BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of City and County of San Francisco for Rehearing of Resolution E Application (Filed March 12, 2018) JOINT RESPONSE OF PACIFIC GAS AND ELECTRIC COMPANY (U 39-E), SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E), AND SAN DIEGO GAS & ELECTRIC COMPANY (U 902-E) TO THE CITY AND COUNTY OF SAN FRANCISCO S APPLICATION FOR REHEARING OF RESOLUTION E-4907 JANET S. COMBS LAUREN P. GOSCHKE Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, CA Telephone: (626) lauren.p.goschke@sce.com STACY VAN GOOR E. GREGORY BARNES Attorneys for SAN DIEGO GAS & ELECTRIC COMPANY 8330 Century Park Court CP32D San Diego, CA Telephone: (858) Facsimile: (619) svangoor@semprautilities.com MARK HUFFMAN Attorney for PACIFIC GAS AND ELECTRIC COMPANY 77 Beale Street, B30A San Francisco, CA Telephone: (415) Facsimile: (415) mark.huffman@pge.com Dated: March 27, 2018

2 Joint Response of Pacific Gas and Electric Company (U 39-E), Southern California Edison Company (U 338-E), and San Diego Gas & Electric Company (U 902-E) to the City and County of San Francisco s Application For Rehearing of Resolution E-4907 Table Of Contents Section Page I. INTRODUCTION AND BACKGROUND...1 II. THE AFR SHOULD BE DENIED BECAUSE IT FAILS TO DEMONSTRATE ANY ABUSE OF DISCRETION OR ARBITRARY OR CAPRICIOUS DECISION-MAKING ON THE PART OF THE COMMISSION IN ADOPTING THE RESOLUTION...2 A. The Resolution Reasonably Addresses Clear Legal and Policy Concerns...3 B. The Resolution is Adequately Supported by Facts and Law...5 C. Public Utilities Code Sections 1708 and Did Not Require the Commission to Hold Evidentiary Hearings Prior to Adopting Resolution E III. CONCLUSION i-

3 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of City and County of San Francisco for Rehearing of Resolution E Application (Filed March 12, 2018) JOINT RESPONSE OF PACIFIC GAS AND ELECTRIC COMPANY (U 39-E), SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E), AND SAN DIEGO GAS & ELECTRIC COMPANY (U 902-E) TO THE CITY AND COUNTY OF SAN FRANCISCO S APPLICATION FOR REHEARING OF RESOLUTION E-4907 Pursuant to Rule 16.1(d) of the Rules of Practice and Procedure (Rules) of the California Public Utilities Commission (Commission), Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E), and Pacific Gas and Electric Company (PG&E) (collectively, the investor-owned utilities (IOUs)) respectfully submit this joint response to the City and County of San Francisco s (CCSF s) Application for Rehearing of Resolution E-4907 (the Resolution), filed on March 12, 2018, and respectfully request that the Application for Rehearing be denied for the reasons discussed below. 1 I. INTRODUCTION AND BACKGROUND On February 8, 2018, after an extended public notice and comment period, the Commission adopted Resolution E The Resolution creates a process for review of Implementation Plans submitted to the Commission by Community Choice Aggregators 1 Pursuant to Rule 1.8(d), counsel for PG&E and SDG&E have authorized counsel for SCE to submit this document on behalf of their respective organizations. 1

