D. Load Profiles For 20 kW to 50 kW Customers
D.97-05-040 left open the question of whether load profiles for certain customers whose maximum demand is equal to or greater than 20 kW, but less than 50 kW, should be permitted. If load profiles for these customers are not permitted, they would be required to have an hourly interval meter to participate in direct access. (D.97-05-040, p. 35.)
In the Workshop Report, PG&E, SDG&E and Edison were originally opposed to the use of load profiles for customers with maximum demands between 20 kW and 50 kW. They originally proposed that only customers with a measurable maximum demand below 20 kW be eligible for load profiling. PG&E and SDG&E subsequently changed their position prior to the meeting of July 16, 1997. In the Eligibility Supplement, PG&E and SDG&E proposed that an interim blanket exemption be adopted to allow the use of load profiles for all direct access customers up to 50 kW. The load profiles for the 20 to 50 kW customers would be developed using the UDCs' proposal for a simplified load profile methodology. This proposal is conditioned on the parties' support for the adoption of the interim load profiling methodology. PG&E and SDG&E further propose to address the issue of whether load profiles for these customers should continue past the interim period in a proceeding to be held in 1998.
Edison opposes the interim blanket exemption. The Eligibility Supplement contains Edison's proposal for a temporary backlog exemption for individual customers with less than 50 kW maximum demand who are waiting to have an interval meter installed. Edison contends, however, that no other exemptions should be granted from the direct access metering requirement because it may cause customers to avoid CTC by taking advantage of the ratemaking treatment for transition costs for hourly metered customers.
A third proposal was advanced at the July16 meeting by the DGS, SPURR-REMAC, ORA, the California Retailers' Association (CRA), and the California Farm Bureau (collectively referred to as "joint proponents"). The joint proponents contend that the installation of a meter will not be economic for customers with loads between 20 kW and 50 kW. This joint proposal would grant a permanent consumption-based exemption for those customers between 20 and 50 kW who have a consumption level below 200,000 kWh per year (based on historical average usage). The joint proponents contend that the 200,000 kWh criterion is the estimated annual kWh level needed to recover Edison's tariff levels of metering costs. Unless this exemption is granted, the metering requirement will create an insurmountable barrier to direct access for some customers. The joint proponents also indicate their support for the proposed temporary backlog exemption and the proposed interim blanket exemption.11
CellNet Data Systems, Inc. (CellNet), a manufacturer of automated meter reading technology and meter data communication systems, presented a fourth proposal at the July 16, 1997 meeting. CellNet proposes that for customers who are not on a demand meter, the same hourly load profile used in billing customers for energy be used to calculate the customer's monthly maximum demand, in order to determine whether that customer exceeds the demand-based eligibility threshold for the use of a load profile.
The Workshop Report notes that some parties thought that load profiles should be extended to customers with a maximum demand of 20 to 50 kW because of a concern over the availability and affordability of hourly meters. The availability of hourly meters revolves around whether enough meters or meter installation capacity will be available in early 1998 to meet market demand. This shortage may arise because of either a lack of approved standards for non-UDC metering and meter installations, a lack of sufficient UDC resources to meet market metering demand, a lack of availability of direct access compatible metering or meter installation expertise, or any combination of these factors.
The Workshop Report notes that the affordability concern arises because it may be cost-prohibitive for certain types of customers, particularly those with low load factors, to justify the cost of a direct access meter. For example, a customer with a low load factor would have a low kWh consumption relative to its maximum demand. As a result, low load factor customers may experience smaller direct access savings, which may make the cost of new direct access metering equipment (including hardware, software, installation, meter reading, data management, and meter maintenance costs) unaffordable.
The Workshop Report notes that an argument against extending load profiles to these customers is that the accuracy of the load profiling methodology may decline with an increase in customer size because of the greater variability in the usage patterns of larger customers. If load profiles are extended to these customers, the Workshop Report states that it is likely that larger volumes of unaccounted for energy (UFE) will result because of the less accurate load profile.
DGS/UC/CSU point out that even Edison concedes that there will be customers in the 20 to 50 kW range for whom the purchase of an hourly meter would be uneconomic. Therefore, DGS/UC/CSU contend that an exemption is necessary for at least a subset of customers within this range to ensure that direct access implementation is equitable to all customer classes as required by Section 365. DGS/UC/CSU believe that the Commission should adopt the interim blanket exemption proposal of PG&E and SDG&E until the issue of exemptions can be addressed in a proceeding to be held in 1998. If this proposal is not acceptable to the Commission, then the Commission should adopt the proposal presented at the July16, 1997 workshop meeting by DGS, SPURR/REMAC, CRA, the Farm Bureau, and ORA.
