium, if
any, and interest on all bonds as and when the same shall become due.
(2) The amounts necessary to pay for power purchased by it and to
deliver it to purchasers, including the cost of electric power and
transmission, scheduling, and other related expenses incurred by the
department, or to make payments under any other contracts,
agreements, or obligations entered into by it pursuant hereto, in the
amounts and at the times the same shall become due.
(3) Reserves in such amount as may be determined by the department
from time to time to be necessary or desirable.
(4) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
(5) Repayment to the General Fund of appropriations made to the
fund pursuant hereto or hereafter for purposes of this division,
appropriations made to the Department of Water Resources Electric
Power Fund, and General Fund moneys expended by the department
pursuant to the Governor's Emergency Proclamation dated January 17,
2001.
(6) The administrative costs of the department incurred in
administering this division.
(b) The department shall notify the commission of its revenue
requirement pursuant to Section 80110.
(END OF APPENDIX B)
Appendix C
APPEARANCES (R.02-01-011) |
Alan L. Schlang |
Kevin R. Mcspadden |
Michael S. Hindus |
Maria E. Stevens |
Stephen St. Marie |
Appearance (A.98-07-003, et al.)
JAMES H. BUTZ KEITH R. MCCREA
AIR PRODUCTS AND CHEMICALS, INC. ATTORNEY AT LAW
7201 HAMILTON BLVD. SUTHERLAND, ASBILL & BRENNAN LLP
ALLENTOWN, PA 18195 1275 PENNSYLVANIA AVENUE, NW
WASHINGTON, DC 20004-2415
KAY DAVOODI MAURICE BRUBAKER
1314 HARWOOD STREET SE BRUBAKER & ASSOCIATES
WASHINGTON NAVY YARD, DC 20374-5018 1215 FERN RIDGE PARKWAY, STE. 208
ST. LOUIS, MO 63141-2000
MERILYN FERRARA CHARLES MIESSNER
ARIZONA PUBLIC SERVICE NEW WEST ENERGY
400 N 5TH ST. PO BOX 61868
PHOENIX, AZ 85004 PHOENIX, AZ 85082
NORMAN A. PEDERSEN KEVIN R. MCSPADDEN
ATTORNEY AT LAW ATTORNEY AT LAW
JONES DAY REAVIS & POGUE MILBANK TWEED HADLEY & MCCLOY
555 WEST FIFTH ST., STE. 4600 601 SOUTH FIGUEROA, 30TH FLOOR
LOS ANGELES, CA 90013-1025 LOS ANGELES, CA 90017
STEVEN P. RUSCH LISA URICK
STOCKER RESOURCES, INC. ATTORNEY AT LAW
5640 S. FAIRFAX MANATT, PHELPS & PHILLIPS
LOS ANGELES, CA 90056 11355 WEST OLYMPIC BLVD.
LOS ANGELES, CA 90064
LISA URICK ANDREW M. GILFORD
ATTORNEY AT LAW ATTORNEY AT LAW
MANATT, PHELPS & PHILLIPS WESTON, BENSHOOF, ET AL
11355 WEST OLYMPIC BLVD. 333 SOUTH HOPE STREET, 16TH FLOOR
LOS ANGELES, CA 90064 LOS ANGELES, CA 90071
CHRIS WILLIAMSON EDWARD WHELESS
BREITBURN ENERGY COMPANY, LLC LOS ANGELES COUNTY SANITATION DISTRICTS
515 S. FLOWER STREET, SUITE 4800 1955 WORKMAN MILL ROAD
LOS ANGELES, CA 90071 WHITTIER, CA 90607
DANIEL W. DOUGLASS BETH A. FOX
ATTORNEY AT LAW ATTORNEY AT LAW
LAW OFFICES OF DANIEL W. DOUGLASS SOUTHERN CALIFORNIA EDISON COMPANY
5959 TOPANGA CANYON BLVD., STE 244 2244 WALNUT GROVE AVENUE, RM. 535
WOODLAND HILLS, CA 91367 ROSEMEAD, CA 91770
