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 21, 1995 CPUC - 75 415-703-2423 (I.91-10-029/R.91-10-028) CPUC SETS UTILITY FUNDING OF LOW EMISSION VEHICLE PROGRAMS The California Public Utilities Commission (CPUC) today set the amount of money utilities can recover in rates to fund low emission vehicle (LEV) programs for the next six years. The programs are intended to comply with Legislative mandate to facilitate purchase and use of electric and natural gas vehicles in California. The combined utility LEV program funding requests totaled $426,652,000. The Commission approved $171,421,000 (40 percent); of this amount, ratepayers will fund $132,408,000 and shareholders the remainder. In every case, the Commission authorized less funding than requested. Southern California Gas (SoCal Gas) was authorized to spend only 24.5 percent of what it requested, San Diego Gas & Electric (SDG&E) only 32.2 percent, Southern California Edison (Edison) only 42.7 percent of its request, and Pacific Gas & Electric (PG&E) 86.9 percent. The reductions reflect the Commission's evaluation of the extent to which the proposed LEV program costs are reasonable and programs are in ratepayers' interest because they meet one or more of a utility's traditional responsibilities to provide reliable, efficient, safe, and environmentally and socially responsible utility service at reasonable rates. Ratepayers will fund information programs related to safe, efficient, reliable and cost-effective recharging and operation of electric vehicles. Shareholders will fund electric and natural gas vehicle marketing or promotion programs and rebate programs. The amounts approved below are the totals authorized for the next six-year period. Utilities will track their - more - approved expenditures and seek recovery of reasonable costs through rates in the following year. SIX-YEAR TOTAL UTILITY LEV PROGRAM FUNDING ELECTRIC VEHICLE PROGRAMS NATURAL GAS VEHICLE PROGRAMS Utility CPUC Utility CPUC Requested Approved Requested Approved SOCAL GAS 0 144,539,000 Ratepayer Funding 0 35,305,000 Shareholder Funding 0 0 The approved amount is $109,234,000 (75.5 percent) less than what SoCal Gas requested. SDG&E 15,967,000 29,428,000 Ratepayer Funding 5,348,000 6,683,000 Shareholder Funding 2,570,000 0 The approved amount is $30,794,000 (67.8 percent) less than what SDG&E requested. EDISON 190,268,000 0 Ratepayer Funding 44,738,000 0 Shareholder Funding 36,443,000 0 The approved amount is $109,087,000 (57.3 percent) less than Edison requested. PG&E $9,528,000 $36,922,000 Ratepayer Funding $9,528,000 $30,806,000 Shareholder Funding 0 0 The approved amount is $6,116,000 (13.1 percent) less than PG&E requested. Consistent with the LEV guidelines, the Commission cited these philosophical principles as underlying its decision: O Consumer funding for utility involvement in LEV programs should be limited to activities which directly benefit consumers, like safety and reliability of utility facilities. O Consumers should fund utility activities undertaken to comply with state or federal law, such as LEV fleet vehicle programs. - more - O Most of the activities the Commission deems inappropriate for consumer funding are legitimate enterprises for shareholder funding. The Commission thus encourages utilities to identify and exploit opportunities in LEV markets, in accordance with LEV guidelines, through unregulated subsidiaries. This protects consumers from subsidizing new business ventures, but allows utilities to profit from successes or absorb losses. The Commission has discretion until January 1, 1997 to establish utility funding for LEV programs to construct and maintain natural gas refueling stations, support vehicle conversion centers, offer incentives for vehicle conversions and purchase of natural gas vehicles and recover the reasonable costs of these programs in rates. Today it approved funding for utility fleet refueling stations but partially disapproved additional expenditures in each of the other areas. After January 1, 1997, however, the Commission retains responsibility to work with the California Energy Commission, the California Air Resources Board, air districts, utilities and the motor vehicle industry to implement other policies to promote natural gas and electric vehicle equipment and infrastructure development, such as sale-for-resale and rate base treatment of LEVs and related equipment, and development of statewide refueling standards. The California Air Resources Board requires that by 1998, 2 percent of all vehicles for sale in California yield no emissions and by 2003, 10 percent yield no emissions. So far, the only vehicles without emissions are electric. PG&E, Edison and SDG&E intend to buy electric vehicles for their fleets to give utility employees first-hand experience with driving characteristics, operation, maintenance, and recharging. This will help utilities design safe recharging practices and determine how to maintain service reliability systemwide as demand for electricity to recharge electric vehicles increases. - more - It will also help utilities comply with the National Energy Policy Act which requires them to begin purchasing alternative fuel vehicles by 1996. SDG&E plans to acquire 60 electric and 835 natural gas fleet vehicles over the next six years - 74 percent of its planned additional fleet vehicles, as well as recharging equipment and three utility fleet stations. Edison plans to acquire 750 electric vehicles. PG&E plans to buy 2,300 natural gas and 304 electric vehicles over the same period, but can only recover in rates costs of recharging stations when they are used by the utility. While utilities need to make sure that the additional demand for electricity by owners of electric vehicles does not burden their distribution systems, it is possible that instead of, or in addition to utility affiliates, electric vehicle manufacturers or independent entrepreneurs will install customer metering and recharging equipment as a way of inducing customers to buy electric vehicles. Therefore, the Commission will require utility shareholders to pay for and bear the risk of these infrastructure activities on the customer side of the meter. ###