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HomeMy WebLinkAboutMINUTES - 08072001 - C.110 TO: BOARD OF SUPERVISORS �,• CONTRA G .. � - COSTA FROM: John Sweeten, County Administratorz '''� COUNTY DATE: August 7, 2001 46 MITj SUBJECT: Relief from PG&E Surcharge SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION(S): 1. SUPPORT ABAG POWER's petition for modification of Decision 01-05-064 before the Public Utilities Commission, which would relieve the County of obligation to pay a procurement surcharge to PG&E to recoup costs during a time when Contra Costa County was not a PG&E customer. 2. AUTHORIZE the Chair, Board of Supervisors, to execute letters of support of ABAG's POWER's petition for modification of Decision 01-05-064. BACKGROUND/REASON(S) FOR RECOMMENDATION(S): On March 27, 2001, the Public Utilities Commission adopted a 3¢ procurement surcharge on electricity rates. Subsequently, on May 15, 2001, the Public Utilities Commission allocated the rate surcharge among the different types of customers over a 12-month period. However, ABAG POWER, and consequently Contra Costa County, was not receiving its power from PG&E between March 27th and June 1St. Consequently, the County will be paying a surcharge to reflect electrical costs during a time when we did not receive electricity from PG&E. CONTINUED ON ATTACHMENT: _YES SIGNATURE: alig RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF0 COMMITTEE APPROVE _OTHER SIGNATURE(S): ACTION OF BOAR August 7, 2001 APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A XX UNANIMOUS(ABSENT ------- 1 TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact:Sara Hoffman,338-1090 ATTESTED August 7, 2001 JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR cc: CAO Eugene Leong,ABAG Executive Director /�/[Q/ Bart Gilbert,GSD BY, DEPUTY Terry Mann,GSD BACKGROUND/REASON(S) FOR RECOMMENDATION(S): ABAG POWER has petitioned the Public Utilities Commission for a modification of their Decision 01- 05-064 to rectify this inequity by exempting direct access customers from the portion of the surcharge which reflects electricity use between the March 27th and June 1St dates. ABAG POWER has requested that its members take a position of support for its petition for modification and to communicate such support to the Public Utilities Commission. President Loretta Lynch California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-2444 Email: commissionerlynch(a,cpuc.ca.2ov Commissioner Richard A. Bilas California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-3703 Email: commissionerbilasCiDcauc.ca.gov Commissioner Henry M. Duque California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-3700 Email: commissionerdu4ue(i ,cauc.ca.aov Commissioner Carl Wood California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-2440 Email: commissionerwood(a-)cauc.ca.stov Commissioner Geoffrey F. Brown California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-1407 Email: commissionerbrown(ii),cpuc.ca.aov The Board of Supervisors Contra John Sweeten Clerk of the Board Count Administration Buildin Costa and Y 9 J d County Administrator 651 Pine Street, Room 106 (925)335-1900 Martinez. California 94553-1293 Count � John Gioia, 1st District JV Gayle B.Uilkema,2nd District Donna Gerber,3rd District August 7, 2001 Mark DeSaulnier,4th District Federal D.Glover,5th District x,,.• :'_" � Trq.cdoK'� President Loretta Lynch California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear President Lynch: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27h to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of SupervisorsCj�rltra John Sweeten e a Clerk of the Board Costa and County Administration Building County Administrator 651 Pine Street, Room 106 (925)335-1900 Martinez, California 94553-1293 Count � John Gioia, 1st District JV Gayle B. Uilkema,2nd District Donna Gerber,3rd District August 7, 2001 Mark DeSaulnier,4th District Federal D.Glover,5th District CjO;- TrA c6uu- Commissioner Richard A. Bilas California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Bilas: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27th to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra Wako thBoad and County Administration Building Costa County Administrator s 651 Pine Street, Room 106 s (925)335.1900 Martinez, California 94553-1293 County John Gioia, 1st District ��E- .•..o,. Gayle B. Uilkema,2nd District August 7, 2001 Donna Gerber,3rd District �. j. - Mark DeSaulnier,4th District n' S Federal D.Glover,5th District °` rTA COUN'� Commissioner Henry M. Duque California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Duque: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27th to June 1't, 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board and County Administration Building Costa County Administrator 651 Pine Street. Room 106 (925)335-1900 Martinez, California 94553-1293 County John Gioia, 1st District Gayle B. Uilkema,2nd District Donna Gerber,3rd District August 7, 2001 Mark DeSaulnier,4th District Federal D.Glover,5th District wis Commissioner Carl Wood California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Wood: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27"to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15'h rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board Count Administration Building Costa and Y 9 J C( County Administrator 651 Pine Street. Room 106 (925)335-1900 Martinez, California 94553-1293 County ount / John Gioia, 1st District `!