D. Discussion

At issue in these petitions is whether the OBMC program should be expanded to include customers also participating in a capacity interruptible program. UPI's petition seeks to expand the OBMC program to customers participating in the ISO's DRP program. A number of respondents to the UPI petition concur with UPI that joint participation in these two programs should be allowed even though they acknowledge that administrative issues need to be resolved if such joint participation is to be authorized. For example, it would be necessary to establish required load reductions for the two programs with different baselines, track and coordinate actual load reductions, establish an accurate and timely payment procedure, establish a procedure to ensure that no payments are received for OBMC reductions, and establish an allocation of load reductions and non-compliance to the two programs.

Although UPI responded and proposed solutions to several of these administrative issues in its May 3, 2001 reply to other parties' comments to its petition, it has not convinced us that these administrative issues can be resolved immediately. The petition of UPI for authority to allow customers to participate in both the ISO's DRP program and OBMC program is denied. We will consider pursuing the coordination between the ISO's DPR program and the OBMC program as a Phase 2 issue.

The remaining petitions seek to expand the OBMC program to include customers already participating in capacity interruptible programs. The proposal of CIU to include interruptible customers with firm service levels of zero, or close to zero, in the OBMC program is not supportable. The inclusion of such customers does not appear to advance the OBMC program goal of reducing the firm load upon request. For example, if an interruptible customer has a firm service level of zero, then that customer would not have load available at the time of the OBMC call to provide the requested load reduction. We reject the proposal of CIU to include interruptible customers with very low firm service levels into the OBMC program.

CIU also proposes that the OBMC program's 15 percent required load reduction be modified to include the ability to adjust for business conditions. Under this proposal, CIU proposes that customers be exempt from rotating outages solely because prior year usage was reduced due to business conditions or plant operating conditions. Again, the goal of the OBMC program is firm load reductions when required. Customer load patterns change from year to year for a variety of reasons which were considered when we established the OBMC program. This proposed modification is rejected.

CIU proposes to clarify that OBMC program customer's participation to rotating outages in the territory of the utility from which the customer obtains service. The utilities' approved tariffs already state that the OBMC operates when the ISO requires firm load reductions in the utility service territory. However, to clarify this condition in the OBMC program, we will add the phrase "by the customer's electric distribution utility" to Section 2.4.2 of Attachment A to the decision. That section should now read as follows:

"2.4.2 The OBMC program operates only when firm load reductions are required (i.e., concurrent with rotating outages) by the customer's electric distribution utility."

We consider the request of CSI and TAMCO to establish a special process for transmission level customers to request exemptions from rotating outages to be premature. We are currently establishing a process to evaluate the need to exclude customers from rotating outages because of health and safety concerns. CSI and TAMCO may participate in that process when offered. The alternative proposal of CSI and TAMCO to allow interruptible customers to participate in the OBMC program is granted to the extent provided in this order.

California Industrial Gas Companies request permission to participate in both interruptible programs and a modified version of the OBMC program. We decline to establish a separate OBMC program for this group of customers. To the extent that this decision allows interruptible program participants to also participate in the OBMC program, its petition is granted.

Although we reject the proposed modifications to include interruptible program participants into the OBMC program, the arguments presented by the petitioners and respondents for dual participation in the OBMC and interruptible programs persuade us that it would be beneficial to allow such dual participation if the required load reductions are not double counted and administrative problems can be resolved. The requests for participation in the OBMC program and the ISO's DRP had administrative problems. One problem was that both programs have baseline calculations that vary with customer use. The utility capacity interruptible programs, on the other hand, rely on a customer selected firm service level. The firm service level is fixed. Therefore, it is a much easier task to determine the required load reduction because only one baseline must be calculated at the time of an OBMC call. In addition, the accounting and payment system is simplified if both the interruptible program and the OBMC are operated by the same entity. Hence, the OBMC program should be modified to include those participants in a utility operated capacity interruptible program as long as the interruptible program requires a reduction of load to a pre-established firm service level. The OBMC program criteria set forth in Attachment A to D.01-04-006 should be modified as set forth in an Ordering Paragraph of this decision.