JENNIFER TSAO JAMES P. SHOTWELL
ATTORNEY AT LAW ATTORNEY AT LAW
SOUTHERN CALIFORNIA EDISON COMPANY SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE 2244 WALNUT GROVE AVE., ROOM 337
ROSEMEAD, CA 91770 ROSEMEAD, CA 91770-0001
JEFFREY M. PARROTT SHARON L. COHEN
ATTORNEY AT LAW ATTORNEY AT LAW
SAN DIEGO GAS & ELECTRIC COMPANY SEMPRA ENERGY
HQ-13 101 ASH STREET, NQ12
101 ASH STREET SAN DIEGO, CA 92101
SAN DIEGO, CA 92101
JOHN W. LESLIE MICHAEL SHAMES
ATTORNEY AT LAW ATTORNEY AT LAW
LUCE FORWARD HAMILTON & SCRIPPS, LLP UTILITY CONSUMERS' ACTION NETWORK
600 WEST BROADWAY, SUITE 2600 3100 FIFTH AVE., SUITE B
SAN DIEGO, CA 92101-3391 SAN DIEGO, CA 92103
PAUL A. SZYMANSKI ROSS CLARK
ATTORNEY AT LAW MOCK ENERGY SERVICES
SEMPRA ENERGY 18101 VON KARMAN AVE STE 1940
101 ASH STREET IRVINE, CA 92612
SAN DIEGO, CA 92129
KEITH E. MCCULLOUGH TODD W. BLISCHKE
ATTORNEY AT LAW ATTORNEY AT LAW
MCCORMICK,KIDMAN & BEHRENS MCCORMICK, KIDMAN & BEHRENS
695 TOWN CENTER DRIVE, SUITE 400 695 TOWN CENTER DRIVE, SUITE 400
COSTA MESA, CA 92626 COSTA MESA, CA 92626
JOHN A. BARTHROP MICHAEL G. NELSON
GENERAL COUNSEL ATTORNEY AT LAW
COMMONWEALTH ENERGY CORP. ELECTRICAMERICA
15901 RED HILL AVE., SUITE 100 15901 REDHILL AVENUE, SUITE 100
TUSTIN, CA 92780 TUSTIN, CA 92780
DAVID J. BYERS NORMAN J. FURUTA
ATTORNEY AT LAW ATTORNEY AT LAW
MCCRACKEN, BYERS & HAESLOOP DEPARTMENT OF THE NAVY
840 MALCOLM ROAD, SUITE 100 2001 JUNIPERO SERRA BLVD., SUITE 600
BURLINGAME, CA 94010 DALY CITY, CA 94014-1976
JAMES D. SQUERI MICHEL PETER FLORIO
ATTORNEY AT LAW ATTORNEY AT LAW
GOODIN MACBRIDE SQUERI RITCHIE & DAY LLP THE UTILITY REFORM NETWORK
505 SANSOME STREET, SUITE 900 711 VAN NESS AVE., SUITE 350
SAN FRANCISCO, CA 94102 SAN FRANCISCO, CA 94102
ROBERT FINKELSTEIN JULIO RAMOS
ATTORNEY AT LAW CALIF PUBLIC UTILITIES COMMISSION
THE UTILITY REFORM NETWORK ROOM 5130
711 VAN NESS AVE., SUITE 350 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102 SAN FRANCISCO, CA 94102-3214
ANNE C. SELTING CHRISTINE H. JUN
ATTORNEY AT LAW ATTORNEY AT LAW
GRUENEICH RESOURCE ADVOCATES ALCANTAR & KAHL LLP
582 MARKET STREET, SUITE 1020 120 MONTGOMERY STREET, STE 2200
SAN FRANCISCO, CA 94104 SAN FRANCISCO, CA 94104
CLYDE MURLEY EVELYN KAHL
GRUENEICH RESOURCE ADVOCATES ATTORNEY AT LAW
582 MARKET STREET, SUITE 1020 ALCANTAR & KAHL, LLP
SAN FRANCISCO, CA 94104 120 MONTGOMERY STREET, SUITE 2200
SAN FRANCISCO, CA 94104
JODY S. LONDON ADAM CHODOROW
GRUENEICH RESOURCE ADVOCATES PACIFIC GAS & ELECTRIC COMPANY
582 MARKET STREET, SUITE 1020 77 BEALE STREET, B30-A
SAN FRANCISCO, CA 94104 SAN FRANCISCO, CA 94105
CARL K. OSHIRO MARK R. HUFFMAN
ATTORNEY AT LAW ATTORNEY AT LAW
100 FIRST STREET, SUITE 2540 PACIFIC GAS AND ELECTRIC COMPANY
SAN FRANCISCO, CA 94105 77 BEALE STREET, ROOM 3133-B30A
SAN FRANCISCO, CA 94105
PETER W. HANSCHEN EDWARD G. POOLE
ATTORNEY AT LAW ATTORNEY AT LAW
MORRISON & FOERSTER LLP ANDERSON & POOLE
425 MARKET STREET 601 CALIFORNIA STREET, SUITE 1300
