Details for: PGE AL 5037-E-A.pdf


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Erik Jacobson
Director
Regulatory Relations

Pacific Gas and Electric Company
77 Beale St., Mail Code B13U
P.O. Box 770000
San Francisco, CA 94177
Fax: 415-973-3582

December 28, 2018

Advice 5037-E-A
(Pacific Gas and Electric Company ID U 39 E)

Public Utilities Commission of the State of California
Subject:

Supplemental: Pacific Gas and Electric Company’s Proposed Dead
Band Tolerance Range for determining when a change would trigger
TOU period Revisions More Frequently than Five Year Intervals, in
Compliance with Decision 17-01-006 and Resolution E-4948

Purpose
This Tier 2 Advice Letter (AL) describes Pacific Gas and Electric Company’s (PG&E’s)
modified dead band tolerance range for determining when a change in the time pattern
of electricity costs would trigger time-of-use (TOU) period revisions more frequently
than every two General Rate Case (GRC) cycles, coupled with a mechanism for
implementation, in compliance with Decision (D.) 17-01-006 (Decision), Decision on
Adopting Policy Guidelines to Assess Time Periods for Future Time-of-Use Rates and
Energy Resource Contract Payments,1 and Resolution E-4948.
Background
On January 23, 2017, the California Public Utilities Commission (Commission or
CPUC) issued D.17-01-006 requiring PG&E, Southern California Edison Company
(SCE), and San Diego Gas & Electric Company (SDG&E) (collectively the IOUs) to
each submit Tier 3 advice letters setting forth their proposals for determining when a
change in the time pattern of electricity costs would be sufficiently large to trigger a
proposal to revise TOU periods more frequently than every two GRC cycles, along with
a mechanism for implementation.2 The general principles adopted in the Decision,
with respect to development and implementation of changes in Base TOU periods,
include general principle number 6, which states that:
[T]o evaluate whether a dead band tolerance range has been exceeded and to
Also, on 2/16/2017 the CPUC issued Decision 17-02-017, titled “Order Correcting Errors in
Decision 17-01-006”.
2
D.17-01-006, mimeo, p.78.
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Advice 5037-E-A -2- December 28, 2018 ensure that the Commission and the public are aware of the likelihood of future Base TOU period changes, Base TOU period analysis should be provided in each general rate case, even if the IOU does not propose a change in Base TOU periods. If such analysis shows that the dead band tolerance range has been exceeded, the IOU should propose revisions to Base TOU periods.3 On March 30, 2017, PG&E submitted Advice Letter 5037-E, which described PG&E’s dead band tolerance proposal, and a proposed mechanism for implementation. On November 29, 2018, the Commission issued Resolution E-4948, approving with modifications the dead band tolerance proposals of PG&E and the other IOUs and directing the IOUs to modify their proposals via supplemental compliance Advice Letter (AL) within 30 days of the effective date of the order. This Tier 2 Advice Letter provides PG&E’s modified dead band tolerance proposal in compliance with Resolution E-4948, and a proposed mechanism for implementation. In the “Dead Band Tolerance Proposal” section below, substantive modifications to PG&E’s original deadband tolerance proposal are in double underline or strikeout font. Dead Band Tolerance Proposal PG&E proposes a two-part test for a dead band tolerance range (or equivalently, threshold to exceed) as the trigger for whether revised TOU periods could be considered sooner than 5 years after the most recent change in TOU period. Specifically, PG&E proposes that TOU period definitions should remain constant for at least 5 years unless both of the following conditions 1 and 2 are met: 1. Changed cost data justify changing either (a) the start or ending time of the TOU period by at least one hour (in either direction), for the summer peak, winter peak, or spring super-off-peak (SOP), or (b) the months for which particular TOU period definitions apply;4 and 2. Using a forecast of marginal generation costs (MGC), or whatever other marginal costs are used to determine TOU periods in a GRC Phase II proceeding,5 3 D.17-01-006, mimeo, p. 6. For example, if changing cost patterns justify modifying the months which are defined to be in the summer season or, as an alternative example, modifying the months which are considered to be spring season (in which low super-off-peak rates apply). The Commission directed PG&E in Resolution E-4948 (at p. 11) to “ensure that the marginal costs used as inputs in determining TOU periods in their GRC Phase II proceedings are mirrored in their deadband tolerance analysis going forward. Thus, because marginal transmission costs were not included as inputs for calculating the TOU periods determined in PG&E’s recent GRC Phase II decision (D.18-08-013), marginal transmission costs should also 4 5
