VII. Our Approach to Interim Rate Design Must be Simple, Straightforward, and Subject to Adjustment

We will track the amounts provided by ratepayers in a balancing account with customer class-specific sub-accounts. Rate design is a complicated endeavor and will be addressed more comprehensively in the next phases of these proceedings, in which all parties will have a full opportunity to examine and analyze relevant facts and financial claims. In the immediate term, we will simply increase rates by applying a surcharge of one cent per kWh on an equal-cents-per-kWh basis. This is a straightforward approach that is often implemented and we will adopt it here. We direct PG&E and Edison to establish the Emergency Procurement Surcharge (EPS) to be in place for the next 90 days. We will exempt those customers on the CARE program from this increase. We are convinced that those consumers at or near poverty level should not bear the burden of this interim rate relief. The rate relief granted is subject to further adjustments as we gather facts and obtain more evidence in additional hearings.

Several commenters urged the Commission to develop a conservation incentive in ratemaking. In order to reinforce this critical concept, we will also explore other approaches in the next 90 days, such as exempting the baseline amounts from this equal cents per kWh approach, or adjusting residential and small commercial energy rate components by one cent per kWh and adjusting large commercial and industrial customers' energy components by two cents per kWh.