SAN FRANCISCO, CA 94105 SAN FRANCISCO, CA 94108-2818
ANGELA N. O'ROURKE BRIAN T. CRAGG
SQUIRE, SANDERS & DEMPSEY, LLP ATTORNEY AT LAW
ONE MARITIME PLAZA, SUITE 300 GOODIN, MACBRIDE, SQUERI, RITCHIE & DAY
SAN FRANCISCO, CA 94111 505 SANSOME STREET, NINTH FLOOR
SAN FRANCISCO, CA 94111
DANIEL J. GERALDI ROBERT B. GEX
ATTORNEY AT LAW ATTORNEY AT LAW
NOSSAMAN, GUTHNER, KNOW & ELLIOTT, LLP SKJERVEN,MORRILL,MACPHERSON,FRANKLIN&FRI
50 CALIFORNIA STREET, 34TH FLOOR THREE EMBARCADERO CENTER, SUITE 2800
SAN FRANCISCO, CA 94111 SAN FRANCISCO, CA 94111
MICHAEL B. DAY EDWARD W. O'NEILL
ATTORNEY AT LAW ATTORNEY AT LAW
GOODIN MACBRIDE SQUERI RITCHIE & DAY LLP DAVIS WRIGHT TREMAINE, LLP
505 SANSOME STREET, SUITE 900 ONE EMBARCADERO CENTER, SUITE 600
SAN FRANCISCO, CA 94111-3133 SAN FRANCISCO, CA 94111-3834
MARTIN MATTES WILLIAM T. BAGLEY
ATTORNEY AT LAW ATTORNEY AT LAW
NOSSAMAN GUTHNER KNOX & ELLIOTT, LLP NOSSAMAN GUTHNER KNOX & ELLIOTT
50 CALIFORNIA STREET, 34TH FLOOR 50 CALIFORNIA STREET, 34TH FLOOR
SAN FRANCISCO, CA 94111-4799 SAN FRANCISCO, CA 94111-4799
PETER OUBORG WILLIAM H. BOOTH
ATTORNEY AT LAW ATTORNEY AT LAW
PACIFIC GAS AND ELECTRIC COMPANY LAW OFFICES OF WILLIAM H. BOOTH
PO BOX 7442, B30A 1500 NEWELL AVENUE, 5TH FLOOR
SAN FRANCISCO, CA 94120 WALNUT CREEK, CA 94596
MARCO GOMEZ REED V. SCHMIDT
ATTORNEY AT LAW BARTLE WELLS ASSOCIATES
BAY AREA RAPID TRANSIT DISTRICT 1889 ALCATRAZ AVENUE
800 MADISON STREET, 5TH FLOOR BERKELEY, CA 94703-2714
OAKLAND, CA 94607
BARBARA R. BARKOVICH C. SUSIE BERLIN
BARKOVICH AND YAP, INC. ATTORNEY AT LAW
31 EUCALYPTUS LANE 2105 HAMILTON AVENUE, SUITE 140
SAN RAFAEL, CA 94901 SAN JOSE, CA 95037
CHRISTOPHER J. MAYER ANN TROWBRIDGE
MODESTO IRRIGATION DISTRICT ATTORNEY AT LAW
PO BOX 4060 DOWNEY BRAND SEYMOUR & ROHWER
MODESTO, CA 95352-4060 555 CAPITOL MALL, 10TH FLOOR
SACRAMENTO, CA 95624
SCOTT BLAISING LON W. HOUSE
ATTORNEY AT LAW 4901 FLYING C ROAD
BRAUN & ASSOCIATES, P.C. CAMERON PARK, CA 95682-9615
8980 MOONEY ROAD
ELK GROVE, CA 95624
ANDREW BROWN BILL JULIAN
ATTORNEY AT LAW ATTORNEY AT LAW
ELLISON, SCHNEIDER & HARRIS, LLP 1127 ELEVENTH STREET, SUITE 226
2015 H STREET SACRAMENTO, CA 95814
SACRAMENTO, CA 95814
DAN L. CARROLL LYNN M. HAUG
ATTORNEY AT LAW ATTORNEY AT LAW
DOWNEY BRAND SEYMOUR & ROHWER, LLP ELLISON & SCHNEIDER
555 CAPITOL MALL, 10TH FLOOR 2015 H STREET
SACRAMENTO, CA 95814 SACRAMENTO, CA 95814-3109
PHILIP A. STOHR KAREN N. MILLS
ATTORNEY AT LAW ATTY AT LAW
DOWNEY, BRAND, SEYMOUR & ROHWER CA FARM BUREAU FEDERATION
555 CAPITOL MALL, 10TH FLOOR 2300 RIVER PLAZA DRIVE
SACRAMENTO, CA 95814-4686 SACRAMENTO, CA 95833
RONALD LIEBERT MICHAEL ALCANTAR
ATTORNEY AT LAW ATTORNEY AT LAW
CALIFORNIA FARM BUREAU FEDERATION ALCANTAR & KAHL LLP
2300 RIVER PLAZA DRIVE 1300 SW FIFTH AVENUE, SUITE 1750
SACRAMENTO, CA 95833 PORTLAND, OR 97201
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CHARLES C. READ RALPH SMITH
ATTORNEY AT LAW LARKIN & ASSOCIATES, INC.