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Advice 5037-E-A -3- December 28, 2018 with the forecast year set at least three years after the year the Base TOU period will go into effect, the “goodness of separation” (GOS) metrics pertaining to the summer peak period, the winter peak period or the super-off-peak (SOP) period increase under the new TOU period definition by at least three five percentage points (35%) relative to the corresponding GOS metrics using the old TOU period definition. Specifically, for the summer and winter peak period, the GOS metric is calculated as follows: (1) Peak Period GOS Metric = A * (1 – B).6 In equation (1), A represents the percent of high-cost hours correctly captured by the peak period definition, and B represents the percentage of low-cost hours incorrectly captured by the peak period definition (i.e., the “false positive” rate for the peak period). Mathematically, A and B are defined in equations (2) and (3) below:7 (2) A = TP / (TP + FN), where TP = the number of high cost hours (95th percentile and above) falling within candidate period; and FN = the number of high-cost hours falling in other periods. (3) B = FP / (FP + TN), where FP = the number of low-cost hours within the candidate period; and TN = the number of low-cost hours falling in other periods. For the spring SOP period, the GOS metric is calculated as: (4) SOP Period GOS Metric = A’ * (1 – B’). be excluded in the deadband tolerance analysis unless and until future GRC Phase II decisions incorporate them into TOU periods.” PG&E notes that in its 2017 GRC Phase II, the peak and super off-peak periods used only MGCs to inform the period definitions, while the part-peak definitions also considered distribution marginal costs. Thus, in accordance with the direction in E-4948, PG&E will consider only MGCs when evaluating whether the deadband tolerance has been exceeded, unless and until a future GRC Phase II decision incorporates distribution and/or transmission marginal costs to set peak and super off-peak periods. 6 See Workpaper “2017 GRC Ph 2 Exh 2 Vol 1 Tables 12-2 to 12-4 12-6 to 12-8.xlsb”, tabs “TESTIMONY TABLES-Summer” and “TESTIMONY TABLES-Winter” in PG&E’s 2017 GRC Phase II Application. 7 See Exh. PG&E-2, p. 12-13 in PG&E’s 2017 GRC Phase II Application
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Advice 5037-E-A -4- December 28, 2018 In equation (4), A’ represents the percent of very low-cost hours captured by the SOP period definition, and B’ represents the percentage of non-very-low-cost hours incorrectly captured by the SOP period definition (i.e., the “false positive” rate for the SOP period). Mathematically, A’ and B’ are defined in equations (5) and (6) below: (5) A’ = TP’ / (TP’ + FN’), where TP’ = the number of very low-cost hours (i.e., hours with negative or zero MGCs) falling within the SOP period; and FN’ = the number of very low-cost hours falling in other periods. (6) B’ = FP’ / (FP’ + TN’), where FP’ = the number of non-very-low-cost hours (i.e., hours with positive MGCs) within the SOP period; and TN’ = the number of non-very-low-cost hours falling in other periods. For example, suppose that, in PG&E’s 2017 General Rate Case (GRC) Phase II proceeding, the Commission finds that the summer TOU peak period definition for PG&E’s non-residential customers should be the hours from 4 p.m. through 10 p.m., based on a forecast made for three years after the new TOU periods would go into effect (i.e., 2022). Further suppose that, in preparing its 2020 GRC Phase II testimony, PG&E determines that the then-existing forecast data support a somewhat later Base summer TOU peak period, from 5 p.m. through 10 p.m., based on a forecast made for three years after any such new TOU periods could go into effect (presumably 2023 or 2024). PG&E would then check whether the potential new Base summer TOU peak period meets both conditions, as follows. For condition 1, the start time of the proposed peak period differs by (at least) 1 hour from the old peak, so condition 1 is satisfied. For condition 2, we compute the GOS metric for the old 4-10 p.m. peak period (using the updated marginal cost forecast) and compare it to the GOS of the potential new 510 p.m. peak period to see whether the GOS increases by at least 35%.
