2. Background

On April 3, 2001, the Commission modified the list of essential customers normally exempt from a rotating outage. (Decision (D.) 01-04-006, Attachment C.) Modifications were made that might affect oil refineries and other customers in the critical fuels chain of production, potentially exposing them in some cases to rotating outages.¹ Further, the Commission directed respondent utilities to coordinate electricity interruptions to fossil fuel producers, pipelines and users, to the extent feasible, thereby minimizing disruptions to public health and safety. (D.01-04-006, Ordering Paragraph 9, mimeo., page 100.) Finally, the Commission invited the California Energy Commission (CEC) to report on necessary changes, if any, in Commission interruptible tariffs or curtailment priorities to further protect public health and safety with respect to fossil fuel producers. (D.01-04-006, mimeo., pages 50-52.)

On April 25, 2001, the Energy Producers and Users Coalition (EPUC) filed an application for rehearing of D.01-04-006. EPUC alleges that the Commission erred in its modification of the essential customer list by ordering transmission level customers for the first time to be subject to rotating outages. EPUC says this change was made without due consideration of the impact on facilities engaged in the chain of production, manufacture, transportation and storage of feedstocks, gasoline, diesel fuel and aviation fuel (critical fuel customers). Further, EPUC says the Commission failed to consider the impact of outages on critical fuel customers served at the distribution level. Finally, EPUC states that implementation of an Optional Binding Mandatory Curtailment plan, and the "net electricity producer exemption," as alternatives to mandatory curtailment for critical fuel customers were made without full and fair consideration of the viability of these options. EPUC concludes that on rehearing the Commission should exempt critical fuel customers from curtailment. At a minimum, EPUC says the Commission should exempt refineries.

On April 25, 2001, the CEC filed and served Comments Relative to Fossil Fuels and Rotating Outages. The CEC urges Commission expansion of the essential customer classification to include the entire fossil fuel infrastructure and all associated ancillary facilities. Further, the CEC recommends Commission development of an economic standard for other categories in order to allow exemption of customers for whom curtailment would spell economic disaster.

On May 24, 2001, the Commission modified the essential customer list to include Category M: "limited other customers as necessary to protect public health and safety, to the extent exempted by the Commission." (D.01-05-089.) Further, the Commission approved and confirmed a May 21, 2001 Assigned Commissioner's Ruling (ACR). The May 21, 2001 ACR established a process for customers to file petitions seeking Category M essential customer status, and for the Commission to consider those petitions.

On June 1, 2001, the Assigned Commissioner granted a motion for clarification of D.01-05-089 filed by EPUC. As a result, each customer in the critical fuels chain of production who believes he or she has a claim for Category M essential customer status was advised to submit a petition. At the same time, customers in the fossil fuel chain of production were advised that they may or may not eventually receive relief when the Commission acts on EPUC's April 25, 2001 application for rehearing.

On June 7, 2001, Governor Gray Davis wrote to Commission President Loretta Lynch. Governor Davis urges that California's petroleum refineries and ancillary facilities be treated as essential customers, and therefore exempt from rotating outages. Governor Davis asks for immediate action to exempt refineries from rotating outages on the basis of public health and safety.