ÿWPC/ Ä°S¹_Öãoo b„=WÏ+ˆiÏA, £–0q$¨{€Y­»X¸ €>sU‚Yk3áî8Í®[ÐbWý lz0ó:ßúx£ÐŠÓØdœúDz>$ÚÜüÊ&žGbÉ姜x¦œQÇŽk·ÏR¯³)Nûôá6½ÓÌÕ·¹ÃŸ.ÉdŠ²Á‚ì9ÌaÔs ?5‡ã,ª^eöÇš…¸#{¡<¸6”üŸYEááÛ~øî1„û¬ööZa< è½Àþ“vM{–¨ü‡W *‰UM©ìþÙO†ÕÄBEÔ—nyô´/F:€0Uc“ýKxuúí7Ò ¤[*!Sµµ‹ãÊ‘¼¿ÎÉíÛ`ºOH[É¥óeРžÄ‘y*nLä«xÖÐm§þgQã«ü€V ["Ävë-†4jDbif~ ˜f¦®Ô 3¢@¡îšX‡¡þî³ppƒ€b¸ÞøîF\O#n5®;tÞk'ÙÞœ½Ç‡¾¸hÏéÿGÍúàø·œ9WcàÖÈx­²JÙ§Ê Ýp#F%ú€©úÎ M‹àþ’¯˜9®HÍFHnæðª¨ÕzhnuD˜É«GÐÌ"Ã&6òˆy,F¹¤ÀŒ=ÍD#!¸UNÙ %' 0L-Hyw@Á4$ m&v=Ƴ y  0e“ Gø 0h? UP§ e ÷  0 0D¤èröäh'L±s$¬,(Ø°°bƈ(T°4û8 3 BS ¸p æ(! #ë#ªÿ$©&ã¸' 0N›(›(›(Žé(é(Šw+Î,,,ÞÏ,Ï,Ï,Ï,Ï,Ï,Ï,Ï,Ï,Ï,Ï,[­-˜\\ES\HP_Second floorØ,,,,,Ø,0xÖÃ9 Z‹6Times New Roman RegularX($,}$¡¡Ó  ÓÑ  ÑÑ  Ñc:\Corel\Office7\Template\WP7US.WPT Ú[Û[Ü[Ý[Þ[ß[à[á[â[ãÊzØ$es\Backup3|xãÿU‹ÿÀÀÀ lÝ ƒºî*ÝÓ  ÓÝ  ݛԀXéªXXXÔÔ€,×É,XXéªÔÔ.nƒ^S:\DGS\abb\CPUC Filings\rcs ph2 jt ob.FINAL.wpdnÔS:\DGS\abb\CPUC€Filings\rcs€ph2€jt€ob.FINAL.wpdÔ/  Ôà€˜ ˜ =(#àÔ"&US ú/ú/ú ú:!ú&ú&ÔÔ ƒÝ Ô6/26/98€1:19PMÔ!  ÔI., II.,Level 1Level 2Level 3Level 4Level 5  CSUÈ4#)Þ2Quick I.Úƒ ÚÚ  Ú.à0 àÛ€ Û =Ý ƒU$ÝÓ  Óà  àòòÚ  Ú23Ú  ÚóóÝ  Ý›òòSeeóó,€TR€544,€line€9€through€545€line€2€(SCE:€Fellows)€regarding€direct€access€andÐ ° Ðdevelopments€which€seek€to€maximize€energy€efficiency.€€òòSee€alsoóó,€TR€518,€line€5€through€524,€lineÐ œì Ð11.(@3ºî$ªªÝ ƒ,}!ÝÓ  ÓÑ  ÑÑ  ÑÝ  Ýx°À`  Z8Swiss 721 Roman (Speedo)  Ý ƒU$ÝÓ  Óà  àòòÚ  Ú1Ú  ÚóóÝ  Ý›Dian€Grueneich,€counsel€for€the€University€of€California€and€California€State€University,€hasÐ ° Ðauthorized€Andrew€B.€Brown€to€sign€this€brief€on€behalf€of€her€clients.(@(3U$¤¤Ý ƒ,}!ÝÓ  ÓÑ  ÑÑ  ÑÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó Ý ƒU$ÝÓ  Óà  àòòÚ  Ú5Ú  ÚóóÝ  Ý›Enron€presented€revised€credits€in€¢Exh£.€55.€€Additionally,€certain€other€potential€correctionsÐ ° Ðwhere€identified€during€hearings.€€òòSeeóó,€e.g.,€TR€900„901. hÝ ƒU$ÝÓ  Óà  àòòÚ  Ú7Ú  ÚóóÝ  Ý›Enron,€¢Exh£€51,€page€2. ÚÝ ƒU$ÝÓ  Óà  àòòÚ  Ú8Ú  ÚóóÝ  Ý›òòSee,€e.g.,óó€Exh.€76,€pages€1„2€„€1„3€where€TURN€notes€its€ð ðsignificant€doubts€as€to€the€utilityÐ ° Ðfigures.ðð€€ Ý ƒU$ÝÓ  Óà  àòòÚ  Ú9Ú  ÚóóÝ  Ý›SDG&Eððs€witness,€Mr.€¢Croyle£,€highlights€the€distinction€between€ð ðavoidableðð€and€ð ðavoidedðð€Ð ° Ðcosts.€€Costs€applicable€for€crediting€include€ð ðavoidableðð€and€ð ðopportunityðð€costs.€€òòSeeóó,€TR€1055Ð œì Ð(SDG&E:€¢Croyle£);€€Exh.€9,€page€6.€€ð ðAvoidableðð€costs€are€more€inclusive€than€the€ð ðavoidedðð€costsÏidentified€by€PG&E€and€Edison.€€TR€412,€line€27€through€413,€line€6€(SDG&E:€¢Croyle£). §Ý ƒU$ÝÓ  Óà  àòòÚ  Ú4Ú  ÚóóÝ  Ý›Price:€ð ðconsistency€in€approach€is€one€of€our€major€recommendations.ðð€TR,€1021.€€ þÝ ƒU$ÝÓ  Óà  àòòÚ  Ú11Ú  ÚóóÝ  Ý›òòSee,€e.g.óó,€Exh.€58€(ORA),€page€12,€lines€12„14€and€page€18,€lines€3„11.€€For€SDG&EððsÐ ° Ðrecommendation€see,€Exh€38€(SDG&E),€page€30€and€TR€446„447. ¢Ý ƒU$ÝÓ  Óà  àòòÚ  Ú13Ú  ÚóóÝ  Ý›òòSeeóó,€testimony€of€SDG&E€witness€Croyle,€TR€443,€line€15€through€444€line€5. Ý ƒU$ÝÓ  Óà  àòòÚ  Ú24Ú  ÚóóÝ  Ý›Indeed,€D.96„12„044,€at€page€33,€notes€that€other€ways€of€dividing€the€total€rate€areÐ ° Ðpermitted€under€the€statue,€and€that€the€point€of€dividing€the€rate€into€components€is€to€ensure€thatÏdirect€access€customers€pay€the€same€charges€for€the€services€they€take€from€the€utility.€€At€that€timeÏonly€the€provision€of€energy€was€expected€to€be€competitive.€€Obviously€the€Commissions€policy€hasÏevolved€in€this€area,€as€evidenced€by€D.97„05„039. ¦Ý ƒU$ÝÓ  Óà  àòòÚ  Ú12Ú  ÚóóÝ  Ý›For€example,€SDG&E€witness€Croyle€notes€this€difference€at€TR€414,€424„425,€443„444.€ Ñ ° Ñ XÝ ƒU$ÝÓ  Óà  àòòÚ  Ú25Ú  ÚóóÝ  Ý›D.97„05„056,€at€page€6„7,€states€that:Ð ° Ðà8  à[¢t]he£€purpose€of€promoting€competition€where€it€may€be€viable€is€to€assure€the€bestÏuse€of€the€economyððs€resources,€to€assure€customers€pay€the€lowest€price€for€services,Ïand€to€expand€the€array€of€services€available€to€customers.€€Unbundling€promotesÏcompetition€by€providing€customers€with€options€for€individual€services€and€sendingÏcustomers€price€signals€which€would€permit€them€to€make€reasoned€choices€aboutÏtheir€competitive€options.€€ ~Ý ƒU$ÝÓ  Óà  àòòÚ  Ú26Ú  ÚóóÝ  Ý›òòSeeóó,€TR€608,€lines€13„14€(PG&E:€Burns). JÝ ƒU$ÝÓ  Óà  àòòÚ  Ú15Ú  ÚóóÝ  Ý›òòSee,€e.g.,óó€Exh.€38€(SDG&E)€page€9€and€Exh.€9€(SDG&E)€page€6;€¢Exh£.€58,€pages€16€&€18Ð ° Ð(ORA);€¢Exh£.€76,€pages€1„21€through€1„28€(TURN);€¢Exh£.€51,€page€36€(Enron);€¢Exh£.€53,€page€16Ï(Enron);€¢Exh£.€71,€page€11€(¢CellNet£). *Ý ƒU$ÝÓ  Óà  àòòÚ  Ú14Ú  ÚóóÝ  Ý›òòSeeóó,€TR€267,€269€(CEC:€¢Jubien£€[Opening€Statements]);€¢Exh£.€64,€page€4,€lines€1„9€(CEC);Ð ° ТExh£.