4 (CCAs). 2 The Resolution coordinates the timeline for submitting an Implementation Plan with the timeline for submitting the annual Resource Adequacy (RA) forecast filings, to ensure that newly launched and expanding CCAs comply with statutory RA requirements prior to serving their customers. 3 All of California s Load Serving Entities (LSEs) must comply with the RA requirements of Public Utilities Code Section However, CCAs have not always participated in annual RA forecasting. That meant that the incumbent utilities remained responsible for procuring enough RA for all existing customers, even if some customers were about to be served by a CCA. As a result, some of the costs of compliance with the annual RA requirement were disproportionally borne by bundled customers who paid for unnecessarily acquired RA. 5 This cost shifting was prohibited, and had to be remedied by the Commission. 6 The timeline adopted by the Commission resolves this issue. The adoption of this Resolution was a lawful and necessary exercise of the Commission s authority to ensure that the CCAs comply with year-ahead RA requirements and mitigate the unlawful cost shifting from new CCA customers to non-cca customers. The AFR fails to demonstrate otherwise. II. THE AFR SHOULD BE DENIED BECAUSE IT FAILS TO DEMONSTRATE ANY ABUSE OF DISCRETION OR ARBITRARY OR CAPRICIOUS DECISION-MAKING ON THE PART OF THE COMMISSION IN ADOPTING THE RESOLUTION The AFR alleges, but does not establish, that the Commission s decision to adopt Resolution E-4907 was the result of arbitrary and capricious decision-making. As described 2 P.U. Code Section P.U. Code Section Unless otherwise indicated, all section references are to the California Public Utilities Code. 5 Resolution, p See e.g., P.U. Code Section 366.2(a)(4) (the implementation of a community choice aggregation program shall not result in a shifting of costs between the customers of the community choice aggregator and the bundled service customers of an electrical corporation). 2

5 below, the Commission s decision to adopt the Resolution was not arbitrary or capricious because the decision to act was based on law, supported by evidence, and took into consideration public comment. A. The Resolution Reasonably Addresses Clear Legal and Policy Concerns The AFR alleges that the Resolution is entirely lacking in evidentiary support and therefore the Commission abused its discretion and acted arbitrarily and capriciously in adopting the Resolution. 7 The AFR s allegations have no merit. The AFR claims that [f]irst and foremost, the Resolution does not adequately define the nature of the supposed problem the Resolution is trying to address. This claim is simply not credible. The Resolution makes plain two key problems: (1) CCAs as LSEs are required per Section 380 to comply with RA requirements, including demonstrating that they have procured sufficient RA resources on a year-ahead basis to serve their retail customers; yet CCAs are rapidly forming and starting to serve, or planning to serve, customers without complying with some or all of the RA requirements; and (2) because CCAs are rapidly forming and starting to serve, or planning to serve, customers without complying with some or all of the RA requirements, the IOUs have been obligated to demonstrate sufficient year-ahead RA resources for those customers that are served or will be served by CCAs, which, in fact, shifts RA costs that should have been borne by the CCAs customers to the IOUs bundled service customers. 8 The Commission did not need additional evidence to identify these problems, because the Commission already has the requisite information before it to identify these problems as a result of its responsibility to enforce RA compliance, as well as IOU cost recovery to ensure that all 7 The AFR cites to Civil Procedure Code as requiring substantial evidence in light of the whole record. It should be noted that the procedure assumes that the decision or order resulted from a proceeding in which by law a hearing is required to be given and evidence is required to be taken. As discussed in Section B herein, there was no requirement that the Commission take evidence before adopting Resolution E CCSF s comments on the Draft Resolution (at p. 1) acknowledge the problem: CCSF recognizes the importance of the concern raised by the Draft Resolution that there is a potential discrepancy with current cost-recovery mechanisms that does not address the recovery of certain short-term costs. 3

