COM/CRC/sid Date of Issuance 8/1/2008
Decision 08-07-045 July 31, 2008
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company To Revise Its Electric Marginal Costs, Revenue Allocation, and Rate Design. (U 39 M) |
Application 06-03-005 (Filed March 2, 2006) |
DECISION ADOPTING DYNAMIC PRICING TIMETABLE AND RATE DESIGN GUIDANCE FOR PACIFIC GAS AND ELECTRIC COMPANY
TABLE OF CONTENTS
Title Page
DECISION ADOPTING DYNAMIC PRICING TIMETABLE AND RATE DESIGN GUIDANCE FOR PACIFIC GAS AND ELECTRIC COMPANY 2
1. Summary 2
2. Procedural Background 3
3. Policy Background 5
4. What Rates Should PG&E Offer Each Customer Class and When? 8
4.1. Dates of PG&E Filings 9
4.2. Large C&I 10
4.2.1. What Dynamic Pricing Rates Should PG&E Offer
Large C&I Customers? 11
4.2.2. When Should PG&E Introduce Dynamic Pricing to Large C&I Customers? 14
4.3. Medium C&I 21
4.4. Small Commercial 24
4.5. Agricultural 28
4.6. Residential 33
4.7. Direct Access (DA) and Community Choice Aggregation (CCA) Customers 40
4.8. Standby, Net Metered, and Master Metered Customers 40
5. Rate Design Guidance 41
5.1. All Dynamic Pricing Rates 42
5.1.1. The Objectives of Rate Design 42
5.1.2. Design of Rates Relative to Each Other and Handling Revenue Over- and Under-Collections 47
5.1.3. Hedging Premium 50
5.1.4. Customer Ability to Hedge 52
5.1.5. Ability to Opt Out from Default Rates and Bill
Protection 54
5.1.6. Integration with the CAISO Operated Wholesale Energy Markets 57
5.2. Critical Peak Pricing 58
5.2.1. Critical Peak Price 59
5.2.2. Structure of CPP 61
5.2.3. Critical Peak Events-How Many Times per Year
and When Are Events Called 67
5.2.4. Time of Day and Length of Critical Peak Events 72
5.3. Real-Time Pricing 74
5.3.1. What Wholesale Prices Should RTP Be Based On? 75
5.3.2. Do Energy Prices Reflect the Entire Cost of Generation? 76
6. TURN's Proposal to Link Dynamic Pricing and Resource Adequacy 78
7. Measurement and Evaluation 80
8. Incremental Costs to Implement Dynamic Pricing 81
9. Content of Future PG&E Dynamic Pricing Rate Filings 83
10. Other Issues 83
10.1. Applicability of this Decision to SCE and SDG&E 83
10.2. Customer Access to Data 84
10.3. Permanent Load Shifting (PLS) 85
11. Comments on Proposed Decision 85
12. Assignment of Proceeding 89
Findings of Fact 89
Conclusions of Law 93
ORDER... 97
ATTACHMENT A - Rate Design Guidance
ATTACHMENT B - Illustrative Timetable
ATTACHMENT C - Glossary, Acronyms and Abbreviations
DECISION ADOPTING DYNAMIC PRICING TIMETABLE AND RATE DESIGN GUIDANCE FOR PACIFIC GAS AND ELECTRIC COMPANY
1. Summary
This decision continues implementation of the Commission's policy to make dynamic pricing available for all customers. Dynamic pricing can lower costs, improve system reliability, cut greenhouse gas emissions, and support modernization of the electric grid.
First, dynamic pricing can lower costs by more closely aligning retail rates and wholesale system conditions, thereby promoting economically efficient decision-making. In more concrete terms, dynamic pricing can lower peak usage and reduce the need to build additional generation capacity to meet the peak. Furthermore, dynamic pricing, coupled with advanced meters, will enable customers to better manage their electricity usage and reduce their bills.
Second, dynamic pricing can improve system reliability by providing customers an incentive to lower their usage when the supply and demand balance is strained or in the face of a system emergency. Dynamic pricing can reduce the bills of a customer who reduces his or her usage in the face of scarce supply.
Third, dynamic pricing can connect retail rates with California's greenhouse gas policies. When wholesale energy prices are high, the most inefficient generation sources with high greenhouse gas emissions are generally operating. By linking retail rates to wholesale market conditions, dynamic pricing can discourage customers from consuming polluting power. Conversely, if other time periods are dominated by non-emitting and low-cost resources such as nuclear, water, and wind, dynamic pricing could signal to customers that the supply of power is clean.
Finally, dynamic pricing will be a building block of a smarter, more advanced electric grid.
This decision adopts a timetable that specifies when Pacific Gas and Electric Company (PG&E) is required to propose specified dynamic pricing rates. The decision also adopts rate design guidance that PG&E shall be required to adhere to in all of its future dynamic pricing proposals.