DGS/UC/CSU contend that Edison's CTC leakage argument, to the extent the argument has any validity, is unrelated to the issue of whether there should be load profiles for customers whose maximum demand is between 20 and 50 kW. That is, the CTC leakage issue applies to all customers, and not just to those customers who fall between the 20 to 50 kW range. DGS/UC/CSU state that the CTC will be calculated using monthly class averages. Thus, only the customer's PX costs would be affected by the changes in usage that could result from a change from a load profile to an hourly meter.
The California Large Energy Consumers Association (CLECA) and the California Manufacturers Association (CMA) oppose any blanket extension of load profile eligibility beyond the 20 kW threshold established in D.97-05-040. They fear that additional profiling may create incremental costs that the UDCs will seek to recover. They contend that this is likely to result in a recovery from all customers, a shift of other type of costs onto hourly metered customers, and additional UFE that the ISO must allocate to all customers. CLECA and CMA contend that if eligibility exemptions are to be adopted, they should be deferred at least until the ISO's software can handle the proposed separation of estimated load profile error from other sources of UFE.
DGS/UC/CSU argue that contrary to the assertions of CLECA and CMA, there is no evidence that a 20 to 50 kW exemption will shift costs to metered customers. They also point out that any load profile error is dwarfed by other errors, such as the inaccurate reporting of loads and schedules by the scheduling coordinators. Any potential problems with load profile errors will be remedied when the ISO adopts procedures to isolate load profile error from UFE losses.
CellNet supports the proposal to allow a temporary exemption if customers are unable to obtain an hourly meter or if there is a delay in installation. CellNet believes, however, that the market will provide the necessary equipment in a timely manner. CellNet further believes that hourly metering will be cost-effective for a majority of customers in the 20 to 50 kW range, and that meter costs will decline with more competition. Before granting any exemptions to the 20 kW rule, CellNet believes the Commission first needs to identify reasons for such exemptions, and that in the absence of such reasons, the Commission should avoid granting any exemptions.
CellNet also asserts that the determination of the 20 kW threshold should be consistent. CellNet points out that under the current proposals, many 20 kW customers will have access to competitive metering services, while others will not. For example, PG&E proposes that a 35 horsepower agricultural load be considered a 20 kW customer, even though such loads exceed 26 kW. SDG&E proposes a threshold of 12,000 kWh per month, which is in excess of 27 kW.
ORA is opposed to the interim blanket exemption proposal of PG&E and SDG&E because it is conditioned upon acceptance of the UDCs' interim load profiling methodology. ORA opposes the interim load profiling methodology because it uses existing static load profiles with segmentation at the rate class level only. Should the Commission adopt the interim blanket exemption, ORA recommends that the exemption end as soon as the ISO's software can recognize the separation of load profile error from the other sources of UFE.
ORA is willing to permit the use of load profiles for 20 to 50 kW customers under certain circumstances. If there is a group of homogeneous customers with some usage below 20 kW, and others with usage above 20 kW, ORA believes that those customers with demands between 20 to 50 kW should be allowed to join the group load profile for the purposes of direct access. ORA also believes that if a group of customers with demands from 20 kW to 50 kW want to use a load profile, such a request should be examined on a case by case basis.
ORA does not believe that CTC leakage will be a concern. ORA asserts that under the UDCs' hourly residual basis proposal, rates will tend to be higher for those who cause the least costs on peak, and that rates will be lower for those who cause the most costs on peak.
Payless ShoeSource, Inc. (Payless) favors the interim blanket exemption proposal of PG&E and SDG&E. Payless asserts that extending the exemption to 20 to 50 kW customers will encourage a larger number of customers to participate in direct access. Payless also contends that such an exemption will allow time for the metering market to develop, which will result in reduced meter costs and increased availability. Payless thinks that an evaluation of the interim blanket exemption should take place after actual experience with direct access implementation and the use of load profiles has occurred. If metering is required for 20 to 50 kW customers, Payless contends that the metering costs will eliminate any savings that would result from direct access.
