III. Interpretation of the 100-Customer Criterion
Parties disagree over how to interpret the Commission's requirement that the POU must be serving at least 100 customers. In discussing the criteria under which customers of a POU may be eligible for a CRS exemption, we stated, in D.03-07-028, that qualifying POUs should have "substantial operations." In characterizing "substantial operations," we indicated that any POU only "serving minimal numbers of customers (e.g., under 100)" would not qualify. In D.04-11-014, we formally adopted a 100-customer minimum requirement, stating that a POU "must have been formed serving at least 100 customers as of July 10, 2003," in order to qualify for the CRS exemption.
The parties seek further clarification, however, concerning how to interpret the 100-customer criterion in determining whether a POU's customers qualify for a CRS exemption. We provide the requested clarification, as discussed below.
A. Customers Not Served by POU Distribution Facilities
1. Parties' Positions
SCE and PG&E interpret the 100-customer eligibility criterion to mean that the POU must be providing electricity to 100 or more customers as of July 10, 2003, through the POU's own distribution facilities. SCE argues that the CRS exemptions were meant to apply to a POU only within its capacity as a POU, but not when acting in the capacity of an Energy Service Provider (ESP). Under this interpretation, a POU serving direct access (DA) customers in the role of an ESP could not use such customers to qualify under the 100-customer criterion. Such an interpretation would disqualify POUs such as City of Corona (Corona) from eligibility for the CRS exemption. Corona's customer base as of July 10, 2003, included a number of DA customers that were not served by POU distribution facilities. Corona sold electricity to such DA customers delivered through IOU distribution facilities.
PG&E argues that that the Commission criterion of "substantial operations" reasonably connotes the existence of a POU distribution infrastructure, not merely POU ownership of "scattered" meters connected to an IOU's distribution system.
Corona disagrees with PG&E and SCE, and argues that the 100-customer criteria should not be restricted to customers served through POU distribution facilities. Corona believes that its DA customers are properly included in the count of customers to determine if the 100-customer eligibility exemption criterion is satisfied.
Corona claims that the Commission did not intend to exclude DA customers served by the POU for purposes of determining if the 100-customer criterion was satisfied. In D.04-11-014, in defining "substantial operations" in terms of the number of customers served, the Commission specifically "decline[d] to add other criteria to this definition." (D.04-11-014 at 37.) Likewise, in discussing CRS exemption eligibility, the Commission stated that a POU must meet the designated criteria "regardless of its customer base." (D.04-12-059 at 30.)
Corona formed its POU utility on April 4, 2001, which was before DWR had made final adjustments to the load forecasts underlying its power purchase contracts. SCE expressly acknowledged that it was aware of the formation of Corona's POU and the substantial effort being undertaken by Corona to implement its utility. For these reasons, CMUA argues that Corona should be found to have satisfied the conditions for CRS exemption.
2. Discussion
We conclude that PG&E and SCE are incorrect in interpreting the 100-customer criterion as requiring that the POU utilize its own distribution facilities to serve its customers. We conclude that in order to qualify as a "local POU," as defined by Pub. Util. Code § 9604(d), the entity need not actually be furnishing electric service over its own or its members' electric distribution system.
We disagree with SCE's claim that § 9604(d) requires that all POUs, as defined thereunder, own transmission or distribution facilities. The definition in § 9604(d) referencing ownership of generation or transmission facilities applies only to a "joint powers authority." We do not interpret the § 9604(d) reference to ownership of generation or transmission facilities, however, as a defining characteristic intended to apply to all POUs.
In D.04-11-014, the Commission viewed the 100-customer criterion as a sufficient measure of whether a POU had "substantial operations," and declined to add other multiple criteria. In D.04-11-014, we stated:
We define "substantial operations" in terms of number of customers, and decline to add other criteria to this definition. For example, PG&E suggests that the publicly-owned utility should establish that service to new customers within the IOU's service territory would not cause disproportionate expansion by the publicly-owned utility which could not reasonably have been considered by DWR, and SDG&E suggests adding other multiple criteria to the definition. However, an inquiry as to the number of customers strikes the balance as the best and most efficient way to insure against disproportionate expansion, because it is an objective test that does not require a mini-hearing for each publicly-owned utility claiming the exception.
In D.04-11-014, we thus rejected the arguments of PG&E, SCE, and SDG&E seeking to add more specific criteria to assess whether a POU had "substantial operations" for purposes of qualifying for CRS exemption eligibility. We stated that, in assessing whether a POU meets the 100-customer criterion under D.04-11-014, no distinction would be made among different categories of retail customers served. For example, either a residential or industrial customer with numerous submeters would be considered a single customer for purposes of counting toward the 100-customer test. (D.04-12-059 at 30-31.) Likewise, no distinction would be made between one large industrial customer versus a small residential customer. They would each be counted as one customer for purposes of the 100-customer criterion.
Accordingly, we find that no basis exists in D.04-11-014 to disqualify a POU from the CRS exemption merely because the retail customers that it serves may include DA. In D.02-12-027, we specifically stated that " `[R]etail end use customers' includes DA customers. DA customers purchase retail, as end-users, their electricity from energy service providers (ESPs) and their distribution and transmission services from the electrical corporation." (D.02-12-027, slip op. at 9.) Consistent with this definition, a POU may qualify for the CRS exemption assuming that it served at least 100 retail customers as of July 10, 2003, even if some or all of such customers were served by the POU under a DA arrangement.
B. Treatment of Intermittent Vessels
1. Parties' Positions
Stockton proposes, for purposes of applying the 100-customer criterion, that customers be defined to include individual vessels that berth intermittently at the Port of Stockton, but that are not continuously present. Stockton argues that such vessels are analogous to a customer that may take protracted vacations, without discontinuing its commercial relationship with the utility or a customer may only have a seasonal use.
PG&E opposes Stockton's proposal to count each individual vessel that intermittently berths at the Port of Stockton as a separate customer in applying the 100-customer criterion. PG&E argues that while customers taking a vacation generally still have a meter in place and receive a monthly bill, such is not the case with individual vessels that berth intermittently.
2. Discussion
We agree with PG&E that the individual vessels that intermittently berth at the Port of Stockton do not constitute separate customers in counting toward the 100-customer criterion. Such vessels have no separate meters. Instead, the meter is associated with the berth, not the individual vessel.
Stockton may therefore count each individual metered berth as a single customer, but may not count multiple vessels as customers merely because they intermittently berth at a meter operated by the Port of Stockton.
C. Treatment of Customers Taking Service From Multiple Locations
1. Parties' Positions
Stockton requests that the Commission clarify that an end use retail customer at a separately read and billed meter3 should not be excluded from the definition of customer for the purpose of establishing eligibility for CRS exemption regardless whether that customer takes service at another separately metered location. PG&E agrees that under its tariffs, separately metered entities generally would have separate accounts and be treated as separate customers. Thus, if one franchisee owned five separately metered franchised establishments, PG&E would generally consider them to be five customers.
2. Discussion
We accept Stockton's proposal, and thus affirm that separately metered entities qualify as representing individual customers under the 100-customer criterion, even if the separately metered entities may be owned by a single entity such as a franchisee. We recognize that utilities often serve entities which take service at multiple, separately metered locations. For instance, separately metered McDonald's restaurants are treated as separate customers, even though one franchisee may own several such restaurants. We thus agree that it would be intrusive and unduly burdensome to attempt to determine affiliations among customers served at multiple metered locations within a POU's service territory.
3 Stockton is not requesting that customers with submeters be considered as more than one customer.