STEPTOE & JOHNSON, LLP 15728 FARMINGTON ROAD
1330 CONNECTICUT AVENUE, N.W. LIVONIA, MI 48154
WASHINGTON, DC 20036
KEVIN SIMONSEN JANIE MOLLON
ENERGY MANAGEMENT SERVICES MANAGER REGULATORY AFFAIRS
848 EAST THIRD STREET NEW WEST ENERGY
DURANGO, CO 81301 1521 N. PROJECT DRIVE
PHOENIX, AZ 85082
RANDALL W. KEEN KRIS CHEH
MANATT, PHELPS & PHILLIPS, LLP O'MELVENY & MYERS LLP
11355 WEST OLYMPIC BLVD. 400 SOUTH HOPE STREET
LOS ANGELES, CA 90064 LOS ANGELES, CA 90071
LYNN G. VAN WAGENEN MALCOLM M. MCCAY
SEMPRA ENERGY SEMPRA ENERGY REGULATORY AFFAIRS
101 ASH STREET 101 ASH STREET
SAN DIEGO, CA 92101 SAN DIEGO, CA 92101
JAMES E. HAY SETH THOMPSON
SEMPRA ENERGY LAGUNA IRRIGATION DISTRICT
101 ASH STREET C/O MCCORMICK KIDMAN & BEHRENS, LLP
SAN DIEGO, CA 92112 6905 TOWN CENTER DRIVE, STE 400
COSTA MESA, CA 92626-7187
CHRIS S. KING MARC D. JOSEPH
VICE PRESIDENT ATTORNEY AT LAW
CELLNET DATA SYSTEMS, INC. ADAMS BROADWELL JOSEPH & CARDOZO
125 SHOREWAY ROAD 651 GATEWAY BOULEVARD, SUITE 900
SAN CARLOS, CA 94070 SOUTH SAN FRANCISCO, CA 94080
BRUCE FOSTER JUDY PECK
REGULATORY AFFAIRS ADMIN. STATE REGULATORY RELATIONS
SOUTHERN CALIFORNIA EDISON COMPANY SEMPRA ENERGY
601 VAN NESS AVENUE, SUITE 2040 601 VAN NESS AVENUE, SUITE 2060
SAN FRANCISCO, CA 94102 SAN FRANCISCO, CA 94102
DIAN M. GRUENEIH, J.D. MONA PATEL
GRUENEICH RESOURCE ADVOCATES BROWN & WOOD LLP
582 MARKET STREET, SUITE 102 555 CALIFORNIA STREET, 50TH FLOOR
SAN FRANCISCO, CA 94104 SAN FRANCISCO, CA 94104
JILL H. FELDMAN RONALD HELGENS
MORRISON & FORESTER LLP PACIFIC GAS AND ELECTRIC COMPANY
425 MARKET STREET 77 BEALE ST.
SAN FRANCISCO, CA 94105 SAN FRANCISCO, CA 94105
BRIAN F. CHASE JASON MIHOS
MORRISON & FORESTER LLP CALIFORNIA ENERGY MARKETS
425 MARKET ST. 9 ROSCOE
SAN FRANCISCO, CA 94105-2482 SAN FRANCISCO, CA 94110
LULU WEINZIMER DERK PIPPIN
CALIFORNIA ENERGY MARKETS CALIFORNIA ENERGY MARKETS
9 ROSCOE STREET 9 ROSCOE STREET
SAN FRANCISCO, CA 94110 SAN FRANCISCO, CA 94110-5921
ANDREW ULMER CHRISTOPHER A. HILEN
ATTORNEY AT LAW ATTORNEY AT LAW
MBV LAW, LLP LEBOEUF LAMB GREENE & MACRAE LLP
855 FRONT STREET ONE EMBARCADERO CENTER, STE 400
SAN FRANCISCO, CA 94111 SAN FRANCISCO, CA 94111
MIRIAM MAXIAN WILLIAM A. MOGEL
J.P. MORGAN SECURITIES, INC. SQUIRE, SANDERS & DEMPSEY L.L.P.
101 CALIFORNIA STREET, 37TH FLOOR ONE MARITIME PLAZA, SUITE 300
SAN FRANCISCO, CA 94111 SAN FRANCISCO, CA 94111-3492
SARA STECK MYERS MICHAEL ROCHMAN
ATTORNEY AT LAW MANAGING DIRECTOR
122 28TH AVENUE SPURR
SAN FRANCISCO, CA 94121 1430 WILLOW PASS ROAD, SUITE 240
CONCORD, CA 94520
SETH D. HILTON GORDON P. ERSPAMER
MORRISON & FOERSTER LLP ATTORNEY AT LAW
101 YGNACIO VALLEY ROAD, SUITE 450 MORRISON & FOERSTER
WALNUT CREEK, CA 94596 101 YGNACIO VALLEY ROAD, SUITE 450
WALNUT CREEK, CA 94596-8130
JERRY LAHR ANDREW J. SKAFF
PROGRAM MANAGER ATTORNEY AT LAW
ABAG POWER ENERGY LAW GROUP, LLP
101 EIGHT STREET 1999 HARRISON ST., SUITE 2700
OAKLAND, CA 94607-4756 OAKLAND, CA 94612
DIANE I. FELLMAN ROBERT B. WEISENMILLER
ATTORNEY AT LAW PHD
ENERGY LAW GROUP, LLP MRW & ASSOCIATES, INC.
1999 HARRISON STREET, SUITE 2700 1999 HARRISON STREET, STE 1440
OAKLAND, CA 94612 OAKLAND, CA 94612-3517
CAROLYN KEHREIN DON WOLVEN
ENERGY MANAGEMENT SERVICES RESOURCE MANAGEMENT INTERNATIONAL,INC.
1505 DUNLAP COURT 3100 ZINFANDEL DRIVE, SUITE 600
DIXON, CA 95620-4208 RANCHO CORDOVA, CA 95670
KAREN CANN MAX MAYER
3100 ZINFANDEL DRIVE, SUITE 600 NAVIGANT CONSULTING, INC.
RANCHO CORDOVA, CA 95670-6026 3100 ZINFANDEL DRIVE, SUITE 600
RANCHO CORDOVA, CA 95670-6026
ROB ROTH STEVE MACAULAY