6 customers irrespective of their procurement provider continue to bear a fair share of costs incurred by the IOUs to serve them while they were part of the IOUs bundled service. 9 The Commission already knew as a matter of fact whether CCAs starting to serve or planning to serve customers in 2018 complied with the Commission s year-ahead RA process in 2017 to demonstrate they have procured sufficient RA to serve customers in Likewise, the Commission already knew that the Power Charge Indifference Adjustment (PCIA) only recovers above market costs from CCA customers not the full costs of RA and that the PCIA does not recover costs for any contracts of less than one year, because these are matters of fact already established in public proceedings before the Commission. 10 Once these two problems were identified, the Commission did not need additional evidence to conclude that it needed to take prompt action, given the rapid growth of CCAs, to enforce RA requirements for CCAs and mitigate cost shifting from CCAs to IOU bundled service customers. The Commission had full authority to take these actions, and its order in Resolution E-4907 to align the CCA implementation planning with the RA planning and delay 2018 implementations until the CCAs satisfy RA requirements, were reasonable under the circumstances. The Commission struck a reasonable balance in taking these actions by providing two viable options for CCAs intent on starting service in 2018 to satisfy their 2018 RA obligations by paying the IOU for the cost of 2018 RA compliance. 11 It is disingenuous for the AFR to claim that the Commission acted unreasonably and arbitrarily by requiring CCAs to promptly begin bearing their responsibilities and the costs for RA reliability, to mitigate at least some small portion of the substantial and increasing cost shifts 9 See P.U. Code Sections 380 and See generally D , explaining the methodology that leads to above-market cost recovery through the PCIA (and CTC) rates; also D at Conclusion of Law 3, concluding that the total portfolio cost methodology should exclude short term power purchases for terms of under one year. The sufficiency of this methodology for achieving indifference is currently under review in R (PCIA OIR). 11 See Resolution, pp and Order 3, regarding the Waiver Process. 4

7 from CCA to IOU procurement customers as a result of CCA formation. 12 The Commission did not need additional evidence to conclude that, when CCAs do not satisfy their RA obligations, the IOUs have to do so. RA resources are not free, and meeting RA obligations leads to cost shifts from CCAs to the IOUs. The AFR makes much of the Resolution s statement that the shift may potentially result in millions of dollars annually. 13 Nothing requires the Commission to determine with certainty the level of harm in order to conclude that the harm exists, and the cost shift is unlawful and needs to be addressed. The law precluding cost shifting does not require a certain threshold amount before it kicks in; the law does not permit any cost shifting. 14 Likewise, the Commission did not need to evaluate the various alternative proposals before taking reasonable actions in the Resolution. 15 As the AFR concedes, parties have an opportunity in the RA Order Instituting Rulemaking (OIR) to address these issues as part of a longer-term RA framework. 16 B. The Resolution is Adequately Supported by Facts and Law The AFR alleges inadequate evidence of cost shifting as a basis for adopting the timeline in the Resolution. However, CCA comments on the Draft Resolution acknowledge the existence of a cost shift under the currently adopted CCA registration timeline. Commenters stated: King City understands and acknowledges the importance of aligning CCA launch dates with Commission programs and the prevention of cost shifting to bundled service customers See R (PCIA OIR), in which the Joint Utilities are presenting evidence of the substantial and increasing cost shifts from CCA to IOU procurement customers as a result of CCA formation. 13 See AFR, p See P.U. Code Sections 366.2(d)(1), and See AFR, p See AFR, pp. 8-9 and fn King City Comments, p. 5. 5

8 CCSF recognizes the importance of the concern raised by the Draft Resolution that there is a potential discrepancy with current cost-recovery mechanisms that does not address the recovery of certain short-term costs. 18 In addition to CCSF s own recognition of cost shifting, the Resolution provides facts that show that there is cost shifting occurring between CCA and IOU customers: Public information illustrates the scale of load migration happening in the year ahead RA program. Existing and new CCAs that were not a part of the year ahead 2018 RA process but plan to serve load in 2018 would have been allocated a System Peak RA requirement of approximately 3,616 MW and a local RA requirement of approximately 1,7393 MW. [Instead] these year-ahead RA requirements were met by the utilities that currently serve these [CCA] customers. Some of these costs are recovered but others are not captured and are borne by remaining bundled customers. 19 The Commission has an obligation to ensure that implementation of CCA programs shall not result in cost shifting between a CCA s customers and the bundled service customers of an IOU. 20 The Commission properly relied on evidence of cost shifting to support its decision to adopt a timeline for review that is intended to prevent future cost shifting. 21 It is reasonable for the Commission to adopt a timeline that ensures compliance with the law. Such an action is not arbitrary, capricious, or otherwise unreasonable. 22 Adoption of the Resolution was a valid exercise of the Commission s authority to implement a timeline for review. Paragraphs 1 and 5 of the Resolution s Findings and Conclusions describe the basis for the Commission s authority to require the CCAs to comply with this timeline. The Commission cites to ordering paragraph 10 of Decision (D.) , 18 CCSF Comments, p Resolution, pp Resolution, p P.U. Code Section The CCSF argues that the Resolution barely acknowledges differences between the prior and adopted timelines. This argument is without merit. In addition to providing a visual comparison of the adopted and prior timeline in Appendix B, the Commission described, in great detail, the differences between the two timelines, and the reasons for those differences, on pages 9-12 of the Resolution. 6