�/ Gayle B. Uilkema.2nd District �V. Donna Gerber,3rd District August 7, 2001 .�! Mark DeSaulnier,4th District n, ;S Federal D.Glover,5th District °' �,"'.'.'.'..` •jam Commissioner Geoffrey F. Brown California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Brown: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27th to June 1st, 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Application 00-11-038 Company (E 3338-E) for Authority to Institute a (Filed November 16, Rate Stabilization Plan with a Rate Increase and 2000) End of Rate Freeze Tariffs. Emergency Application of Pacific Gas and Application 00-11-056 Electric Company to Adopt a Rate Stabilization (Filed November 22, Plan. (U 39 E) 2000) Petition of THE UTILITY REFORM NETWORK Application 00-10-028 for Modification of Resolution E-3527. (Filed October 17, 2000) PETITION OF ABAG POWER FOR MODIFICATION OF DECISION 01-05-064 Daniel W. Douglass 5959 Topanga Canyon Blvd. Suite 244 Woodland Hills, CA 91367 Telephone (818) 596-2201 Facsimile (818) 346-6502 Attorney for ABAG POWER July 13, 2001 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Application 00-11-038 Company (E 3338-E) for Authority to Institute a (Filed November 16, Rate Stabilization Plan with a Rate Increase and 2000) End of Rate Freeze Tariffs. Emergency Application of Pacific Gas and Application 00-11-056 Electric Company to Adopt a Rate Stabilization (Filed November 22, Plan. (U 39 E) 2000) Petition of THE UTILITY REFORM NETWORK Application 00-10-028 for Modification of Resolution E-3527. (Filed October 17, 2000) PETITION OF ABAG POWER FOR MODIFICATION OF DECISION 01-05-064 Pursuant to Rule 47 of the Rules of Practice and Procedure of the California Public Utilities Commission (Commission), the Association of Bay Area Governments Publicly Owned Energy Resources ("ABAG POWER") hereby requests that the Commission modify Decision No. 01-05-064 (D.01-05-064), its rate stabilization decision in the above-captioned proceeding. ABAG POWER proposes modifications to the decision to provide that its direct access customers who continued to receive direct access service during the interim period between the March 27, 2001 issuance of D.01-03-082 and the subsequent May 15, 2001 issuance of D.01-05-064 should not be subject to the 12-month procurement surcharge which is designed to permit utilities to collect the three cent increase authorized by the earlier decision, which the utilities were not able to collect until the 1 later issuance of D.01-05-064. All ABAG POWER members were direct access customers during the period between the issuance of the two decisions. They should not be required to pay the additional amount being amortized over 12.months, since they were direct access customers during the period in question and therefore not subject to the rate increase. Pursuant to Rule 47(d), this petition is submitted within one year of the effective date of the decision to be modified. I. DESCRIPTION OF ABAG POWER ABAG POWER is a Joint Powers Agency formed pursuant to Cal. Govt. Code §§ 6500, et seq. by 67 public agencies ("Members") to provide its Members with electricity and natural gas purchasing services, with the goal of achieving a reduction in energy purchasing costs. The Members provide essential public services, and the electric energy furnished through ABAG POWER supports essential government functions. A board comprised of representatives of the Members governs ABAG POWER. The board sets pricing and procurement policies. All revenues in excess of costs are returned to the Members. Under the rules and regulations of the California Public Utilities Commission, ABAG POWER is eligible to provide electricity, as well as natural gas, and related services to public agencies. The Electric Program was started in 1998, with the commencement of electrical deregulation, and until recently, provided electrical power procurement and associated services to 56 cities, counties and special districts throughout Northern California. In addition, ABAG POWER has been a California Energy Commission registered renewable energy provider since mid-1999. ABAG POWER recently suspended its Electric Program due to market volatility and the non- 2 payment by Pacific Gas & Electric Company ("PG&E") of PX credit amounts due to ABAG POWER and its members. II. PROCEDURAL BACKGROUND The Commission's 1998 Rate Stabilization Proceeding resulted in the March 27, 2001 issuance of D.01-03-082 ("March Decision"). The March Decision granted Southern California Edison Company ("Edison") and PG&E authority to increase rates by adding to their current rates a three-cent per kilowatt-hour (kWh) procurement surcharge in response to the current emergency in the electric industry. The increase was added to the utilities' currently controlled rates and was specified to be in addition