7. Assignment of Proceeding

Michael R. Peevey is the Assigned Commissioner and Michelle Cooke is the assigned ALJ in this proceeding.

Findings of Fact

1. The current schedule for handling the 2006-2008 program plan applications in A.05-06-006 et al. anticipates a Commission decision on the applications in March 2006, which could leave a funding gap for the first few months of 2006.

2. Design of an RTP tariff cannot be performed in isolation from a comprehensive rate design examination.

3. The CAISO market currently lacks a meaningful price signal upon which a real time price could be established.

4. As transparent pricing information from the CAISO market redesign becomes available, that information will facilitate development and adoption of a true RTP tariff.

5. Residential and small commercial customers are not currently able to sign up for CPP rates.

6. Effective implementation of time-differentiated tariffs for smaller customer classes requires the installation of more sophisticated metering and communications technology than currently in place.

7. Since the time that D.04-11-034 was issued, the CPA was able to engage a Fiscal Agent to operate and manage the DRP program.

8. D.05-01-056 approved an additional $575,000 in funding to cover PG&E's incremental costs of implementing the DRP management services agreement with the CPA.

9. There are currently no adopted measurement and evaluation protocols for demand response programs.

10. High quality demand reduction estimates derived from accepted measurement methodologies are a necessary prelude to accurate cost-effectiveness analysis.

11. Because demand response programs are still in their infancy, there is not yet an industry accepted methodology for evaluating cost-effectiveness.

12. The minimum functionality criteria adopted in the February 19, 2004 ACR are not meant to limit any party's ability to advocate for selection of a technology that incorporates additional functionality, like a universal, nonproprietary local area network to wide area network bi-directional interface in the meter.

Conclusions of Law

1. In the near term, the Commission should focus its efforts with respect to tariff offerings on reviewing the applications of each utility to implement a critical peak pricing tariff for customers with load of over 200 kW (A.05-01-016 et al.), and PG&E's proposed CPP tariffs to promote demand response as part of its Advanced Metering Infrastructure Project (A.05-06-028) rather than on creation of a two-part RTP.

2. Requiring the utilities to file non-experimental CPP tariff options in their next rate design applications will allow us to know whether and when metering and communications technology necessary to implement such rates will be in place.

3. Since PG&E has not been functioning as the manager of the DRP program, the incremental funding approved in D.05-01-056 is unneeded.

4. PG&E may shift the DRP management agreement funds into other programs, consistent with the fund shifting guidelines adopted in Ordering Paragraph 4 of D.05-01-056.

5. Agency staff should develop draft measurement and evaluation protocols and a process for peer review.

6. Agency staff should follow the process described in Section 4.5 to prepare proposed cost-effectiveness tests.

7. The motion by USCL Corporation to add new minimum functionality criteria should be denied.

ORDER

IT IS ORDERED that:

1. In the event that no Commission decision has been adopted in Application 05-06-006 et al by January 1, 2006, the utilities may carry over any 2005 authorized funding to continue to offer 2005 programs until such time as a decision is adopted for 2006 programs.

2. Southern California Edison Company's October 6, 2005 motion is granted, Pacific Gas and Electric Company's October 27, 2005 motion is granted, and transitional funding is extended to San Diego Gas & Electric Company.

3. Each utility, as part of its next comprehensive rate design proceeding application following development and final implementation of an hourly day-ahead market price by the California Independent System Operator, shall submit a real time pricing tariff for its largest customers as part of its tariff offerings.

4. Each utility, as part of its next comprehensive rate design proceeding application, shall also include proposals for critical peak pricing (CPP), time of use (TOU) and inverted rate tariffs (with an appropriate hedge) for small commercial and residential customers, as well as CPP and TOU tariffs for customers over 200 kilowatt in monthly demand.

5. Non-experimental CPP tariff options for residential and small commercial customer classes shall be included by each utility in its next rate design application.

6. The Executive Director shall explore opening a new rulemaking to develop more customer friendly billing formats for energy bills and report back to the Commission at the second business meeting in January 2006 on whether the Commission should open such a rulemaking, and if so, the schedule for presenting such a rulemaking to the Commission.

7. The Proposed Management Services Agreement between Pacific Gas and Electric Company and Conservation Financing Authority (CPA) that was filed on February 4, 2005, is not approved and CPA's Fiscal Agent shall continue to manage the Demand Reserves Partnership program.

8. By April 3, 2006, agency staff shall prepare a set of draft protocols for estimating load impacts for both price responsive and reliability demand response programs and a list of additional data that should be collected on program costs and incremental costs, including comfort changes or costs during curtailments.

9. Agency staff shall serve the draft measurement and evaluation protocols on the service list to this proceeding, and any related or successor proceedings, and schedule a workshop for interested persons to provide peer review and feedback.

10. Agency staff shall prepare a proposed rulemaking or recommend an alternative procedural approach for Commission consideration no later than six months after the draft measurement and evaluation protocols are circulated.

11. Agency staff shall host a workshop by March 15, 2006, with the objective of designing a process to scope the issues that parties believe must be addressed in developing relevant cost-effectiveness tests for demand response programs and within two months after the workshop, shall recommend to the Commission's Executive Director whether to open a new rulemaking to provide guidance on this topic, and if so, shall prepare a proposed rulemaking for consideration.

12. The motion by USCL Corporation to add new minimum functionality criteria is denied.

13. The utilities should file a list of the completed research reports and one copy of any completed research reports that have not been filed within 10 days of the issuance of this decision.

14. One copy of research reports on 2005 programs shall be filed in Rulemaking (R.) 02-06-001 within 10 days of completion. An electronic copy or notice of availability of each report shall be served on the service list to this proceeding, and any related or successor proceedings, like A.05-06-006 et al.

15. One search reports on 2005 programs shall be filed in R.02-06-001 within 10 days of their completion. An electronic copy or notice of availability of each report shall be served on the service list to this proceeding, and any related or successor proceedings.

16. Docket Office shall not reopen R.02-06-001 as a result of the filing of the research reports referenced above.

17. The utilities shall file a monthly report on interruptible load and demand response programs with the Director of the Energy Division.

18. The utilities shall serve the monthly report on interruptible load and demand response programs on the service list to this proceeding, and any related or successor proceedings.

19. The Energy Division Director shall cause the monthly report on interruptible load and demand response programs to be made available on the Commission's website.

20. To the extent that any motions remain outstanding, all such motions are denied.

21. No hearing is necessary.

22. Rulemaking 02-06-001 is closed.

This order is effective today.

Dated November 18, 2005, at San Francisco, California.

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