9 where the Executive Director was ordered to develop and publish a process for CCAs to submit their Implementation Plans to the Commission for review. Prior to the adoption of the Resolution, the Commission had not yet developed this process. By adopting the CCA registration process proposed in this Resolution, the Commission effectuated D , a valid exercise of the Commission s authority to act. The Commission took into consideration public comment in setting the timeline for submission of the CCAs Implementation Plans. The Commission provided commenters with over 30 days to review and comment on the Draft Resolution, even extending the length of the comment period twice and allowing for reply comments. The Commission received over 60 comments and reply comments from the public. The Commission replied to these comments in the Resolution, addressing the public s concerns regarding timing, policy effects and due process. The Commission described its decision making process on each of these issues, clearly showing that the Commission considered each material and important issue and did not act in an arbitrary or capricious manner in evaluating public comments. CCSF has not shown that the Commission s decision lacked evidentiary support or was otherwise arbitrary or capricious. CCSF may not agree with the timeline adopted by the Commission, but disagreement over policy does not establish that the Commission s decision was factually or legally lacking. C. Public Utilities Code Sections 1708 and Did Not Require the Commission to Hold Evidentiary Hearings Prior to Adopting Resolution E-4907 In the AFR, CCSF argues that because it requested evidentiary hearings in its comments on draft Resolution E-4907, the Commission was obligated to hold evidentiary hearings, and by not holding evidentiary hearings prior to adopting Resolution E-4907, the resulting Commission order is arbitrary and capricious and not supported by evidence or findings. The AFR 7

10 relies on Sections 1708 and for its position that the Commission had no discretion to deny CCSF s request. 23 The AFR fails to demonstrate any legal error and must be denied. The AFR erroneously assumes that the Commission acted pursuant to Section 1708 in adopting the Resolution. However, the Resolution makes clear that it is issued pursuant to Sections and 380 of the P.U. Code and D The Resolution explains in the Due Process section: Numerous commenters assert that the resolution violates their due process rights. We disagree. The changes in the CCA timeline made by this resolution are an exercise of authority the Commission has had since Section 366.2(c)(8) establishes the authority of the Commission to designate a CCA s start date with consideration of the impact on the electrical corporation s annual procurement. The Commission could have set a start date/timeline for a CCA in a letter certifying its Implementation Plan. There is no substantive difference here, where the Commission is simply setting that start date/timeline for all CCAs. Ordering Paragraph 10 of D , moreover, requires the Executive Director to prepare and publish instructions for CCAs and utilities that includes a timeline and describes the procedures for submitting and certifying receipt of the Implementation Plan, notice to customers, notice to CCAs of appropriate CRS, and registration of CCAs. This resolution effectuates that order. Elsewhere, the Resolution cites to the Commission s authority in Section 380 to enforce Resource Adequacy a reliability program for all LSEs, including CCAs. 24 Accordingly, the Commission in the Resolution did not rescind, alter or amend any of its orders or decisions, but rather issued new orders to enforce existing statutory requirements in Section and 380, and effectuate its previously adopted orders in D regarding CCA timelines. Thus, Section 1708 does not apply. Sections (a) (e) do not apply because the Resolution did not arise as a result of a petition by an interested person to adopt, amend, or repeal a regulation. 25 Moreover, Section (f) simply retains any right of a party to an evidentiary hearing 23 AFR, p See Resolution, pp. 1, 6-8, 10-11, See P.U. Code Section