to the emergency procurement surcharge approved on January 4, 2001, and made permanent by the March decision. The rate increase was made effective as of March 27, but the Commission sought parties' comments on the amount of the increase and on rate design proposals for its collection, including that which the assigned Commissioner set forth in the Assigned Commissioner's Ruling issued contemporaneously. Subsequently, two weeks of hearings were held to discuss the design of the rate increase mandated by the March Decision. These proceedings led to the May 15, 2001 issuance of D.01-05-064. That decision adopted rates for various types of customers; applied a rate design to existing electric energy revenue needs for the purchase and supply of electricity by the California Department of Water Resources ("DWR"), PG&E and Edison; and expedited the allocation among bundled service procurement 3 customers of the three-cent-per-kilowatt-hour average rate increase adopted in the March Decision. The May Decision also allocated the recovery of the authorized 3¢ per/kWh. rate procurement surcharge from March 27, 2001, the time of its initial authorization, to June 1, 2001, the beginning of the surcharge recovery period. The amount of additional revenue raised through this period was said to total $903 million, which the utilities were directed to amortize in customer bills over the twelve-month period through May 31, 2002.' This is the procurement surcharge that ABAG POWER believes should not be applied to direct access customers who received direct access service during this interim period between the two decisions. The reasons for this proposed modification to the May Decision are discussed below. III. DIRECT ACCESS CUSTOMERS WERE SPECIFICALLY EXEMPTED FROM THE RATE INCREASE The May Decision specifically exempts direct access customers from payment of the three-cent procurement surcharge: The 3 cent/kWh surcharge adopted on March 27 is meant to apply to all generation deliveries on the utilities' systems, including the demand of direct access customers. However, although we authorize the utilities to include the direct access load in calculating the revenue requirement associated with the surcharge, we do not require direct access customers to pay any of the rate increase. Direct access customers are not relying on the utilities or DWR to purchase power on their behalf. The surcharge adopted in D. 01-03-082 is intended to provide payment for DWR purchases which do not include purchases made by direct access customers. By this exemption we intend to "net out" 1 Conclusion of Law 5 in the May Decision states at page 66 that, "The revenue associated with applying the three-cent/kWh surcharge to all non-exempt energy sales from March 27, 2001 to the day utilities begin collecting the surcharge should be added to each utility's revenue requirement and amortized over a twelve month period." 4 the charges and credits of direct access customers. By refraining from imposing an additional charge on direct access customers we do not intend to cause a windfall through a claim of a credit under the current direct access credit system. Thus, we will proceed to reexamine and redesign the direct access credit system to reflect current structural reality. ? [Emphasis added.] The ABAG POWER proposed modification to the May decision is quite simple, and is grounded in the same rationale provided by the Commission in the above excerpt from the May decision. If direct access customers are not required to pay any of the rate increase, then customers who were still on direct access during the interval between the March and May decisions should not be required to pay the 12-month procurement surcharge. This modification is fair. It is equitable. And it is in accordance with the Commission's exemption of direct access customers from the rate increase. IV. CUSTOMERS WHO RECEIVED DIRECT ACCESS SERVICE DURING THE PERIOD BETWEEN THE TWO DECISIONS SHOULD NOT BE SUBJECT TO THE PROCUREMENT SURCHARGE. The Commission has determined that direct access customers should not be subject to the rate increase imposed by the March and May Decisions. In effect, this will mean that a customer of PG&E or Edison who is on direct access will pay neither the three-cent rate increase nor the 12-month procurement surcharge. Should a direct access customer return to bundled service, it will be purchasing power from the utility (or DWR) and therefore will be subject to the three-cent increase. However, the customer who has received direct access service during the interim period between the issuance of the Decisions and subsequently returns to bundled service should not be subject to the 12-month procurement surcharge which is intended to recover power z May Decision[mimeo],at pages 30-31. 