If the Commission decides not to raise the metering eligibility to 50 kW, Payless contends that the Commission should then exempt multi-site facilities that fall under 50 kW from the metering requirement. Allowing multi-site facilities to use load profiles on all loads less than 50 kW, will enable Payless and other similarly situated companies to implement a direct access strategy that is consistent among facilities, and will allow them to maximize any potential savings in the direct access market.
Payless rebuts the argument of CLECA and CMA that extending load profile eligibility from 20 to 50 kW would create additional UFE. Payless contends if a customer with a peak demand of less than 50 kW does not participate in direct access, its actual load will be estimated for purpose of the CTC by the same load profile that will be used if it participated in direct access without a meter. Thus, Payless believes that UFE cannot be increased, but can only be decreased by customers using meters.
Payless contends that Edison's proposal for a temporary backlog exemption addresses only the issue of meter availability, and not affordability. Such a proposal will not benefit those customers who cannot participate in direct access due to the high cost of metering.
Joint comments to the Eligibility Supplement were filed by PG&E, SDG&E, DGS/UC/CSU, SPURR/REMAC, the California Farm Bureau, and the CRA (collectively referred to as "joint commenters"). The joint commenters support the interim blanket exemption for customers with loads between 20 and 50 kW until this issue is revised by the Commission during a proceeding in 1998. The joint commenters believe that in PG&E's service territory, eligibility for exemptions should be determined as follows: (1)loads without demand meters would be deemed to be under 20 kW consistent with PG&E's position on eligibility for load profiles; and (2)loads with a demand meter having a demand under 50 kW in nine out of the twelve months of the year would be deemed under 50 kW. In SDG&E's service territory, eligibility for exemptions should be determined as follows: for loads with a demand meter, having a demand under 50 kW in nine out of the twelve months of the year would be deemed under 50 kW.
The joint commenters also agree that the PG&E and SDG&E proposals for segmentation and load profile methodologies as set forth in the Workshop Report should be adopted for use during an interim period until the Commission revisits the issues regarding methodologies in 1998.12
The joint commenters agree that for the 20 to 50 kW customers, the installation of an hourly meter may be uneconomic, and the installation of such a meter could present a significant barrier to direct access for these customers. They further assert that the development of such a barrier would contravene Legislative and Commission policy that direct access should be available on an equitable basis to all classes of customers. (See Section 365(b).) The joint commenters also contend that allowing an interim exemption from hourly meters would reduce the potential for backlogs related to the availability of hourly meters and their installation. The joint commenters also state that there is likely to be more accurate information in mid-1998 on the availability and cost of meters and metering services, particularly for medium-sized customers.
PG&E filed separate comments to the Eligibility Supplement in support of the blanket interim exemption. PG&E believes that the use of interim statistical load profiles for 20 to 50 kW customers will ensure that no customer faces an unreasonable barrier to direct access as a result of a lack of meters or the cost of such metering. PG&E also changed its position with regard to street light and traffic control accounts, and is willing to put all of these accounts, regardless of lamp and photocell ownership, on deemed load profiles.
PG&E recognizes that the expansion of load profile eligibility to include medium-sized customers will reduce the accuracy of ISO and PX settlements. Thus, PG&E contends that the blanket interim exemption should not be viewed as a long-term solution to any problems that may emerge with respect to meter affordability or availability.
PG&E also raised in its comments that the UDC must be the only provider of metering and meter services for statistical load profile customers and for its full service customers.13 PG&E does not believe that the Commission's decision on revenue cycle unbundling was intended to allow ESPs to provide metering and meter services to customers who are not their direct access customers. PG&E contends that its systems are not prepared to handle the complex contractual arrangements that would be required to facilitate the separate unbundling of metering and meter reading functions at this time. At a minimum, PG&E asserts that the Commission must adopt such a policy on an interim basis until a fuller review of this issue can be made.
PG&E also points out that under the Commission's cost separation decision, D.97-08-056, the Commission has created unintended incentives for certain types of customers and their ESPs, and that it has altered the incentives for UDCs to remain neutral with respect to a customer's election to take direct access or remain as a utility full service customer. PG&E contends that as better load shape customers, i.e., high load factor customers, choose to take direct access and install direct access metering, the PX purchase costs will rise for all remaining full service and load profile customers. PG&E asserts that this will lead to material cost-shifting within customer classes in contravention of AB 1890 and Commission policy.
