CCC PPPPP U U CCC N N EEEEE W W W SSS C C P p U U C C NN N E W W W S S C P P U U C N N N E W W W S C PPPPP U U C N N N EEE W W W W SSS C P U U C N N N E WW WW S C C P U U C C N NN E W W S S CCC P UUUU CCC N N EEEEE W W SSS California Public Utilities Commission 505 Van Ness Avenue, Room 5301 San Francisco, CA 94102 CONTACT: Dianne Dienstein November 26, 1996 CPUC - 90 415-703-2423 (R.94-04-031/I.94-04-032) CPUC APPROVES PG&E INTERIM COMPETITIVE TRANSITION CHARGE The California Public Utilities Commission (CPUC) today took one more step toward a competitive electric industry in California by authorizing Pacific Gas & Electric (PG&E) to charge an interim competitive transition charge to customers leaving its system. Current electric rates, in part, reimburse utilities for their costs of building power plants and buying electricity from other utilities and independent power producers to serve their customers. The Commission previously approved those costs as reasonable, and authorized utilities to recover them in rates over many years. To ensure utilities recover these costs during transition to a competitive electric industry, all utility customers on and after December 20, 1995 - the date the Commission laid out a plan to restructure California's electric industry - will pay a competitive transition charge (CTC) until 2002. All customers will pay the CTC so residential and small commercial customers don't end up paying higher rates to make up revenue lost from larger customers who choose service from a company competing with PG&E and leave the PG&E system. When several large customers attempted to leave the PG&E system earlier this year, PG&E sought Commission approval to charge them an interim CTC. Today, the Commission approved the interim CTC, effective in 10 days, for customers with maximum monthly demands of 500 kW in any two of the preceding 12 months who choose to leave the PG&E system. The interim CTC is intended to recover during 1996 and 1997 transition costs included in current electric rates. - more - The interim CTC will remain in effect until superceded or ended by the Commission. All interim CTC payments are subject to adjustment on January 1, 1997 and once the final CTC is established, if appropriate. Both departing and remaining customers will pay transition costs, and both benefit from reductions in transition costs. Exceptions to the interim CTC obligation include customers served by cogeneration or self-generation units committed to construction on December 20, 1995, and expansions of up to 20 percent to onsite or over-the-fence cogeneration facilities that were operating as of December 20, 1995. Over-the-fence cogeneration refers to a cogenerator selling to one to two customers located on property immediately adjacent to the cogenerator. Customers who wish to leave the PG&E system must give the utility 30 days' notice. PG&E will maintain individual tracking accounts for customers who pay the interim CTC. The interim CTC will be calculated adding up the generation- related revenue requirements of PG&E's Energy Cost Adjustment Clause, the Annual Energy Rate, the General Rate Case, and Diablo Canyon. The total will be reduced by an estimate of the market value of forecasted sales. The resulting transition cost estimate for 1996 is $2.9 billion, about 39.2 percent of existing rates. Several types of customers asked for exemption from the CTC, and the Commission responded: O When a bypass deferral contract expires and the customer proceeds to build the deferred generator or take service from another source, this customer must pay the interim CTC. O The Commission denied exemption from the interim CTC for customers who have interruptable rate schedules and master meter customers. - more - If a new customer replaces a departing PG&E customer, PG&E doesn't double-collect the interim CTC because the exit and entry of customers is accounted for in the sales forecast, approved by the Commission, which will be used to calculate the interim CTC. Instead, addition of a new customer will reduce transition costs in two ways: o new customers before the beginning of competition on January 1, 1998 will pay for transition costs as part of their rate, which includes the interim CTC, and later through the final CTC, thus reducing the amount eligible for transition cost recovery, and o the added demand created by new customers after January 1, 1998 may boost the price of electricity supplied by the Power Exchange and the market price of generating plants - the primary measures of transition costs. ###