5 procurement costs during a time when the customer was purchasing power from an ' alternate provider. As the Commission is aware, numerous direct access customers were returned to bundled service by their energy service providers ("ESPs") when the utilities ceased paying the full PX credits that were due to customers and/or the ESPs who served them. Due to the financial stress imposed by the loss of the PX credit, members of ABAG POWER were recently returned to bundled service with PG&E - most being .returned during the month of June. All of ABAG POWER's customers were on direct access during the interim period between the issuance of the March and May decisions. It is unfair and inequitable for these non-procurement customers to be assessed the 12-month procurement surcharge imposed by the May Decision to cover this interim period. As they were not bundled service procurement customers during that time period, they should not be liable for the charge simply because they were forced to be returned to bundled service through PG&E's unfortunate inability to pay the PX Credit. If ABAG POWER customers are forced to pay the additional 12-month procurement surcharge they will have been forced to pay for power that they never received — or rather, they will have paid.twice for the power that they used during this period. V. AS A CONSORTIUM OF ENDUSERS, BOTH THE 12-MONTH PROCUREMENT SURCHARGE AND THE LOSS OF THE PX CREDITS IS TOTALLY TRANSPARENT TO ABAG POWER MEMBERS. The Member public agencies of ABAG POWER are directly affected by both the application of the 12-month procurement surcharge and the inability of PG&E to pay all amounts due and owing under the PX credit. Member's budgets have been placed 6 under significant financial stress, which has caused extreme financial hardship. PG&E currently owes in excess of $20 million to the public agencies of ABAG POWER. This ranges from approximately $3,500 owed to the Los Trancos Co. Water District and the South County Fire Authority to over $2,000,000 owed to the Counties of Contra Costa and San Mateo. Also this has caused the program to default on its obligations to other agencies such as the Northern California Power Agency ("NCPA") and the California Independent System Operator (CAISO). The public agencies of ABAG POWER are now being made subject to the 12-month procurement surcharge, which is causing their further unanticipated and unbudgeted increases to their PG&E bills. ABAG POWER urges the Commission to take note of the fact that there are hundreds of state and local government agencies, schools and hospitals that have taken advantage of direct access in an attempt to reduce their energy costs. " in the case of ABAG POWER, 56 such public agencies banded together on a non-profit basis to reduce costs for their thousands of constituents. They were harmed first by the financial inability of PG&E to pay the PX credit. Application of the 12-month procurement surcharge, particularly when all of ABAG POWER's customers were on direct access for the entire period between the Decisions, is unjust, inequitable and should not be allowed. VI. THE COMMISSION IS ALREADY TAKING ACTION TO GUARD AGAINST INEQUITABLE TREATMENT OF DIRECT ACCESS CUSTOMERS IN ANOTHER FORUM. IT SHOULD DO LIKEWISE IN THIS PROCEEDING. On July 3, 2001., the Commission's Energy Division issued its draft Resolution E- 3726. The draft Resolution, which is on the Commission's July 12 Agenda, responds to 7 SDG&E advice letters 1249-E, filed August 28, 2000; 1254-E, filed on September 12, 2000; and 1260-E/-E-A, filed on October 2/Oct 30, 2000. The draft Resolution notes that the Assembly Daily Journal for September 1, 2000 stated that, "It is the intent of this Legislature in enacting AB 265, that direct access customers not be discriminated against in implementation of the rate formula as established in AB 265." The draft Resolution then expressly states that, "to guard against such inequities, we will exempt DA customers from any future cost recovery obligations associated with AB 265 rate ceiling benefits." Direct access customers are therefore exempted from the application of any procurement surcharge which SDG&E may layer impose to recover its undercollection caused by the application of the AB 265 rate cap. There are significant parallels between the SDG&E proceeding and the situation faced by ABAG POWER: Like the direct access customers of SDG&E, the direct access customers of ABAG POWER did not contribute to any undercollection incurred by their local utility (in this case, PG&E). • As in the SDG&E proceeding, the utility will be required to impose a procurement surcharge to collect amounts not previously collected due to a delay in implementation of regulatory proceedings. • As with the direct access customers of SDG&E, it would be inequitable for the Commission to assess a procurement surcharge on the direct access customers of ABAG POWER. The Commission has expressed its intent to "guard against inequities" for direct access customers of SDG&E. ABAG POWER asks the Commission to afford similar 8 protection to the direct access customers of PG&E who did not receive procurement service during the interval between the March and May Decisions and therefore should not be subject to the procurement surcharge designed to recover the lost revenues of PG&E during that period. VII. APPLICATION OF THE PROCUREMENT SURCHARGE TO CUSTOMERS WHO RECEIVED DIRECT ACCESS SERVICE DURING THE PERIOD BETWEEN THE MARCH DECISIONS AND THE MAY DECISION WOULD CONSTITUTE DISCRIMINATORY TREATMENT. Section 