€58,€pages€3„4€(ORA)€(Competitive€services€should€be€allocated€to€UDCsðð€merchant€function). ñÝ ƒU$ÝÓ  Óà  àòòÚ  Ú17Ú  ÚóóÝ  Ý›TR€1261€(CellNet:€King).€€¢CellNet£,€for€example,€produces€retrofit€devices€that€would€allowÐ ° Ðconvention€meters€to€be€used€for€direct€access. Ý ƒU$ÝÓ  Óà  àòòÚ  Ú16Ú  ÚóóÝ  Ý›TR€570€(SCE:€Pope):€ð ðWhat€drives€the€[net]€salvage€value€...€negative€is€that€thereððs€a€fairlyÐ ° Ðlarge€expense€of€removing€the€meter€from€Edisonððs€accounting€records.ðð d ®Ý ƒU$ÝÓ  Óà  àòòÚ  Ú18Ú  ÚóóÝ  Ý›òòSeeóó€the€extensive€testimony€regarding€this€issue€beginning€at€TR€416€(SDG&E:€Croyle).€€ ÜÝ ƒU$ÝÓ  Óà  àòòÚ  Ú2Ú  ÚóóÝ  Ý›The€superiority€of€price€signals€from€the€market,€as€would€be€the€case€if€RCS€rates€wereÐ ° Ðunbundled€from€distribution,€was€addressed€by€SDG&Eððs€witness€Croyle:€ð ðIf€you€were€to€decide€thatÏcertain€activities€were€now€competitive€and€pull€them€out€of€those€bundled€rates€and€chargeÏseparately€for€them,€the€only€right€price€signal€would€be€the€market€price€....ðð€TR€440.H áÝ ƒU$ÝÓ  Óà  àòòÚ  Ú3Ú  ÚóóÝ  Ý›While€the€utilities€purport€to€follow€a€ð ðcommon€methodology,ðð€it€is€clear€that€there€areÐ ° Ðsignificant€differences€in€how€they€òòimplementedóó€the€methodology€which€extend€far€beyond€anyÐ œì Ðdifferences€in€their€internal€costs.€€The€inconsistency€in€òòimplementationóó€must€be€removed€in€order€toÐ ˆØ Ðavoid€unintended€barriers€or€incentives.  Ý ƒU$ÝÓ  Óà  àòòÚ  Ú19Ú  ÚóóÝ  Ý›ORA€developed€this€proposal.€€See,€Exh€58,€page€16.€€Additionally,€extensive€testimony€wasÐ ° Ðgiven€during€hearings€regarding€the€circumstances€where€the€sale€would€make€sense€as€well€asÏpotential€means€of€pricing€the€meters.€€SDG&E€does€not€generally€oppose€this€concept.€€See,€TRÏ417„419€and€442„443€(SDG&E:€Croyle). Ý ƒU$ÝÓ  Óà  àòòÚ  Ú20Ú  ÚóóÝ  Ý›òòSee,€e.g.,óó€Exh€76€(TURN)€pages€1„6€through€1„12;€Exh€56€(ORA)€pages€15„16;€Exh.€51Ð ° Ð(Enron)€pages€27„28;€Exh.€52€(Enron)€page€3;€Exh.€53€(Enron)€pages€2„5. ÙÝ ƒU$ÝÓ  Óà  àòòÚ  Ú27Ú  ÚóóÝ  Ý›That€AB€1890€was€focused€on€competition€in€generation€only€is€clear€from€reviewingÐ ° ÐSection€330€and€other€provisions.>…¦$"Small Circleð"ðà0  à „Ý ƒU$ÝÓ  Óà  àòòÚ  Ú22Ú  ÚóóÝ  Ý›Fully€Consolidated€ESP€Billing,€where€the€ESP€calculates€òòallóó€charges,€presents€and€collectsÐ ° Ðthe€bill,€must€not€be€confused€with€Partial€Consolidated€ESP€Billing,€where€the€ESP€takes€informationÏfrom€the€UDC€(either€ð ðrate„readyðð€data€or€the€UDCððs€charges€as€calculated€by€the€UDC)€andÏcombines€that€with€the€ESPððs€own€charges€into€a€single€bill€for€presentation€and€collection.€ÏConversely,€ESPs€may€present€data€to€the€UDCs€under€UDC€consolidated€billing.€€òòSeeóó,€D.97„10„087,Ð `° ÐAppendix€A,€pages€35„39. €Ý ƒU$ÝÓ  Óà  àòòÚ  Ú10Ú  ÚóóÝ  Ý›òòSee,€e.g.,óó€TR€631,€line€15€(PG&E:€Burns). ÄÝ ƒU$ÝÓ  Óà  àòòÚ  Ú27Ú  ÚóóÝ  Ý›That€AB€1890€was€focused€on€competition€in€generation€only€is€clear€from€reviewingÐ ° ÐSection€330. ÔÝ ƒU$ÝÓ  Óà  àòòÚ  Ú21Ú  ÚóóÝ  Ý›òòSee,€e.g.,óó€TR€733€(PG&E:€Ross)€regarding€customer€class€cost€distinctions€and€use€of€meterÐ ° Ðreading€zones. QÝ ƒU$ÝÓ  Óà  àòòÚ  Ú6Ú  ÚóóÝ  Ý›òòSeeóó,€TR€at€1246,€line€28€through€1247,€line€3€(¢CellNet£:€King);€¢Exh£€9,€pages€1€and€2Ð ° Ð(SDG&E);€¢Exh£.€71,€pages€4„5€(¢CellNet£);€¢Exh£.€58,€page€4,€lines€4„6€(ORA);€¢Exh£.€76,€page€1„1Ï(TURN);€¢Exh£.€64,€page€2,€lines€9„11€(CEC).Ý ƒ,}!ÝÓ  ÓÑ  ÑÑ  ÑÝ  Ý›ÒÀ°ÒÒÀ°ÒÑ8€ÈëXXdìdÈ8ÑÑ  Ñò òÓ  ÓÑ€ OaÑÔ% € ÔBEFORE€THE€PUBLIC€UTILITIES€COMMISSIONÐ ° ÐOF€THE€STATE€OF€CALIFORNIAó óÐ œì ÐÓ¤ÓÌApplication€of€Pacific€Gas€and€Electric€Companyà0 ( à)ÐtÄ($($ Ðto€Identify€Cost€Savings€for€Revenue€Cycle€à0 Ð àà0(Ð$Ð$à)à0€($($àà0Ø€$€$àA.97„11„004Ð`°Ø$Ø$ ÐServices€Provided€by€Other€Entities€And€to€€à0 Ð àà0(Ð$Ð$à)ÐL œ($($ ÐPropose€Credits€For€End„Use€Customers€In€Suchà0 ( à)Ð8 ˆ($($ ÐCircumstances€For€Implementation€No€Laterà ( à)Ð $ t ÐThan€January€1,€1999€à àà x àà Ð àà ( à)Ð  ` Ð__________________________________________)ÌApplication€of€Southern€California€Edison€à0 Ð àà0(Ð$Ð$à)Ðè 8 ($($ ÐCompany€to€Identify€Cost€Savings€for€Revenue€à0 ( à)à0€($($àà0Ø€$€$àA.97„11„011ÐÔ$ Ø$Ø$ ÐCycle€Services€Provided€by€Other€Entities€And€to€€à0 ( à)ÐÀ ($($ ÐPropose€Credits€For€End„Use€Customers€In€Suchà0 ( à)Ьü ($($ ÐCircumstances€For€Implementation€on€à0 Ð àà ( à)Иè Ð$Ð$ ÐJanuary€1,€1999€à È àà àà x àà0 Ð àà ( à)Ð„Ô Ð$Ð$ Ð__________________________________________)ÌApplication€of€San€Diego€Gas€&€Electric€à0 Ð àà0(Ð$Ð$à)Ð\¬($($ ÐCompany€to€Identify€Cost€Savings€for€Revenue€à0 ( à)à0€($($àà0Ø€$€$àA.97„12„012ÐH˜Ø$Ø$ ÐCycle€Services€Provided€by€Other€Entities€And€to€€à0 ( à)Ð4„($($ ÐPropose€Credits€For€End„Use€Customers€In€Suchà0 ( à)Ð p($($ ÐCircumstances€For€Implementation€on€à0 Ð àà ( à)Ð \Ð$Ð$ ÐJanuary€1,€1999€à È àà àà0 x àà0Ðx$x$àà0(Ð$Ð$à)ÐøH($($ Ð__________________________________________)ÌÌÓ  Óò òPHASE€2€OPENING€BRIEF€OF€Ð ¼  ЀTHE€UNIVERSITY€OF€CALIFORNIA€ÌTHE€CALIFORNIA€STATE€UNIVERSITY€ANDÌTHE€CALIFORNIA€DEPARTMENT€OF€GENERAL€SERVICESÌó óÌÓ  ÓÓÓà  àPursuant€to€the€January€26,€1998€Assigned€Commissionersðð€Ruling€(ð ðACRðð)€and€the€June€8,€1998,ÏAdministrative€Law€Judgeððs€Ruling€(ð ðALJ€Rulingðð),€the€University€of€California,€the€California€StateÏUniversity€and€the€California€Department€of€General€Services€(ð ðUC/CSU/DGS€ðð)€respectfully€submit€thisÏOpening€Brief€on€Phase€2€issues.׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€We€have€been€active€in€both€phases€of€this€proceeding€representing€aÐ à%0!$ Ðrange€of€customer€interests.€€Some€of€the€facilities€represented€will€remain€bundled€utility€customers,€othersÏare€current€participants€in€the€direct€access€market,€and€many€are€actively€investigating€the€options€availableÐ )à$( ÐÑ OaÑâ  âÑ°°Ñâ  âÑ  Ñto€them€in€the€restructured€electric€market.€€Therefore,€our€interests€are€to€ensure€that€the€credits€developedÏhere€forward€the€pro„competition€goals€of€the€Commission€without€exposing€bundled€utility€customers€toÏincreased€burdens.Ìò òI.à0  àñÚñòòñÚñœBackgroundó ó›ñÚñóóñÚñÐ8 ˆ$$ Ðà  àPhase€2€of€the€proceeding€addresses€a€number€of€issues€regarding€the€appropriate€methodology€andÏultimate€credits€applicable€to€end„use€customersðð€billings€in€the€case€where€that€customer€takes€direct€accessÏelectric€commodity€service€from€an€electric€service€provider€(ð ðESPðð)€and€also€has€an€ESP€provide€certainÏrevenue€cycle€services€(ð ðRCSðð).€€€These€credits€are€necessary€for€three€fundamental€reasons:€Ì(1)€à0  àEnd„use€customers€should€not€be€required€to€pay€the€utility€distribution€companies€(ð ðUDCsðð)„„Ð pÀ ÐPacific€Gas€&€Electric€(ð ðPG&Eðð),€San€Diego€Gas€&€Electric€(ð ðSDG&Eðð)€and€Southern€CaliforniaÏEdison€(ð ðEdisonðð)„„for€services€the€òòUDCs€no€longer€provideóó€to€the€end„use€customer;€Ð p$$ Ð(2)à0  àThe€individual€credits€proposed€in€this€case€are€necessary€because„„at€this€time„„the€UDCs€do€notÐ øH Ðhave€unbundled€revenue€cycle€services€òòratesóó€which€reflect€the€unbundled€services.€€Therefore,Ð Ð  Ðbecause€the€UDC€distribution€rate€element€contains€that€portion€which€pays€for€the€UDC€RCS,€theÏend„use€customer€who€procures€RCS€from€someone€else€òòmustóó€recover€those€monies€via€the€credits.€Ð €Ð ÐIf€and€when€the€UDCs€provide€òòunbundled€ratesóó€for€the€unbundled€RCS€services€the€need€forÐ X ¨ Ðindividual€credits€should€end;€and,Ð $$ Ð(3)à0  àUntil€there€are€unbundled€rates€for€the€unbundled€RCS€services,€the€credits€adopted€here€are€theÐ $X" Ðmeans€whereby€the€customers€(and€ESPs)€receive€a€price€signal€regarding€the€cost€for€thoseÏservices.€€Reasonably€accurate€price€signals€will€allow€the€customer€to€weigh€its€service€options€andÏthereby€make€the€choice€most€suitable€to€their€needs.€€While€the€ESP€(or€a€UDC€discretionaryÏservice€tariff)€may€offer€additional€service€innovations,€the€RCS€credits€will€provide€at€least€aÐ h+¸&* Ðbaseline€against€which€the€customer€can€draw€their€own€conclusions€regarding€the€value€of€service.€ÏThe€credits€are€not€the€optimal€form€of€price€signal;€rates€specific€to€the€services€provided€wouldÏbe€a€preferable€form€of€signal€because€they€would€remove€the€potential€customer€confusionÏregarding€the€scope€of€costs€addressed€by€the€credits€(i.e.,€the€utilitiesðð€credit€proposals€will€beÏconsidered€by€customers„„incorrectly„„to€be€the€full€UDC€rate€for€those€services).׃)×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×Ð `$$ Ðà  àWith€these€fundamental€concepts€in€mind,€UC/CSU/DGS€address€the€various€issues€raised€in€theÏproceeding€as€well€as€those€matters€brought€forward€in€the€ALJ€Ruling.ÌÓë ÓÓî Óò òII.à0  àòòMethodologyóóó óИè $$ Ðà  àThe€application€of€a€single,€consistent€methodology€for€all€three€UDCs„„including€the€manner€inÏwhich€it€is€implemented„„is€critical€if€the€RCS€credits€are€to€treat€end„use€customers€throughout€the€state€Ïequally€and€if€no€RCS€market€anomalies€are€to€be€created€at€the€utilitiesðð€service€area€boundaries.€€FailureÏto€require€the€same€methodology,€or€allowing€the€individual€utilities€to€implement€that€methodology€inÏdifferent€ways,€can€yield€credit€results€which€reflect€more€than€differences€in€utility„specific€costs.