Clean Energy Alliance: Regulatory Update
Jake Schlesinger – Keyes & Fox LLP
April 25, 2024
Overview
● A.22-05-002: Income Graduated Fixed Charges for IOU’s, Proposed Decision and Comments From Parties
● A.23-01-008: GRC Phase 2 GRC: Rate Design and Customer Understanding ● R.21-03-011: Provider of Last Resort – Revised Proposed Decision 2 AB 205 amended 739.9 of the Pub. Util. Code:
● Removed current $10 fixed charge cap for large IOUs.
● The Legislature finds and declares… ”The majority of an electrical corporation’s revenue requirement…is recovered from customers by a volumetric rate. However, only a portion of the electrical corporation’s costs directly vary based on how much electricity a customer consumes, while many infrastructure and operational costs do not.” ● Defined “Fixed charge” to mean “any fixed customer charge, basic service fee, demand differentiated basic service fee, demand charge, or other charge not based on the volume of electricity consumed.
● “The commission may adopt new, or expand existing, fixed charges for the purpose of collecting a reasonable portion of the fixed costs of providing electrical service to residential customers. ● “For the purposes of this section and Section 739.1, the commission may authorize fixed charges for any rate schedule applicable to a residential customer account. The fixed charge, shall be established on an income-graduated basis with no fewer than three income thresholds so that a low-income ratepayer in each baseline territory would realize a lower average monthly bill without making any changes in usage. The commission shall, no later than July 1, 2024, authorize a fixed charge for default residential rates.”
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A.22-05-002: Proposals from Parties
5 A.22-05-002: Proposed Decision to Implement AB 205
● PD takes a middle ground/incremental approach on IGFC largely due to difficulties income verification (IV), for now.
● Ties default residential fixed charge to be in line with SMUD @ $24.15 ○ Tier 1: Customers enrolled in the CARE (0% - 200% of Federal Poverty Guideline ) automatically pay the lowest discounted amount: ~ $6 per month ○ Tier 2: Customers enrolled in the FERA program (200% - 250%) or who live in affordable housing (at or below 80% of Area Median Income) automatically pay higher discounted amount : ~ $12 per month
○ Tier 3: All other customers will pay a fixed amount of: $24.15 per month 6 A.22-05-002: Proposed Decision to Implement AB 205
Fixed Costs can Recover the
Following Costs:
Fixed Costs Can NOT Recover the
Following Costs:
• Marginal Customer Access Costs
(unanimous);
• PPP charges (e.g., EE and LI program
charges) (TURN/NRDC, Cal Advocates,
the Large IOUs, and Sierra Club);
• Cost Allocation Mechanism,
(TURN/NRDC and the Large IOUs); and
• Nuclear Decommissioning NBCs
(Large IOUs).
• CTC (unanimous);
• PCIA: (TURN/NRDC);
• Wildfire Fund /Wildfire Hardening
NBCs (TURN/NRDC, Cal Advocates,
and Sierra Club);
• Recovery Bond charge (Sierra Club);
• PUC Reimbursement Fee and the
Energy Commission Fee (Sierra Club);
• Non-Marginal Distribution Costs.
(TURN/NRDC, Sierra Club, Cal
Advocates, and the Large Utilities);
• Electrification Incentive (Large IOUs)
7 A.22-05-002: Proposed Decision to Implement AB 205
Impact on CCA rates?
● ERRA will not change to fixed cost recovery, so CCAs should not have to match lower volumetric IOU rates
● CAM can be collected in the fixed charge, but CCAs already pay these costs as a separate NBC
● CPUC rejected PCIA inclusion
Impact on policy?
● Less emphasis on conservation
● More emphasis on affordability and electrification
● CEA programming addresses all of these concerns = some programs may benefit, some may not
8 A.22-05-002: Proposed Decision to Implement AB 205
9 A.22-05-002: Proposed Decision’s Next Steps:
● Utilities’ implementation advice letters should include proposals for IGFCs based on each utility’s most recently adopted revenue requirements. ● Within 90 days of the issuance date of this decision, each of the Large Utilities must file a Tier 3 advice letter to implement income-graduated fixed charges; ● Between October 1, 2025 and December 15, 2025, SCE and SDG&E must begin to apply fixed charges to residential customers’ bills; and
● Between January 1, 2026 and March 31, 2026, PG&E must begin to apply fixed charges to residential customers’ bills.
● Public Comment/Potential Revisions to PD or Alternate Decision 10 A.23-01-008: SDG&E’s Phase 2 GRC: Status Update
● PCIA Rate Design for Bundled Customers
● Customer Understanding of Rates due to Confusing SDG&E Bills ○ CARE and FERA Discounts
○ PCIA
● Expect these issues to be litigated and that SDG&E will argue that “bill presentment” is out of scope for this case.
R.21-03-011: Provider of Last Resort Updates
● POLR proposed decision was revised on April 15; Commission approved revised proposed decision on April 18.
● Key Updates:
○ Resolved duplicate submission of audited financials; now, audited financials are only due once per year, in January or July. ○ Expanded Tier 2 trigger: Tier 2 reporting now required if there is a “reasonable expectation” that CCA will become insolvent or bankrupt, not just actual insolvency/bankruptcy.
○ Removed presumption that Tier 2 reporting submissions are confidential; instead, CCAs must follow typical process for securing confidential treatment of submitted materials.
QUESTIONS?
Jake Schlesinger
[email protected]
(970) 531-2525
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