453(a) of the Public Utilities Code provides that, "No public utility shall, as to rates, charges, service, facilities or in any other respect, make or grant any preference or advantage to any corporation or person or subject any corporation or person to any prejudice or disadvantage." Application of the 12-month procurement surcharge to non-procurement customers who received direct access service during the time period that the procurement surcharge is supposed to cover would be discriminatory. It would subject those direct access customers to payment of a charge from which they were specifically exempted by D.01-05-064. It would benefit bundled service customers by reducing the amount of the procurement surcharge that was properly to be collected from bundled service customers. Moreover, Section 453(c) of the Public Utilities Code provides that, "No public utility shall establish or maintain any unreasonable difference as to rates, charges, service, facilities, or in any other respect, either as between localities or as between . classes of service." Bundled service and direct access service customers receive two distinctly different classes of service. The former, as noted by D.01-05-064, receive procurement service from their local serving utility or the DWR. The latter receives 9 procurement service from their ESP. For all the reasons noted above, it would be unreasonable and unfair for direct access non-procurement customers to be required to pay a procurement-related surcharge. Unless D.01-05-064 is modified as requested herein, the decision will have inadvertently placed PG&E and Edison into a position where they are forced to apply a discriminatory procurement surcharge to non-procurement customers who received direct access service during the period between the March and May Decisions. Neither the Commission nor the utilities intended this result, and it should be corrected through the approval of this petition for modification of D.01-05-064. VIII. SUMMARY AND CONCLUSION The Commission should modify D.01-05-064 to clarify the status of direct access customers who continued to receive direct access service during the interim period between the March 27, 2001 issuance of D.01-03-082 and the subsequent May 15, 2001 issuance of D.01-05-064. These customers should not be subject to the 12-month procurement surcharge that is designed to permit utilities to collect the three-cent increase authorized by the earlier decision, which the utilities were unable to collect until the later issuance of D.01-05-064. Direct access customers were specifically exempted from the procurement- related rate increase because they do not receive procurement service. They should therefore be similarly exempted from the12-month procurement surcharge, even if they subsequently returned to bundled service. The inability of PG&E to pay all amounts due and owing under the PX credit have caused the budgets of ABAG POWER Members to be placed under significant financial stress. The Member public agencies have suffered 10 extreme financial hardship. The application of the 12-month procurement surcharge has added to that burden unnecessarily In a separate proceeding the Commission has expressed its intent to "guard against inequities" for direct access customers of SDG&E. ABAG POWER asks simply that the Commission afford similar protection to the direct access customers of PG&E who did not receive bundled procurement service during the interval between the March and May Decisions. These non-procurement customers should not be subject to the 12-month procurement surcharge. Moreover, in addition to being inequitable, the application of the procurement surcharge to non-procurement direct access customers would be discriminatory and would cause the utilities to violate.the anti-discrimination provisions of the Public Utilities Code, Sections 453(a) and 453(c). For the foregoing reasons, ABAG . POWER respectfully requests that the Commission grant this petition for modification or grant other relief, as it deems appropriate. Respectfully submitted, Daniel W. Douglass 5959 Topanga Canyon Blvd., Suite 244 Woodland Hills, CA 91367 Telephone: (818) 596-2201 Facsimile: (818) 346-6502 E-Mail: douglass@energyattorney.com Counsel for ABAG POWER July 13, 2001 11 President Loretta Lynch California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-2444 Email: commissionerlvnch(a),cpuc.ca.gov Commissioner Richard A. Bilas California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-3703 Email: commissionerbilas(a�cpuc.ca.gov Commissioner'Henry M. Duque California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-3700 Email: commissionerdugue(a,cjguc.ca.gov Commissioner Carl Wood California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-2440 Email: commissionerwood(a-),cpuc.ca.gov Commissioner Geoffrey F. Brown California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Phone: (415) 703-1407 Email: commissionerbrown(a),cpuc.ca.gov The Board of Supervisors Contra John Sweeten Clerk of the Board and County Administration Building Costa County Administrator 651 Pine Street. Room 106 I I (925)335-1900 Martinez. California 94553-1293 County John Gioia, 1st District tiE L E-rT ,U Gayle B.Uilkema,2nd District �%:`_; -,�L_.!