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Advice 5037-E-A -5- December 28, 2018 As a hypothetical example, suppose the GOS metrics for the old and potential new peak periods using the updated marginal cost forecast turned out to be as follows: 8 For Scenario S-17 (4-10 p.m.) A = TP/(TP + FN) = 9593% B = FP/(FP + TN) = 20% GOS = A*(1 – B) = 7674.4% For Scenario S-26 (5-10 p.m.) A = TP/(TP + FN) = 94% B = FP/(FP + TN) = 15% GOS = A*(1 – B) = 79.9% Because the GOS of the potential new 5-10 p.m. peak period is at least 35% higher than the GOS of the old 4-10 p.m. period, condition 2 is satisfied. In this example, both criteria are met so PG&E should may propose the new Base summer TOU period in its 2020 GRC Phase II. As a second example, suppose instead that for the old 4-10 p.m. period the GOS was the same as in the first example, but for the proposed 5-10 p.m. period the GOS turned out to be as follows: For Scenario S-26 (5-10 p.m.) A = TP/(TP + FN) = 94% B = FP/(FP + TN) = 18% GOS = A*(1 – B) = 77% In this second hypothetical example, the GOS of the proposed peak period is less than 35% higher than the GOS of the old period, so condition 2 is not satisfied and PG&E may not propose the new Base summer TOU period in its 2020 GRC Phase II. A similar calculation would be made for the Winter Peak and the Super Off Peak separately; if the Summer Peak change satisfies both conditions but the Winter Peak and Super Off Peak do not, PG&E would only consider changes to the Summer Peak period definition. PG&E believes its proposed dead band tolerance methodology is reasonable because of its requirement that the new TOU period must show at least a 35% improvement in Goodness of Separation, and must cause at least a full hour shift from the previouslyadopted TOU Periods. PG&E’s approach is relatively conservative, to address the CPUC’s underlying concern, expressed in D.17-01-006, that “a degree of stability is 8 These metrics are similar to the data displayed in Table 12-4 in Exhibit PG&E-9 in PG&E’s 2017 GRC Phase II Application, but are numerically different to show an illustrative example that might apply three years hence.
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Advice 5037-E-A -6- December 28, 2018 needed after new TOU periods are adopted, with the significant marketing efforts needed to make customers aware of changes in TOU periods,” 9 preferring the assumed time-frame to maintain newly adopted TOU periods be at least five years (i.e., two GRC cycles). However, the Decision also recognized that forecast assumptions underlying TOU time periods may deviate over time as more up-to-date data becomes available.” To build in flexibility should the new data “deviate significantly,” the Decision allowed for the possibility that an “adjustment in TOU time periods more frequently than once every five years may be warranted.”10 Thus the CPUC stated that, in every GRC Phase II proceeding, it would review forecast data for Base TOU period development, using the dead band tolerance methodology to be adopted through this Advice Letter process. PG&E believes its proposed dead band methodology’s requirement of at least a 35% deviation, will reliably identify whether cost-data deviations are “significant” enough to warrant consideration of an interim revision in TOU time periods. Also, by requiring the deviation to cause at least a one-hour shift in the base TOU periods, PG&E’s proposed dead band methodology would not cause proposed changes of less than an hour, which would be more difficult to communicate to customers. As the Decision noted, the several-hour shift shown in the CAISO’s as well as PG&E’s data – warranting moving the legacy Noon – 6pm peak period to the evening hours - reflects the steep increase in “deployment of grid-connected and behind-the-meter solar…[increasing] the availability of energy during the afternoon and decreased load on the grid.” Because these solar installations are long-lived, and because the hours during which the sun shines still end in the evening, the multi-hour shift in updated TOU peak periods being considered and adopted by the CPUC in proceedings like PG&E’s 2015 RDW (D.15-11-013) and in PG&E’s GRC Phase II (A.16-06-013) are unlikely to repeat. Finally, even if the dead band were exceeded in a future GRC after the updated TOU peak periods are adopted, the Decision only allows parties to propose modifications to the TOU periods to align with costs, it does not require the IOUs to propose a change or for the CPUC to adopt it in that interim GRC. Therefore, if after considering a potential shift of one hour or more in an interim GRC Phase II the IOU or the CPUC still has concerns about stability, neither the Decision nor this dead band methodology requires the IOU to propose or the CPUC to actually adopt such a change sooner than “at least 5 years” after the last change. For all of these reasons, the CPUC should approve PG&E’s revised dead band methodology included in this advice letter. Timing and Implementation As discussed above, the Decision directs the IOUs to propose changes to the guidelines to clarify the mechanics and timing of the dead band tolerance trigger and 9 D.17-01-006, mimeo, p. 46. D.17-01-006, mimeo, p. 47. 10