׃+@×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€ThisÐ Ð  Ðcould€harm€the€market€by€distorting€price€signals€to€customers€and€ESPs.€€We€agree€with€ORA€that€this€isÏa€fundamental€issue.׃¸ ×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€€UC/CSU/DGS€therefore€urge€the€Commission€to€require€a€single€methodology€asÐ €Ð Ðwell€as€a€uniform€scheme€of€utility€implementation.Ð X ¨ ÐÓhÓà  àò òA.à0 p àòòUC/CSU/DGS€Support€the€Fully€Allocated€Cost€Methodology€As€A€Proxy€forÐ ° ÐUnbundled€RCS€Ratesó óóóÐœìp$p$ ÐÌÓ,Óà  àUC/CSU/DGS€urge€the€Commission€to€adopt€the€fully€allocated€cost€(ð ðFACðð)€methodologyÏpresented€by€Enron€as€corrected€during€hearings.¢×ƒ×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×£€€Our€support€is€rooted€in€our€firm€belief€that€customersÐ L œ Ðshould€not€pay€for€services€they€do€not€receive.€€This€is€a€philosophy€shared€with€œCellNet›€and€oftenÏmentioned€as€a€guiding€principle€in€the€othersðð€testimony.¢×ƒCh×Ý ƒ#ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×£€€The€¢FAC£€methodology€best€approximates€theÐ ü L  Ðmonies€collected€from€end„use€customers€via€the€UDC€distribution€rates€that€support€the€RCS€services.¢×ƒô×Ý ƒ#ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×£€Ð Ô$  ÐIn€the€absence€of€unbundled€RCS€rates,€¢FAC£€is€the€next„best€proxy€to€be€used€as€a€credit.€€Enron€hasÏderived€those€credits€from€utility€numbers€filed€with€the€Commission€and€with€the€Federal€EnergyÏRegulatory€Commission€(ð ðFERCðð).€€We€perceive€those€figures€to€be€more€reliable€than€the€speciallyÏdeveloped€time€and€motion€studies€used€to€generate€the€ð ðactualðð€future€net€avoided€cost€numbers€presentedÏby€PG&E€and€Edison.€€Those€studies€where€not€subjected€to€independent€verification,€employees€other€thanÏthose€who€did€the€actual€field€work€were€interviewed,€and€those€utility€employees€knew€in€advance€thatÏtheir€answers€would€be€incorporated€into€credits€given€to€customers€who€left€the€utility.׃¨×Ý ƒ#ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×€€€Therefore€weÐ ¼  Ðbelieve€that€the€likelihood€of€bias€in€the€results€are€high.€€This€type€of€bias€should€not€be€found€in€theÏmaterials€the€utilities€have€filed€with€the€CPUC€and€FERC.Ð l¼ ÐÓŒÓò òÔ& ˆ Ô€à  àB.à0 p àòòIf€the€Fully€Allocated€Cost€Methodology€is€Not€Adopted,€then€UC/CSU/DGS€BelieveÐ ° Ðthat€SDG&Eððs€Net€Avoidable€Cost€Approach,€Modified€as€Suggested€by€Intervenors,Ïis€the€Superior€Methodology€Among€the€Applicantsó óóóЈØp$p$ ÐÌÓÓà  àIf€the€Ô'ˆ°ú%ÔCommission€does€not€embrace€the€fully€allocated€cost€methodology,€then€UC/CSU/DGSÏwould€support€the€approach€used€by€SDG&E,€subject€to€the€certain€refinements€suggested€by€other€partiesÏsuch€as€ORA,€TURN€and€the€CEC.€€We€believe€that€SDG&Eððs€identification€of€the€range€of€ð ðavoidableðð¢×ƒ×Ý ƒ#ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ףР ` Ðcosts,€founded€in€part€on€an€examination€of€UDC€RCS€activities€eliminated€assuming€100%€ESPÏpenetration,€to€be€superior€to€the€more€limited€examination€undertaken€by€PG&E€and€Edison.׃4@×Ý ƒ#ÃÝòòÚ  Ú10Ú  ÚóóÝ  Ý×  ׀РÀ  ÐAdditionally,€the€100%€penetration€exercise€allows€some€basis€for€comparison€against€cost€figures€providedÏto€the€CPUC€and€FERC€such€as€those€used€to€develop€fully€allocated€costs.€€In€our€view€it€is€essential€thatÏall€utilities€undertake€this€100%€analysis€in€order€to€provide€some€form€of€ð ðreality€checkðð€against€RCS€costsÏfound€in€the€distribution€rates€as€well€as€ensuring€full€identification€of€avoidable€costs.€€ORA€and€SDG&EÏtake€a€similar€view.׃ô×Ý ƒ#ÃÝòòÚ  Ú11Ú  ÚóóÝ  Ý×  ×Ð øH Ðà  àThe€distinction€between€ð ðavoidableðð€and€ð ðavoidedðð€costs€should€not€be€lost.€€SDG&EððsÏmethodology€places€the€burden€on€the€UDC€to€realize€the€savable€costs.€€Exh.€9,€page€6.€€It€appears€thatÏPG&E€and€Edison€have€attempted€to€forecast€ð ðavoidedðð€savings;€thus,€we€fear€that€they€could€return€in€aÏsubsequent€update€and€assert€that€they€were€not€able€to€realize€savings€and€urge€a€downward€revision€inÏthe€customerððs€credit.€€If€that€were€to€occur€the€customer€would€effectively€pay€twice€for€RCS.€€Moreover,Ð 0"€  ÐSDG&Eððs€approach€has€the€practical€effect€of€òòreducingóó€the€likelihood€of€subsequent€protracted€litigationÐ ° Ðregarding€the€extent€of€ð ðactualðð€single„year€utility€cost€savings.€€Therefore,€UC/CSU/DGS€believe€it€isÏappropriate€to€provide€the€cost€saving€incentive€built€into€SDG&Eððs€methodology.