6. Expiration in 24 months

The Category M status granted today will expire in 24 months. We do this for several reasons.

First, Category M was established due to circumstances in the electricity market requiring extraordinary steps to protect public health and safety. As Governor Gray Davis stated in his January 17, 2001 Proclamation of a State of Emergency, electricity shortages had resulted in blackouts affecting millions of Californians. Further, the Governor stated that the imminent threat of widespread and prolonged disruption of electricity constituted a condition of extreme peril to the safety of persons and property within California.

This condition, however, is not expected to be indefinite. Rather, due to actions by the Governor, this Commission, and others, we expect within 2 years to return to an electricity market that can operate reasonably well without the need for extraordinary measures.

Second, each customer awarded Category M status today should take steps to reduce or eliminate any significant risk to public health and safety which occurs if that customer is exposed to an outage from any cause, including weather, accidents, or supply shortages. That is, despite the cause, frequency, or duration, customers should take reasonable steps in the next 24 months to reduce any risk they present to public health and safety if they experience an outage.

Third, notification procedures for rotating outages (as discussed more below) are improving, and will continue to improve with experience and need. Better and timelier notification before rotating outages provides the opportunity for businesses to take necessary steps to mitigate or eliminate any jeopardy to public health and safety. This should reduce, if not eliminate, the need for the total exemption granted Category M customers.

Fourth, we do not want Category M status to forever remove incentives for Category M customers to make health and safety modifications to their operations. It is reasonable in these particularly difficult and troubled times to protect public health and safety by excusing some customers from rotating outages. This sensibly transfers the relative risk presented by some businesses to all customers. In the long run, however, we want each business itself to be exposed to the risk it places on the community in which it operates, and have the incentive to take whatever steps are reasonable to mitigate or eliminate that risk.

Finally, customers change as economic conditions evolve and time passes. New businesses enter the market, other businesses depart; some businesses grow, others contract; some businesses merge, others divest parts into new companies; and existing businesses may change the amount or type of activity that jeopardizes public health and safety.¹² The award of Category M status should not be a government benefit that accrues indefinitely to only a select group of individually named customers. It should not become part of the economic worth of some businesses, and not others. Rather, the status awarded today is intended to address relative risk for some customers during a temporary State of Emergency.

Therefore, we limit Category M status awarded today to a period of no more than 24 months. We will not at that time eliminate Category M itself, since use of the category may continue to be necessary at intermittent times. Absent a specific Commission order to the contrary, however, Category M status granted today will expire on September 6, 2003.

We direct each respondent utility to individually notify each customer granted Category M essential customer status in today's order that the customer's circuit is, or will become, exempt from rotating outages. In that same notice, the utility must inform the customer that such status will expire in 24 months. Further, 30 days before the expiration of Category M status, each respondent utility shall notify each customer granted this status that such status will expire 30 days after the date of that notice, absent a specific Commission order to the contrary.