11 accorded by Section However, even if Section 1708 applied in the instant case, the AFR errs in assuming that it requires an evidentiary hearing. Section 1708 provides in relevant part: The commission may at any time, upon notice to the parties, and with opportunity to be heard as provided in the case of complaints rescind, alter, or amend any order or decision made by it. The terms evidentiary hearing or evidentiary or evidence are notably absent from its provision of an opportunity to be heard. The AFR points to the opportunity to be heard as provided in the case of complaints and assumes but does not substantiate that complaint cases require an evidentiary hearing. They do not. Nothing in the P.U. Code or the CPUC s Rules 26 requires the CPUC to hold an evidentiary hearing to resolve a complaint case. Rather, Section 1701 makes clear that even in adjudicatory proceedings (complaints), the Commission has discretion, consistent with due process, public policy, and statutory requirements, to determine whether a hearing is needed. Moreover, even if the Commission determines that an adjudicatory (complaint) proceeding requires a hearing, it can be an evidentiary or adjudicatory hearing, as needed. 27 Thus, Section 1708 does not require the Commission to hold evidentiary hearings prior to its adoption of Resolution E The Commission was well within in its authority to balance the need for evidentiary hearings against the due process afforded parties through the comments and reply comments (with extended timelines); the public policy and statutory requirements that necessitated prompt action and the resulting orders in the Resolution; and the recognition that the Resolution may delay some CCAs desired implementation dates for a finite period... for the purpose of avoiding unlawful cost shifting, but only if those CCAs decline to pursue one or 26 See P.U. Code Section (a), stating [t]he commission shall determine whether each proceeding requires a hearing. ; see also Section 1702 and CPUC Rules ; also Section and CPUC Rule 4.5, which adopts an expedited complaint procedure for small claims of money that does not permit attorneys to represent parties, limits the pleadings, and requires a hearing without reporter, but does not require an evidentiary hearing. Section also provides the Commission discretion at any time to move an expedited case to one that follows the regular procedure set out in Section 1702 and CPUC Rules See P.U. Code Section 1701(b). 9

12 both options for avoiding any delay through the waiver process; and to conclude that parties have had a full and fair opportunity to be heard: Commenters assert that there was no opportunity to be heard. We disagree. Comments on draft resolutions are normally afforded about 20 days to comment. Here, in response to requests from commenters, additional time was afforded for comment. In addition, reply comments, while normally not allowed, were allowed. Finally, two additional changes were made in response to comments. First, the deadline to submit Implementation Plans in 2018 has been moved forward to March 1, 2018, allowing several additional CCAs to begin service in Second, CCAs that desire to serve in [sic] may request a waiver if they reach an agreement with the incumbent utility to resolve RA cost-shifting concerns. These changes provide greater flexibility to CCAs on the date they can begin service. 28 The AFR does not identify with any specificity what the Commission could accomplish through evidentiary hearings on rehearing as it evaluated the policy and legal questions of the CCA implementation timeline to enforce RA requirements and avoid unlawful cost-shifting. The AFR does not explain what information CCSF would have brought forward had the Commission held evidentiary hearings. Nor does the AFR indicate that there was information that could not have been provided in CCSF s written comments. The AFR points to nothing in Resolution E-4907 that, from CCSF s perspective, is based on an incorrect factual determination. All parties, including CCSF, had a full and fair opportunity to be heard on the matters that were resolved in the Resolution. The AFR fails to demonstrate any error or abuse of discretion on the part of the Commission in declining to hold evidentiary hearings and provides no basis for rehearing any of the matters resolved in the Resolution. 28 Resolution, pp