€€Ìà  àAnother€area€of€critical€importance„„and€where€SDG&Eððs€approach€is€superior€to€PG&Eððs€andÏEdisonððs„„concerns€the€scope€of€offsets€applied€to€the€end„user€credit.€€SDG&E€properly€excludes€fromÏoffsets€those€costs€that€are€more€appropriately€attributed€to€actions€by€ESPs€or€other€UDC€costs€notÏdirectly€connected€to€the€specific€end„use€customerððs€RCS€service€election.€€Exh.€9,€page€6.€€This€is€anotherÏof€the€primary€distinctions€between€SDG&Eððs€approach€and€that€of€PG&E€and€Edison.׃×Ý ƒ#ÃÝòòÚ  Ú12Ú  ÚóóÝ  Ý×  ×€€ORA€(Exh.€58,Ð ˜è  Ðpage€18€),€TURN€(Exh.76,€page€1„21),€and€Enron€(e.g.,€TR€846),€are€all€in€apparent€agreement€that€theÏoffsets€proposed€by€PG&E€and€Edison€are€overinclusive€or€unreasonable.€€For€example,€these€overinclusiveÏoffsets€would€reduce€the€systemwide€òòend„userððs€óócredit€for€costs€which€are€more€appropriately€recoveredÐ  p Ðeither€through€discretionary€or€non„discretionary€service€fees€on€ESPs€or€individual€customers,€throughÏSection€376€implementation€cost€proceedings€or€other€mechanisms.€€¢Overinclusion£€of€costs€through€offsetsÏundermines€the€creditððs€ability€to€reflect€those€RCS€costs€found€in€distribution€rates€and€further€dilutes€theÏprice€signal€provided€to€end„use€customers€and€ESPs€through€the€credits.׃|×Ý ƒ#ÃÝòòÚ  Ú13Ú  ÚóóÝ  Ý×  ×€Insofar€as€the€SDG&EÐ €Ð Ðmethodology€omits€these€costs,€UC/CSU/DGS€urge€the€Commission€to€remove€the€offsets€proposed€byÏPG&E€and€SCE€because€it€is€inappropriate€to€discount€the€end„use€customerððs€credit€for€costs€notÏâ âattributable€directly€to€the€customer.€Ð $X" Ðà  àUC/CSU/DGS€concur€with€a€number€of€adjustments€to€SDG&Eððs€calculation€raised€in€testimonyÏand€hearings.€€However,€we€believe€that€in€the€interest€of€brevity€and€clarity€it€is€best€to€leave€the€detailsÏof€those€œadjustments›€to€the€parties€proposing€them.Ìâ âò òòòÔ& ° ÔIII.à  àAssociated€Issuesóóó óÐ 8 ˆ Ðà  àA.à0 p àòòThe€Commission€Should€Carefully€Consider€the€Need€for€Annual€Update€ProceedingsÔ'°8 Ã7ÔóóÐ `p$p$ Ðà  àThe€evolution€of€electric€restructuring€has€triggered€a€vast€array€of€regulatory€proceedings,€both€atÏthe€Federal€and€State€levels.€€UC/CSU/DGS€urge€the€Commission€to€avoid€the€call€to€evolve€this€RCSÏcredit€proceeding€into€another€annual€regulatory€event.€€This€potential€is€particularly€troubling€if€RCSÏcrediting€is€truly€an€interim€step„„a€view€we€believe€is€shared€with€the€CEC€and€possibly€other€parties.¢×ƒ$×Ý ƒ#ÃÝòòÚ  Ú14Ú  ÚóóÝ  Ý×  ×£€Ð pÀ ÐThe€Commissionððs€and€other€partiesðð€time€will€be€better€spent€developing€the€unbundled€rates€than€engagingÏtheir€limited€resources€annually€in€the€re„litigation€of€costs€and€savings.€€In€any€event,€it€is€imperative€thatÏthe€unbundled€RCS€rates€be€in€place€no€later€than€the€end€of€the€rate€freeze.€€If€annual€updating€is€embraced,Ïthen€the€update€proceeding€should€not€entertain€changes€in€the€methodology€adopted€in€this€phase€withoutÏsome€significant€justification.€€Moreover,€we€believe€that€changes€to€the€credits€on€an€annual€basis€willÏcompound€the€dilution€of€the€price€signal€and€increase€customer€confusion,€especially€during€the€rate€freeze.Ìà  àñÛñò òñÛñB.à0 p àòòOffsets€to€Customer€Credits€Must€be€Carefully€and€Narrowly€œConstruedóó›ñÛñó óñÛñÐX ¨p$p$ Ðà  àIt€is€very€important€that€any€offsets€made€to€the€end„use€customersðð€credit€be€limited€to€those€costsÏimposed€by€the€actions€of€that€customer.€€It€is€inappropriate€to€include€offsets€for€costs€which€are€moreÏappropriately€recovered€via€other€mechanisms€such€as€discretionary€service€charges,€implementation€costÏrecovery€proceedings€or€rate€case€proceedings.€This€topic€was€the€subject€of€extensive€testimony.€€GenerallyÐ ¸'#& Ðspeaking,€UC/CSU/DGS€note€that€ORA,€TURN,€SDG&E,€Enron,€and€CellNet€all€appear€to€share€the€beliefÏthat€offsets€to€credits€should€be€narrowly€drawn.¢×ƒ#×Ý ƒ#ÃÝòòÚ  Ú15Ú  ÚóóÝ  Ý×  ףРˆØ ÐÓÓà  àà p àñÜñò òñÜñ1.à0 È àòòBecause€Utility€Demand€For€Reusable€Meters€Can€Draw€Down€Credits,€TheÐ `° ÐCommission€Should€Allow€Customers€To€Purchase€Their€Existing€œMeter.óó›ñÜñó óñÜñÐL œÈ $È $ ÐÌÓ¶@Óà  àPart€and€parcel€of€the€utility€meter€ownership€credit€is€the€value€of€a€returned€meter.€€In€mostÏinstances€that€value€is€driven,€in€part,€by€whether€the€utility€will€consider€the€meter€ð ðreusable.ðð€€When€theÏutilities€existing€stock€of€meters€is€sufficient€to€serve€its€own€demand,€the€utilitiesðð€credit€is€generally€drivenÏdown.€€Additionally,€because€they€assert€that€no€secondary€market€exists€for€these€meters,€¢unreusable£Ïmeters€will€be€scrapped.