SACRAMENTO MUNICIPAL UTILITY DISTRICT CALIFORNIA DEPARTMENT OF WATER RESOURCES
6201 S STREET MS 75 3310 EL CAMINO AVENUE, SUITE 120
SACRAMENTO, CA 95817 SACRAMENTO, CA 95821
KAREN LINDH
LINDH & ASSOCIATES
7909 WALERGA ROAD, ROOM 112, PMB 119
ANTELOPE, CA 95843
State Service
MARIA E. STEVENS ANTHONY FEST
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
EXECUTIVE DIVISION MONOPOLY REGULATION BRANCH
320 WEST 4TH STREET SUITE 500 ROOM 4205
LOS ANGELES, CA 90013 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214
CHRISTOPHER J. BLUNT DONALD J. LAFRENZ
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
MARKET DEVELOPMENT BRANCH DECISION-MAKING SUPPORT BRANCH
ROOM 4101 AREA 4-A
505 VAN NESS AVENUE 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214
HELEN W. YEE MARIA VANKO
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
ROOM 5031 DECISION-MAKING SUPPORT BRANCH
505 VAN NESS AVENUE AREA 4-A
SAN FRANCISCO, CA 94102-3214 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214
OURANIA M. VLAHOS ROBERT A. BARNETT
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
ROOM 5037 DIVISION OF ADMINISTRATIVE LAW JUDGES
505 VAN NESS AVENUE ROOM 5008
SAN FRANCISCO, CA 94102-3214 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214
SALVADOR PEINADO, JR. WILLIAM H. RAYBURN
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
ANALYSIS BRANCH INVESTIGATION, MONITORING & COMPLIANCE B
AREA 4-A AREA 4-A
505 VAN NESS AVENUE 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214
FERNANDO DE LEON JOHN LARREA
ATTORNEY AT LAW CALIF PUBLIC UTILITIES COMMISSION
CALIFORNIA ENERGY COMMISSION EXECUTIVE DIVISION
1516 - 9TH STREET, MS-14 770 L STREET, SUITE 1050
SACRAMENTO, CA 95814 SACRAMENTO, CA 95814
(END OF APPENDIX C)
DISSENT OF PRESIDENT LYNCH AND
COMMISSIONER WOOD
TO D.02-03-055
Early in 2001, the Legislature and the Governor enacted Assembly Bill (AB) 1X, which required that the Commission suspend customers' ability to select alternative electric service providers, commonly referred to as direct access. Between July 1, 2001, when the Commission first addressed the issue of suspension and September, 20, 2001 when the Commission issued Decision (D.) 01-09-060 suspending new direct access contracts, over 10% of the retail load served by investor-owned utilities switched providers. These customers are primarily industrial and large commercial customers that had just recently switched back to utility service to avoid high market prices.
In D.01-09-060, the Commission stated that it would consider making the suspension retroactive to July 1, 2001. The Commission addresses this issue today, concluding that customers that entered into direct access contracts between July 1 and September 20, 2001, should be able to retain, renew and modify those contracts despite the prohibition on customers' right to switch electric suppliers imposed by the Legislature and the Governor. Instead of adopting a July 1 suspension date, and thereby returning a large number of customers to utility service, the decision finds that imposing exit fees is viable and preferable.
We dissent from this decision based on the following concerns. There is no legal basis in the record to determine that exit fees are viable or preferable to suspending direct access as of July 1, 2001. Parties did not address nor were they asked for legal briefing on the extent or legality of exit fees. They have been instructed that the establishment of an exit fee or other mechanism would be addressed and resolved in the Rate Stabilization docket, not in this proceeding. The Commission has not developed a full record here, nor in any other proceeding, regarding exit fees and other options. Thus, it is inappropriate to prejudge the issue in this decision.