Edison is opposed to extending load profiling to any customers with a maximum demand above 20 kW. Edison estimates that only about 15% of its 100,000 customers who fall between a maximum demand of 20 and 50 kW would find it cost-prohibitive to purchase a direct access meter.14 In addition, Edison contends that these same low load factor customers have little incentive to move to direct access because they are generally cross-subsidized under the existing class-average bundled service rates.
With respect to the availability of meters, Edison recognizes the problem that can occur if a direct access customer is unable to have an hourly interval meter installed in a timely manner. If a meter installation backlog develops, Edison proposes to expand its installation capacity to meet the demand. If this is not possible, Edison proposes that load profile eligibility could be extended on a temporary basis for individual customers with less than a 50 kW maximum demand. Edison proposes that this temporary backlog exemption be eliminated once the market can accommodate customer demand for direct access metering.
Edison is concerned that exempting additional customers from the direct access metering requirement may cause leakage of the CTC. That is, the exemption process could provide an opportunity for customers to systematically shift or avoid CTC by taking advantage of the ratemaking treatment for transition costs for hourly metered customers. If CTC leakage occurs, Edison contends that the period over which Edison has to recover its transition costs will be extended, and that it may prevent the UDCs from fully recovering the CTC during the transition period.
Edison also expressed concern over the proposal of DGS and the others to exempt customers with peak usage between 20 kW and 50 kW and annual consumption below 200,000 kWh from the hourly meter requirement. Edison contends that the proposal is inappropriate because it allows low load factor customers to use load profiling at the expense of high load factor customers. That is, the cost of serving low load factor customers is higher because the low load customer's usage is during on-peak times when prices are higher. During off peak hours, Edison contends that the high load factor customers subsidize the low load factor customers.
If the Commission were to adopt an exemption for low load factor customers, Edison recommends that the Commission direct the utilities to create one or more separate load profile segments for these customers as soon as practical to mitigate the extent of the cross-subsidies.
D.97-05-040 left open the issue of whether load profiles for customers with a maximum demand of 20 kW to 50 kW should be permitted. We had hoped that the participants at the load profiling workshop could come to some agreement on this issue. (D.97-05-040, p. 35.) Unfortunately, no agreement was reached.
In deciding this issue, we need to weigh the cost and availability of hourly interval meters, and what may happen if we allow or do not permit the use of load profiles for this customer group. At this point, we do not know for certain how much hourly interval meters will cost, what kinds of monthly fees will be associated with such meters, and the availability of such meters. If the cost of having such meters is high, or if there is a waiting list to have such meters installed, this will discourage customers from signing up for direct access. On the other hand, if the cost of such metering is low, and hourly interval meters can be readily installed, it is likely that more customers will choose direct access. If load profiles for customers with a maximum demand of 20 kW to 50 kW are not permitted, the number of customers who select direct access in this range of usage will depend on the affordability and availability of hourly interval meters. If load profiles for these customers are permitted, more customers will be eligible for direct access, but this is likely to increase the amount of error due to inaccurate load profiles.
In balancing the above considerations, we believe that the interim blanket exemption proposal of PG&E and SDG&E should be adopted. This proposal, will allow those customers who fall within the 20 to 50 kW range to examine the costs and benefits of moving toward an hourly interval meter, while being able to use load profiles on an interim basis. It will also provide an opportunity for market forces to determine how much hourly interval meters should cost, and allow the supply of such meters to match the demand. Since the proposal of PG&E and SDG&E is only for an interim period, we will have an opportunity to review the impact of the hourly interval metering requirements and its effects on customers who choose direct access. In addition, since these load profiles will be used only on an interim basis, there will not be an undue amount of load profiling error or a shifting of costs onto hourly metered customers. Interim load profiling for 20 to 50 kW customers is equitable given the uncertainty over the cost and availability of hourly interval meters, and consistent with the provisions of Section 365(b).
We will permit the use of interim load profiles for customers with a maximum demand of 20 kW or greater, but less than 50 kW. These interim load profiles shall be in effect until September30, 1998, unless extended by the Commission. The UDCs are directed to generate such load profiles, and to make them available no later than January1, 1998.15 We will also adopt the joint commenters' recommendation that if the customer has a maximum demand under 50 kW in nine out of the twelve months of the year, that customer can use the 20 to 50 kW load profile.
