2012 RDW Workshop. A12.02.020. Analysis and Rates July 12, 2012, CPUC. Agenda . 10:00 Welcome/Introductions Procedural Background and Workshop Goals 10:10 Reduction of baseline quantities (BQ) to 50% PG&E Presentation Discussion and Q&A
Analysis and Rates
July 12, 2012, CPUC
(a)Each climate zone’s BQs were weighted based on its share of 2011 basic service households.
(a) Based on 2009 calendar year data. Excludes TOU Schedules E6, E7 and E9.
(b) Territories P and S are combined in the summer.
(c) Territory Q is a geographical subset of T. It uses T values in the summer but X values in the winter.
Based on July 1, 2012 rates
Schedule E-7 has been in place since 1986. The last cost based allocation to Schedule E-7 was in the 90s. Generally, allocations to E-7 were based on participants on that schedule. Since participants were generally larger residential customers, average rates were lower than for E-1 customers
Schedule E-7 design remained substantially the same until restructuring. In 1998, the schedule included a meter charge of $3.90; summer rates (31.5/8.5) and winter rates (11.6/8.9) and a baseline credit of 1.7 cents per kWh
Beginning in 1998, all residential schedules began receiving a 10% discount. In 1999, up-front TOU meter installation charges were added ($277)
In January 2001, a one cent per kWh surcharge was added. In June 2001, the three cent energy surcharge was added creating tiers 3, 4 and 5. Rates were ‘frozen’ until 2004
Since 2001, tier differentials for all regular residential rate schedules have been set at the same levels. Thus, E-7 Tier 1 and Tier 2 rates are set, and then uniform surcharges are added to all standard non-CARE residential upper tier rates.
In 2004, the residential rates were converted to four tiers
In 2006, up front TOU meter installation charges were removed. Also, residential rates were returned to 5 tiers
In the 2003 GRC Schedule E-6 was proposed as a revenue neutral rate to replace E-7. E-6 was implemented in 2006
Schedule E-6 is time differentiated and includes the tier differentials common to other residential schedules
Schedule E-6 is not as steeply differentiated as E-7 and also includes partial peak period to improve its cost basis
Schedule E-7 was popular among solar customer-generators. It was closed to new non-solar customers in 2006, but remained open to new solar customers on a limited basis until 2009. Schedule E-7 is currently closed to new customers
In the 2007 GRC, settling parties agreed that the revised Schedules E-6 and EL-6 fulfill the requirements of Senate Bill (SB) 1, Public Utilities Code Section 2851 (a)(4), requiring “a time-variant tariff that creates the maximum incentive for ratepayers to install solar systems…”
Current TOU meter charges expire as customers are billed using SmartMeters
Beginning in 2010, Tier 1 and Tier 2 rates were adjusted based on the SB 695 index. Rates were returned to a four tier structure in 2010
In the 2011 GRC, residential rate design issues were litigated, not settled. As a result several parties offered testimony on Schedule E-6 design. PG&E’s proposed rates with four tiers were adopted
While PG&E may seek approval of a pilot for a non-tiered TOU rate in the future, it continues to be very concerned about revenue shortfalls resulting from larger customers migrating from a steeply tiered rate to an non-tiered rate
Energy Division Request:
Demonstrate that Schedule E-7 is not revenue neutral
Design a non-tiered TOU rate
Demonstrate the revenue shortfall from a non-tiered TOU rate
In order to design revenue neutral rates, rates are set such that the TOU rate collects the same revenue as would be collected if all customers were on Schedule E-1
PG&E developed the tier and time of use billing determinants for all customers assuming they took service on E-7
July 1, 2012 rates were multiplied by those determinants to derive the revenue from E-1 and E-7
PG&E prepared the same analysis for tiered Schedule E-6
Billing determinants (as if all customers are served on each rate schedule), are derived from load research data
Preliminary Results: Schedule E-6 was about 1 percent lower than Schedule E-1, but Schedule E-7 revenue was about 11 percent lower than revenue from Schedule E-1
Preliminary Results: PG&E’s design is based on retaining the current E-6 TOU periods and TOU rate differentials
The non-tiered rate is revenue neutral
Design a non-tiered TOU rate similar to E-6
Bill Comparison Results By Region (All Customers)
Using Load Research Data, Separate Bill Increases and Reductions
Revise SmartRate and PDP Designs in accordance with Resource Adequacy Requirements
D.11-06-022 required PG&E to file operating hours of 1 – 6 pm for its CPP rates in the 2012 RDW, and granted a waiver for the 2012 operating year in anticipation of implementation in 2013
D.12-06-025 continued the treatment established by D.11-06-022 if a decision in the 2012 RDW is not rendered in time for the 2013 operating year.
Revise terms and conditions for consistency between SmartRate and PDP
Choices: Either increase the SR event charge or reduce the revenue neutral credit to retain the current level of annual incentive
Proposed: Reduce the credit to maintain current daily level of event charge ($3 = 5hr x $0.60)
For PDP, increase the operating period from 2 – 6 pm (48 hours) to 1 – 6 pm (60 hours)
Choices: Either reduce the PDP event charge or increase the PDP revenue neutral credit.
Proposed: Reduce the event charge to maintain the daily level of event charge - retaining the existing event charge over a longer number of hours would have implied too great a capacity value ($4.80 = 5hr x $0.96)
Changes to Dynamic Rates: SmartRate and other Peak Day Pricing Rates (continued)