€€In€the€case€of€SCE€there€is€a€significant€offsetting€cost€to€their€scrapping€processesÏwhich€can€make€the€meter€value€negative.׃&T×Ý ƒ#ÃÝòòÚ  Ú16Ú  ÚóóÝ  Ý×  ×Ð \¬ Ðà  àUC/CSU/DGS€believe€that€the€proposal€that€customers€have€the€option€to€purchase€existing€metersÏin€place€is€a€viable€means€of€mitigating€this€offsetting€effect.€€As€noted€in€testimony,€retrofit€technologiesÏexists€for€some€meters.¢×ƒ%ô×Ý ƒ#ÃÝòòÚ  Ú17Ú  ÚóóÝ  Ý×  ×£€€€Failure€to€provide€this€option€to€customers€means€that€the€utilities€and€customersÐ ä4 Ðwill€lose€an€opportunity€to€save€costs.€€Because€the€utilities€may€be€able€to€use€the€meter,€it€may€be€prudentÏto€give€them€some€discretion€on€the€sale,€but€in€no€event€should€the€utility€be€able€to€refuse€a€sale€whereÏâ âthey€have€no€internal€use€for€the€meter€or€where€the€salvage€value€(and€hence€customer€credit)€would€be€Ð l¼ Ðsignificantly€reduced€because€of€UDC€handling€costs.׃(×Ý ƒ#ÃÝòòÚ  Ú18Ú  ÚóóÝ  Ý×  ×€€The€record€is€sufficient€to€implement€thisÐ ° Ðâ âproposal׃,|×Ý ƒ#ÃÝòòÚ  Ú19Ú  ÚóóÝ  Ý×  ×;€the€Commission€need€only€set€guidelines€regarding€the€scope€and€limitations€on€UDC€discretionÐ ˆØ Ðand€the€reasonable€means€of€pricing€meters.€€Parties€to€the€transaction€can€then€negotiate€the€transaction,Ïor€a€pro€forma€mechanism€could€be€put€in€place.ÌÓÓà  àñÝñò òñÝñC.à0 p àòòThe€Geographic€Segmentation€Proposals€Raise€Serious€Concerns€That€RequireÐ  ` ÐAdditional€œReviewóó›ñÝñó óñÝñÐü L p$p$ ÐÌÓøIÓà  àTraditionally,€utilitiesðð€rates€have€been€developed€using€broad€customer€classes€with€only€limitedÏattention€to€customer„specific€differences€in€the€costs€to€serve.€€Generally€the€rates€reflect€class€averageÏcosts.€€UC/CSU/DGS€is€concerned€that€the€use€of€deaveraging€based€on€geographic€segmentationÏsignificantly€clashes€with€the€methods€used€to€develop€the€now„frozen€rates.€€While€deaveraging€may€makeÏsense€in€future€ratemaking,€creating€RCS€credits€from€such€an€alien€basis€is€troubling.€€We€believe€thatÏdeaveraging€should€not€be€applied€in€this€case;€it€is€not€appropriate€to€deaverage€by€location€when€otherÏdeaveraging€slices€may€also€be€appropriate.€To€select€one€dimension€of€deaveraging€without€embracingÏother€areas€may€well€not€be€perceived€by€customers€as€equitable.Ìà  àUC/CSU/DGS€share€the€concern€expressed€by€others€that€the€piecemeal€deaveraging€cannot€beÏtraced€back€to€the€traditional€development€of€class„specific€rates€and€therefore€a€determination€of€whetherÏcost„shifting€occurs€is€problematic€at€best.׃-ô×Ý ƒ#ÃÝòòÚ  Ú20Ú  ÚóóÝ  Ý×  ×€€We€do€not€believe€that€deaveraging€òòper€seóó€would€necessarilyÐ D!” Ðcause€cost„shifting,€but€we€do€believe€that€selective€deaveraging€could€have€the€result€of€shifting€costs.€ÏDetailed€segmentation€(which€is€akin€to€deaveraging)€could€be€a€feature€of€market„based€rates€for€RCS.€ÏHowever,€in€the€current€context€of€credits,€we€do€not€believe€that€the€applicants€have€fully€explained€how„„¼given€the€cost€variations€driven€by€meter€types€for€example„„only€meter€reading€deserves€deaveraging.€×ƒ8×Ý ƒ#ÃÝòòÚ  Ú21Ú  ÚóóÝ  Ý×  ×Ð 8 ˆ ÐTherefore,€any€proposal€to€deaverage€the€RCS€portion€of€distribution€rates€must€be€carefully€reviewed€toÏensure€that€similar€customers€within€each€class€are€not€treated€dissimilarly€via€the€type€of€deaveragingÏapplied.€ÌÓÓà  àñÞñò òñÞñD.à0 p àòòDue€to€the€Speculative€Nature€of€the€Utilitiesðð€Implementation€of€Fully€ConsolidatedÐ ˜è  ÐESP€Billing,€Additional€Review€May€Be€œNeededóó›ñÞñó óñÞñÐ„Ô p$p$ ÐÌÓŸRÓà  àFull€ESP€Consolidated€billing„„where€the€ESP€calculates€charges€for€UDC€and€ESP€services,€andÏthen€delivers€and€collects€the€bill„„is€an€important€option€that€UC/CSU/DGS€expect€to€be€implemented€asÏthe€competitive€market€matures.׃2h×Ý ƒ#ÃÝòòÚ  Ú22Ú  ÚóóÝ  Ý×  ×€€However,€there€are€a€number€of€outstanding€issues€regarding€how€thisÐ  \ Ðoption€will€be€exercised.€€To€our€knowledge€this€has€been€the€first€proceeding€to€address€some€of€thoseÏdetails.€€While€certain€aspects€of€the€record€are€sufficient€to€outline€the€range€of€costs€to€be€addressed,€weÏalso€believe€that€there€are€many€more€issues€outstanding€at€this€time.€€Given€the€utilitiesðð€position€regardingÏthe€nature€and€costs€associated€with€the€ð ðauditðð€and€testing€procedures€they€would€like€to€impose€on€ESPs,€Ïwe€expect€this€to€be€the€subject€of€future€detailed€discussions.€€It€may,€therefore,€be€appropriate€to€revisitÐ D!” Ðthis€topic€and€remove€the€currently€speculative€character€of€the€utility€program€costs€when€the€nature€andÏscope€of€ESP€qualification€process€is€clarified.