To assess the impact of the metering requirement on 20 to 50 kW customers, we will require the Energy Division to convene a workshop with the UDCs and other interested participants no later than May30, 1998. The purpose of that workshop shall be to examine the costs associated with hourly interval metering, and its impacts on customers whose maximum demands fall within the 20 to 50 kW range. The workshop should examine how many customers in that range are on load profiles, and how many have hourly interval meters. The workshop should also address whether the load profiles for these customers should be extended or discontinued in light of the metering situation, or whether hearings should be held to resolve this issue. Within 30 days of the conclusion of such workshop, the Energy Division shall prepare and file a workshop report with the Docket Office. Interested persons may file comments to the workshop report within 21 days of such filing. The Commission shall then decide whether hearings are necessary, or if the interim load profiles for customers whose maximum demand is between 20 to 50 kW should be extended, or if these interim load profiles should be allowed to terminate on September30, 1998.
We also address PG&E's comment that it is its understanding of D.97-05-039 that the Commission did not intend to allow the ESPs to provide metering and meter services to customers who are not their direct access customers. PG&E asserts that with one exception, only the UDC can be the provider of metering and meter services for statistical load profile customers and its full service customers.16
A review of D.97-05-039 seemingly confirms part of PG&E's interpretation, at least for the short term. Ordering Paragraph 2 of that decision states:
"Beginning January1, 1998, competing retail energy service companies may provide the billing and related services for all customers and metering systems for their largest customers and beginning January1, 1999, such firms may provide metering systems for all customers, so long as the services and systems are consistent with the other requirements discussed in this order."
D.97-05-039 contemplates that starting on January1, 1999, any retail energy service company may provide metering systems for any customer. Thus, contrary to PG&E's belief, metering services for all customers will be unbundled as of January1, 1999. That means in 1999, any company may supply the meter to any customer. For 1998, however, PG&E believes that D.97-05-039 did not intend to unbundle metering and meter services for customers who are on load profiles. D.97-05-039 stated that retail energy service companies may provide "metering systems for their largest customers." The decision did not, however, address who supplies the meter for a load profile customer.
The unbundling of metering services for customers on load profiles does not really affect those customers because, as PG&E points out, a load profile customer will remain on a kWh, time-of-use, or demand meter until the customer chooses to install a meter which meets the standards for direct access metering. The unbundling issue arises only when a customer purchases a meter for direct access, but then decides to return to a load profile instead of engaging in direct access. Since the purpose of making load profiles available is to see how the metering market develops, and to make direct access available without the necessity of having the customer purchase a meter, it does not make sense to allow unbundling of metering services for customers who are on statistical load profiles in 1998, except in the situation noted above.
In light of the load profile approach that we adopted in D.97-05-040 and in today's decision, we clarify our intent behind D.97-05-039 with respect to the unbundling of metering and meter services for customers who take service on load profiles. For customers who are on load profiles for the purposes of direct access, the UDC shall be the only approved provider of metering and meter services in 1998, unless the customer already owns a meter that is capable of providing data for direct access, but chooses to take direct access from a load profile instead. In such a situation, however, the UDC would be the only entity allowed to read and maintain the meter.
CellNet points out that the 20 kW threshold is not consistent among the UDCs. As an example, CellNet asserts that PG&E proposes that a 35 horsepower agricultural load be considered a 20 kW customer, even though such a load exceeds 26 kW. We recognize that the break points in the current rate schedules do not completely match our load profile cut-off points. The workshop referenced above should examine these inconsistencies in the load profiles, and propose recommendations as to how these inconsistencies should be resolved.
11 The Eligibility Supplement notes that ORA does not support the UDCs' proposals for a simplified load profiling methodology.
12 The joint commenters state that the issues related to load profiles for street lights is not addressed in their joint comments.
13 PG&E has proposed one minor exception to this rule. If a customer elects direct access and owns its own direct access meter, but later returns to PG&E's full service, PG&E would permit that customer the option of continuing to own its own meter. However, PG&E would be the only entity that would be allowed to read and maintain the meter so long as the customer remains a full service customer.
14 Edison's estimate is based on the assumption that there is a monthly metering charge of $15 per month, and that there is a 10% savings for direct access. Other parties believe that the meter costs in a competitive market are likely to be lower than Edison's $15 per month estimate, which should reduce the percentage of customers who would not be able to afford a direct access meter.
15 If possible, dynamic load profiles should be used. If that is not possible, static load profiles may be used until July1, 1998.
This Web page was produced using a Beta version of HTML Transit 3.0