In recognition that exit fees may not be viable, the decision states that the Commission will revisit suspending direct access earlier than September 20 if the Commission has not adopted an exit fee in a reasonable time. This approach is very problematic. First, reopening the proceeding and revisiting the issue will cause a significant, unnecessary delay. Instead, the July 1 suspension date should be established now and lifted only if the Commission is able to design and establish an equitable exit fee. Second, by leaving open the possibility that the suspension of direct access suspension may be made retroactive to July 1, 2001, the decision is creating a significant, ongoing level of uncertainty. Thus, the decision fails to achieve its primary goal, providing certainty to the direct access customers and suppliers.
Regarding exit fees, the decision asserts that exit fees are better than the July 1, 2001 suspension date because the earlier date would harm direct access customers by eliminating the benefits they bargained for in their contracts and raise costs of electricity and thereby harm California's economy. However, no basis exists for these assertions. Direct Access customers have not been willing to share their contracts with the Commission. Thus, the Commission has no record to establish that these contracts contain any benefits that were bargained for, other than the potential to shift some of their costs to bundled customers.
There is similarly no basis in the decision or the record for concluding that an earlier suspension date will increase electric costs. No analysis has been presented to indicate that the mere existence of direct access results in lower electric costs. If an exit fee is fully compensatory, there may well be no change whatsoever in the overall magnitude of electric costs to customers.
In addition to a lack of record evidence, a number of other issues must be resolved prior to the implementation of exit fees or other mechanisms to prevent cost shifting. For example, the decision identifies exit fees as solely for the recovery of DWR costs. However, parties have identified many other costs that may need to be included in exit fees (or other cost mechanisms) to prevent cost shifting. SCE has already filed for recovery of one such cost in its request for a historic procurement charge. Qualifying Facility costs and utility retained generation costs are other areas that need to be considered. If the full costs of direct access are not even analyzed, much less assessed, the Commission's action will impede the utilities from returning to financial health and from providing electricity service for their customers. An accurate accounting of the true costs of direct access is a necessary prerequisite, not an incidental afterthought, to this Commission's action. However, the decision fails to address the need to consider non-DWR costs which may be shifted to bundled customers if the Commission allows for the September 20 direct access suspension date. The only comment in the decision that could even be construed as allowing other costs to be considered is a footnote on page 12 which states "Other issues relating to direct access customer cost responsibilities may also be considered in A.00-11-038 et al".