€€If€the€Phase€I€decision€instructs€the€UDCs€to€program€theirÏbilling€systems€for€the€Fully€Consolidated€ESP€billing€option,€then€the€ultimate€credits€developed€with€lessÏspeculative€data€could€be€easily€and€quickly€ñÕñincorporated.€€ñÕññÖñimplemented.€€ñÖñThis€approach€would€allow€the€utility€cost€andÏsavings€data€to€be€addressed€at€the€time€the€program€details€are€addressed.ÌÔ& ° Ôà  àñßñò òñßñE.à0 p àòòNew€Customer€Connections€Should€Be€Able€to€Avoid€UDC€Initial€Meter€œInstallationsóó›ñßñó óñßñÐè 8 p$p$ Ðà  àWe€Ô'°è ¹YÔconcur€with€TURNððs€proposal€that€new€customer€installations€should€be€able€to€avoid€costsÏassociated€with€a€ð ðdefaultðð€initial€UDC€meter€installation€and€thereby€own€the€meter.€€New€customerÏconnections€should€have€the€ability€to€reduce€costs€through€the€competitive€market.€€The€PermanentÏStandards€Working€Groupððs€efforts€toward€open€meter€architecture€should€alleviate€UDC€concerns€aboutÏð ðunreadableðð€meters€and€the€ð ðlock„inðð€of€customers.€€We€disagree€with€Edisonððs€view€that€AB€1890Ïforecloses€this€option€for€a€majority€of€new€installations.€Because€direct€access€could€be€used€throughoutÏa€projectððs€construction,€€and€because€meters€should€be€readable€by€both€ESPs€and€UDCs,€€we€do€notÏbelieve€that€the€UDCs€should€have€preferential€status€in€meter€installation€business€for€new€connections.׃×Ý ƒ#ÃÝòòÚ  Ú23Ú  ÚóóÝ  Ý×  ×Ð ¨ø Ðò òÔ& ° ÔIV.à0  àòòResponse€to€ALJ€Malcolmððs€Issues:€AB€1890€Impact€Upon€The€RCS€Credit€Proposalsóóó óЀÐ$$ Ðà  àIn€Ô'°Ô":^Ôthe€following€sections€UC/CSU/DGS€respond€to€the€various€issues€raised€in€the€June€8,€1998€ALJÏRuling.Ìà  àñàñò òñàñA.à0 p àòòSection€368(a)€Does€Not€Limit€the€Commissionððs€Ability€to€Require€RCS€œCredits.óó›ñàñó óñàñÐ$X"p$p$ Ðà  àAB€1890,€and€specifically€Section€368(a),€impose€no€limits€on€the€Commissionððs€ability€to€requireÏcredits€to€those€customers€who€secure€RCS€services€from€providers€other€than€the€UDC.€€Section€368ððsÐ ¸'#& Ðrate€freeze€provision€speaks€to€the€UDC€rate€as€a€whole;€as€long€as€the€sum€of€unbundled€elements€do€notÏchange€the€whole€rate€faced€by€òòbundledóó€service€customers.€€D.96„12„077,€page€7„8.€€Additionally,Ð ˆØ Ðunbundling€beyond€that€initially€contemplated€by€AB€1890€is€not€precluded.€€Ibid.׃×Ý ƒ#ÃÝòòÚ  Ú24Ú  ÚóóÝ  Ý×  ×€€Indeed,€given€that€theÐ `° Ðfocus€of€AB€1890€was€upon€the€Commissionððs€development€of€a€competitive€òògenerationóó€market€(instigatedÐ 8 ˆ Ðby€the€end€of€natural€monopoly€characteristics€related€to€generation),€further€unbundling€of€utility€serviceÏfunctions„„like€RCS„„that€can€aid€market€development€are€logical.¢×ƒ!,×Ý ƒ#ÃÝòòÚ  Ú25Ú  ÚóóÝ  Ý×  ×£€€This€is€a€touchstone€to€D.97„05„039.€Ð è 8  ÐAnd€since€the€Commission€has€determined€that€RCS€is€a€proper€subject€for€competition,€it€would€beÏinequitable€to€customers€and€non„UDC€providers€to€pay€an€admission€fee.€€Yet€this€is€what€customers€willÏface€during€the€time€they€pay€the€UDC€for€services€it€no€longer€provides.€€Put€most€simply,€competition€atÏthe€price€of€paying€twice€is€an€insurmountable€barrier€to€market€entry€and€is€inconsistent€with€theÏCommissionððs€pro„competition€policies.ÌÒÏÀÒÓÓà  àñáñò òñáñB.à0 p àòòIf€the€CPUC€Determines€that€Section€368(a)€Limits€Crediting€During€the€TransitionÐ øH ÐPeriod,€the€Commission€Should€Not€Use€the€Evidentiary€Record€Developed€Here€forÏPost„transition€œCredits.óó›ñáñó óñáñÐÐ p $p $ ÐÌÓ;fÓà  àShould€the€Commission€conclude€that€RCS€crediting€is€not€permissible€while€rates€are€frozen,€it€isÏunlikely€that€there€will€be€any€real€competition€for€these€services€during€the€transition€period.€€As€notedÐ €Ð Ðabove,€absent€RCS€credits€to€customers,€competition€in€the€RCS€market„„and€the€associated€benefits€ofÏtechnology€and€service€innovations„„will€be€stymied€by€the€barrier€of€the€UDC€distribution€rate.€€RCSÏcrediting€in€the€òòpost„transitionóó€period€should€be€avoided:€the€same€effect€can€be€done€via€the€unbundlingÐ `° Ðof€rates€for€the€services€the€Commission€has€unbundled.€The€UDC€would€simply€not€charge€for€servicesÏit€does€note€provide.€€€UC/CSU/DGS€firmly€hope€that€the€problems€associated€with€generating€appropriateÏcredits€can€be€avoided€simply€by€relying€upon€market€forces€to€set€the€appropriate€prices€for€competitiveÏservices.€€However,€if€the€UDCs€are€required€to€identify€the€full€range€of€RCS€costs€òònowóó,€and€to€track€theÐ À  Ðsavings€they€will€realize€from€ESP„provided€RCS€services,€then€better€cost€information€would€be€gained.