13 III. CONCLUSION For the foregoing reasons, the Commission should deny the AFR. Respectfully submitted, JANET S. COMBS LAUREN P. GOSCHKE /s/ Lauren P. Goschke By: Lauren P. Goschke Dated: March 27, 2018 Attorney for SOUTHERN CALIFORNIA EDISON COMPANY On behalf of PACIFIC GAS AND ELECTRIC COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY, AND SOUTHERN CALIFORNIA EDISON COMPANY 11

14 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of City and County of San Francisco for Rehearing of Resolution E Application (Filed March 12, 2018) CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of JOINT RESPONSE OF PACIFIC GAS AND ELECTRIC COMPANY (U 39-E), SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E), AND SAN DIEGO GAS & ELECTRIC COMPANY (U 902-E) TO THE CITY AND COUNTY OF SAN FRANCISCO S APPLICATION FOR REHEARING OF RESOLUTION E-4907 on all parties identified on the attached service list(s) A Service was effected by one or more means indicated below: Transmitting the copies via to all parties who have provided an address. Placing the copies in sealed envelopes and causing such envelopes to be delivered by U.S. Mail to the offices of the ALJ(s) or other addressee(s). Chief ALJ Anne Simon California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA Executed on March 27, 2018, at Rosemead, California. /s/ Regina Coburn Regina Coburn Legal Administrative Assistant SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

15 CPUC - Service Lists - A Page 1 of 2 3/27/2018 CPUC Home CALIFORNIA PUBLIC UTILITIES COMMISSION Service Lists PROCEEDING: A NOT_SUBMITTED FILER: CITY AND COUNTY OF SAN FRANCISCO LIST NAME: LIST LAST CHANGED: MARCH 26, 2018 Download the Comma-delimited File About Comma-delimited Files Back to Service Lists Index Parties SUZY HONG DEPUTY CITY ATTORNEY CITY AND COUNTY OF SAN FRANCISCO CITY HALL 1 DR. CARLTON B. GOODLETT PLACE, RM 234 SAN FRANCISCO, CA FOR: CITY AND COUNTY OF SAN FRANCISCO Information Only MRW & ASSOCIATES, LLC ONLY ONLY, CA CASE ADMINISTRATION SOUTHERN CALIFORNIA EDISON COMPANY 8631 RUSH STREET ROSEMEAD, CA LAUREN P. GOSCHKE DONALD C. LIDDELL SOUTHERN CALIFORNIA EDISON COMPANY ATTORNEY 2244 WALNUT GROVE AVE. DOUGLASS & LIDDELL ROSEMEAD, CA ND AVENUE SAN DIEGO, CA PHILLIP MULLER DAN GRIFFITHS PRESIDENT ATTORNEY SCD ENERGY SOLUTIONS BRAUN BLAISING SMITH & WYNNE, P.C. 436 NOVA ALBION WAY 915 L STREET, STE SAN RAFAEL, CA SACRAMENTO, CA 95814

16 CPUC - Service Lists - A Page 2 of 2 3/27/2018 REGULATORY CLERK SCOTT BLAISING BRAUN BLAISING SMITH WYNNE, PC COUNSEL 915 L STREET, STE BRAUN BLAISING SMITH WYNNE P.C. SACRAMENTO, CA L STREET, SUITE 1480 SACRAMENTO, CA JEFFERY D. HARRIS ANDREW B. BROWN ATTORNEY ATTORNEY AT LAW ELLISON SCHNEIDER HARRIS & DONLAN LLP ELLISON SCHNEIDER HARRIS & DONLAN LLP 2600 CAPITOL AVENUE, STE CAPITAL AVENUE, SUITE 400 SACRAMENTO, CA SACRAMENTO, CA BRIAN S. BIERING ATTORNEY ELLISON SCHNEIDER HARRIS & DONLAN LLP 2600 CAPITOL AVENUE, SUITE 400 SACRAMENTO, CA State Service LEGAL DIVISION CPUC ONLY ONLY, CA TOP OF PAGE BACK TO INDEX OF SERVICE LISTS