The decision states that we need consistency in regulation to provide the predictability necessary to plan investment and budgetary decisions. However, by allowing direct access to continue in this premature method, the decision is reducing the predictability it seeks to promote. As the graph in the decision shows, when the electric market had problems last year, direct access customers were all dumped or switched back to the utilities. Nothing prevents that from happening again if the market spirals out of control again. The decision attaches no safeguards to the exodus of direct access customers when prices are low and the dumping of those very same customers if prices rise. This lack of accountability exacerbates the precarious condition of the utilities, shifting huge costs when customers are dumped at the very time that the utilities are least able to plan for and guard against those additional costs. This decision allows direct access customers to be dumped back on the utility at any time. Electric service providers, other than utilities, have no requirements to provide assured service or adequate supply to meet their customers needs. Until these problems are resolved, allowing direct access creates more uncertainty and unpredictability.
The decision is also inconsistent with the Commission's mandate to ensure that renewable resources are developed to meet California electric demand. The decision states that direct access helps diversify the California electric power market. Not only is there no basis in the record to reach this conclusion, it is simply wrong. In the short term the sources of supply do not change simply from a customer shifting from being a utility customer to a direct access customer. Over the longer term, it is clear that regulated utilities have much more diverse resource portfolios than do direct access providers that are almost entirely reliant on gas-fueled power plants. While current statutes require that the Commission assure that renewable resources and energy efficiency programs be part of the investor-owned utilities' resource mix, no such requirement exists for direct access providers, most of whom provide power from traditional fossil fuel sources.
In addition to the problems identified above, the decision also allows for future revisions to direct access contracts and new direct access contracts, regardless of the cost consequences to current utility customers. These future changes to current direct access contracts do not appear consistent with the letter or intent of AB 1X.
For example, the decision allows direct access customers to switch from one provider to another even if that requires a new contract. The rationale is that this is "consistent with AB 1X since it doesn't increase direct access load." However, AB 1X contains no language or direction about increasing or not increasing direct access load. What AB 1X does do is direct this commission to ensure that customers ability to "acquire service from other providers shall be suspended...".
The decision also allows new customers to select direct access service in the future, by allowing service providers to assign contracts to a new customer (i.e., if a business changes ownership the new owner can elect to take over the previous owner's direct access service). The decision fails to address the legality of ongoing availability of direct access given the terms of AB 1X, other than indicating that under the decision's terms direct access load does not increase overall. Whether the effect of these future loopholes does or does not increase overall load is not a criterion stated or considered in AB 1X.
Yet another problem with the decision is the impractical manner it adopts for assuring that only contracts executed on or prior to September 20, 2001 are allowed. The decision lets the direct access customer and provider make the determination that their contract was executed by the appropriate date, as long as they provide an affidavit under penalty of perjury, or get an accounting firm to corroborate their story. There is no discussion about how such a process can be implemented by the Commission. The Commission currently does not have access to the contracts to verify any such claims. The Commission also lacks sufficient staffing to review hundreds of contracts and prosecute perjury cases. Nor does the decision address the myriad legal challenges and potential impediments that may arise if this Commission attempted to perform those legal checks on energy service providers offering direct access. The supposed protections envisioned by the decision constitute a wholly unworkable scheme that may well be unenforceable.
Because the Commission does not yet have the facts or the record to move forward to assess the costs and benefits of direct access - both on the buyers and on those continuing to purchase power as bundled utility customers; because the decision inaccurately bases its action on legislative intent attributed to AB 1X that is nowhere to be found and which contradicts the plain language of the statute, because hasty and ill-conceived action today may well result in greater impediments to the utilities resuming their obligations by the end of the year, and because this action by the Commission flies in the face of a real and enforceable commitment to the use of renewable resources, I dissent.
/s/ Carl Wood /s/ Loretta Lynch
CARL WOOD LORETTA LYNCH
Commissioner President
San Francisco, California
March 25, 2002