€ÏTherefore,€the€record€developed€in€this€proceeding€could€be€improved€at€that€later€time€if€the€CommissionÏis€resolve€to€use€a€bill€crediting€mechanism.ÌÓÓà  àñâñò òñâñC.à0 p àòòDoes€AB€1890,€and€Particularly€Section€368(b),€Limit€the€Commissionððs€Ability€toÐ  p ÐImplement€ð ðDeaveragingðð,€e.g.,€by€Causing€œð ðCost„Shiftingððóó›ñâñó óñâñÐ \p $p $ ÐÌÓ‰lÓà  àAs€stated€earlier,€UC/CSU/DGS€do€not€believe€that€deaveraging€òòper€seóó€would€be€a€violation€of€ABÐ ä4 Ð1890.€€However,€that€is€not€to€say€we€support€it€as€proposed€in€this€case.€€Properly€done,€it€may€be€possibleÏto€ð ðunbundleðð€those€costs€addressed€in€distribution€rates€into€strata€more€refined€than€that€used€when€theÏrates€were€built€up.€€However,€we€believe€that€if€improperly€done€the€result€of€deaveraging€rates€mayÏcertainly€lead€to€improper€cost„shifting€within€classes€and€between€them.€€Additionally,€because€utilityÏaccounting€generally€does€not€address€the€detailed€cost€data€required€to€support€deaveraging׃"×Ý ƒ#ÃÝòòÚ  Ú26Ú  ÚóóÝ  Ý×  ×,€and€becauseÐ #l! Ðthat€detail€was€generally€not€present€through€the€evolution€of€the€rates,€it€is€not€clear€how€precisely€theseÏâ âcost€differences€can€be€assigned.€Ð Ì&"% Ðà  àAs€for€the€passage€cited€in€Section€368(b),€we€believe€that€because€AB€1890€was€focused€on€theÏâ âdevelopment€of€a€competitive€òògenerationóó€market,€and€because€the€Commission€in€an€exercise€of€itsÐ ˆØ Ðexpertise€later€determined€that€RCS€should€not€be€solely€the€domain€of€monopolies,€RCS€should€be€treatedÏas€analogous€to€generation.ñÙñ׃.×ñÙññÙñ׃5×ñÙñÝ ƒ#ÃÝòòÚ  Ú27Ú  ÚóóÝ  Ý×  ×€€Put€more€simply,€the€later€unbundling€of€RCS€services€does€not€mean€thatÐ 8 ˆ Ðcustomers€who€do€not€take€that€service€from€the€UDC€must€continue€to€pay€for€that€now€unbundledÏcomponent.€€Section€368(b)€focused€on€an€unbundled€generation€component€for€customers€eligible€toÏpurchase€electricity€from€other€suppliers.€€The€Commission€has€determined€that€certain€eligible€customersÏmay€also€purchase€RCS.€€Therefore€the€logic€expressed€in€386€should€relieve€the€customer€from€the€burdenÏof€paying€for€the€unbundled€service€the€UDC€no€longer€provides.Ìò òV.à0  àòòConclusionóóó óÐH˜ $ $ Ðà  àFor€the€reasons€set€forth€above,€UC/CSU/DGS€urge€the€Commission€to€adopt€RCS€credits€whichÏreflect€the€monies€customers€pay€in€UDC€distribution€rates.€€These€credits€should€be€an€interim€measureÏwhich€would€end€when€unbundled€rates€are€developed€for€unbundled€services.€€We€urge€the€developmentÏof€unbundled€RCS€rates€and€stress€that€these€should€be€in€place€no€later€than€the€end€of€the€rate€freeze.€ÏThese€rates€would€provide€the€clearest€price€signal€to€customers€and€ESPs.€€We€support€the€fully€allocatedÏcost€approach€as€the€preferable€proxy€for€RCS€rates.€€If€the€fully€allocated€cost€methodology€is€notÏembraced,€we€believe€that€the€credit€approach€used€by€SDG&E€is€superior€to€the€PG&E€and€EdisonÏapproaches.€€€All€UDCs€should€identify€ð ðavoidableðð€costs€through€the€100%€penetration€analysis.€€OffsetsÏto€the€customer€credits€should€be€narrowly€constructed,€and€the€UDCs€should€use€other€recoveryÏmechanisms€for€costs€not€directly€attributable€to€the€customer€(e.g.,€service€charges,€implementation€costÐ ¸'#& Ðrecovery€proceedings€or€rates€cases€as€appropriate).€€RCS€ð ðupdateðð€proceedings€should€not€become€anÏannual€regulatory€proceeding€with€extensive€litigation€regarding€avoided€UDC€costs.€Customers€shouldÏhave€the€option€to€purchase€their€existing€meter€in€place€as€well€as€owning€the€meter€at€the€time€of€initialÏinstallation.€€Geographic€deaveraging€should€not€be€embraced€at€this€time€as€it€was€not€used€for€theÏdevelopment€of€rates€and€the€UDC€studies€do€not€appear€rigorous€enough€to€support€the€proposal.€ÏDeaveraging€must€be€carefully€reviewed€to€ensure€that€similarly€situated€customers€are€not€treatedÏdifferently.ÌÓÓDated:€June€26,€1998à0 È àà0 È $È $àà0x $ $àà0Ðx $x $àRespectfully€submitted,€Ð˜è Ð $Ð $ ÐÌÌÌà  àà p àà È àà àà x àà Ð à____________________________________________ÌÌà  àà p àà È àà àà x àà Ð àChristopher€T.€EllisonÌà  àà p àà È àà àà x àà Ð àAndrew€B.€BrownÌà  àà p àà È àà àà x àà Ð àELLISON€&€SCHNEIDERÌà  àà p àà È àà àà x àà Ð à2015€H€StreetÌà  àà p àà È àà àà x àà Ð àSacramento,€California€95814Ìà  àà p àà È àà àà x àà Ð àTelephone:à0 € à916/447„2166м € $€ $ Ðà  àà p àà È àà àà x àà Ð àFacsimile:à0 € à916/447„3512Шø€ $€ $ Ðà  àà p àà È àà àà x àà Ð àE„mail:€abb@¢eslawfirm.com£ÌÌà  àà p àà È àà àà x àà Ð àAttorneys€for€the€CaliforniaÌÖ€ ÿÿÖà  àà p àà È àà àà x àà Ð àDepartment€of€General€œServicesñãñÔ% €* Ôñãñ›