• August 7, 2001 Donna Gerber,3rd District -' , ��. �•; AU g Mark DeSaulnier,4th District As Federal D.Glover,5th District Commissioner Geoffrey F. Brown California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Brown: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27`h to June l"', 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 151h rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, f Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board and County Administration Building Costa County Administrator 651 Pine Street. Room 106 I (925)335.1900 Martinez, California 94553-1293 County John Gioia, 1st District ae � �. o Gayle B.Uilkema,2nd District _;.. -�'?:f• rte= August 7, 2001 Donna Gerber,3rd District g Mark DeSaulnier,4th District .A5 Federal D.Glover,5th District Commissioner Carl Wood California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Wood: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27`h to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15`h rate stabilization decision (D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to convect this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, , Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board and County Administration Building Costa County Administrator 651 Pine Street, Room 106 I I (925)335-1900 Martinez, California 94553-1293 County John Gioia, 1st District Gayle B.Uilkema,2nd District AU ust 7, 2001 Donna Gerber,3rd District �•, g Mark DeSaulnier,4th District 1 Federal D.Glover,5th District '= ._......y, M. t�'9 CUUNt` Commissioner Henry M. Duque California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Duque: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27`h to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 151h rate stabilization decision (D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board Ind County Administration Building Costa County Administrator 651 Pine Street, Room 106 (925)335-1900 Martinez, California 94553-1293 County John Gioia, 1st District tie t `JV Gayle B.Uilkema,2nd District Donna Gerber,3rd District August 7, 2001 Mark DeSaulnier,4th District Federal D.Glover,5th District is T'a COUK� Commissioner Richard A. Bilas California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear Commissioner Bilas: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27th to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision(D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director The Board of Supervisors Contra John Sweeten Clerk of the Board Count Administration Building Costa and County 9 J d .County Administrator 651 Pine Street, Room 106 (925)335-1900 Martinez, Cafifornia 94553-1293 County lnt ' John Gioia, 1st District IJV tie L Gayle B.Uilkema,2nd District Donna Gerber,3rd District � August 7, 2001 Mark DeSaulnier,4th District Federal D.Glover,5th District `;:rte: : :• 't ' :S):q CIIU h•(i President Loretta Lynch California Public Utilities Commission Headquarters Office 505 Van Ness Avenue San Francisco, CA 94102 Re: Petition for Modification of Decision 01-05-064 Dear President Lynch: Contra Costa County supports the above-referenced petition filed by ABAG POWER. The County is a member of ABAG POWER and has participated in its electric aggregation program since the earliest days of deregulation. Recently, however, we were forced to return to PG&E bundled service due to energy market price volatility and the non-payment by PG&E of the PX credits owed to the County. The issue discussed in the petition is another blow against customers that chose to take part in the deregulation process. Without the approval of this petition, Contra Costa County will be forced to pay for energy it never used from March 27th to June 1", 2001. During this period Contra Costa County was a direct access customer receiving power from ABAG POWER, and has paid ABAG POWER for this energy used. However due to the necessity of returning to PG&E service, Contra Costa County is now being forced to pay the 12-month procurement surcharge, approved by the Commission in its May 15th rate stabilization decision (D.01-05-064), for power that it never received from PG&E. The procurement surcharge represents a significant financial hardship for Contra Costa County over and above the rate increases that have already been approved. This increase was not considered when budgeting County electricity costs for the FY 01-02 fiscal year, which are already projected to increase from $5.7 million to $12.1 million, 112%. We urge you to correct this inequity at the earliest possible opportunity by restricting the 12-month surcharge to only those customers that received electricity from PG&E (or SCE) during the period in question, and approving refunds of surcharges paid to date for customers that were not served by the utilities. We request your immediate attention to this serious matter. Please contact Sara Hoffman, Assistant County Administrator at 925/335-1090 should you have any additional questions. Sincerely, , Gayle B. Uilkema Chair, Board of Supervisors cc: Eugene Leong, ABAG Executive Director