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Advice 5037-E-A -7- December 28, 2018 that Base TOU period analysis should be provided in each general rate case (even if the IOU does not propose a change in Base TOU periods). Also, Appendix 3 of D.1701-006 outlines an anticipated Schedule for TOU Period Implementation Based on Current Rate Case Plan.11 Protests Pursuant to CPUC General Order 96-B, Section 7.5.1, PG&E hereby requests the protest period be waived. Effective Date PG&E requests that this Tier 2 advice submittal become effective on regular notice, January 27, 2019, which is 30 calendar days after the date of submittal. Notice In accordance with General Order 96-B, Section IV, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list and the parties on the service list for R.15-12-012. Address changes to the General Order 96-B service list should be directed to PG&E at email address PGETariffs@pge.com. For changes to any other service list, please contact the Commission’s Process Office at (415) 703-2021 or at Process_Office@cpuc.ca.gov. Send all electronic approvals to PGETariffs@pge.com. Advice letter filings can also be accessed electronically at: http://www.pge.com/tariffs/. /S/ Erik Jacobson Director, Regulatory Relations cc: 11 Michael Campbell, Program Manager, ORA Jeanne B. Armstrong, Counsel for SEIA Edward Randolph, Director CPUC Energy Division Paul Phillips, Supervisor, CPUC Energy Division Service List for R.15-12-012 D.17-01-006, mimeo, Appendix 3, pp.1-2.
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ADVICE LETTER SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.: Pacific Gas and Electric Company (ID U39E) Utility type: ELC GAS PLC ✔ HEAT ELC = Electric PLC = Pipeline WATER Contact Person: Yvonne Yang Phone #: (415)973-2094 E-mail: PGETariffs@pge.com E-mail Disposition Notice to: Yvonne.Yang@pge.com EXPLANATION OF UTILITY TYPE GAS = Gas WATER = Water HEAT = Heat (Date Submitted / Received Stamp by CPUC) Tier Designation: 2 Advice Letter (AL) #: 5037-E-A Subject of AL: Supplemental: Pacific Gas and Electric Company’s Proposed Dead Band Tolerance Range for determining when a change would trigger TOU period Revisions More Frequently than Five Year Intervals, in Compliance with Decision 17-01-006 and Resolution E-4948 Keywords (choose from CPUC listing): Compliance AL Type: Monthly Quarterly Annual ✔ One-Time Other: If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: Resolution E-4948 Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: No Summarize differences between the AL and the prior withdrawn or rejected AL: Yes Yes ✔ No ✔ No 1/27/19 No. of tariff sheets: N/A Estimated system annual revenue effect (%): N/A Estimated system average rate effect (%): N/A When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: Service affected and changes proposed1: N/A Pending advice letters that revise the same tariff sheets: N/A 1 Discuss in AL if more space is needed. Clear Form
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Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102 Email: EDTariffUnit@cpuc.ca.gov Name: Erik Jacobson, c/o Megan Lawson Title: Director, Regulatory Relations Utility Name: Pacific Gas and Electric Company Address: 77 Beale Street, Mail Code B13U City: San Francisco, CA 94177 Zip: 94177 State: California Telephone (xxx) xxx-xxxx: (415)973-2093 Facsimile (xxx) xxx-xxxx: (415)973-3582 Email: PGETariffs@pge.com Name: Title: Utility Name: Address: City: State: District of Columbia Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: Email: Zip: Clear Form
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PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Albion Power Company Alcantar & Kahl LLP Alta Power Group, LLC Anderson & Poole Atlas ReFuel BART Barkovich & Yap, Inc. Braun Blaising Smith Wynne P.C. CalCom Solar California Cotton Ginners & Growers Assn California Energy Commission California Public Utilities Commission California State Association of Counties Calpine Casner, Steve Cenergy Power Center for Biological Diversity City of Palo Alto City of San Jose Clean Power Research Coast Economic Consulting Commercial Energy County of Tehama - Department of Public Works Crossborder Energy Crown Road Energy, LLC Davis Wright Tremaine LLP Day Carter Murphy Dept of General Services Don Pickett & Associates, Inc. Douglass & Liddell Downey & Brand East Bay Community Energy Ellison Schneider & Harris LLP Energy Management Service Evaluation + Strategy for Social Innovation GenOn Energy, Inc. Goodin, MacBride, Squeri, Schlotz & Ritchie Green Charge Networks Green Power Institute Hanna & Morton ICF International Power Technology Intestate Gas Services, Inc. Kelly Group Ken Bohn Consulting Keyes & Fox LLP Leviton Manufacturing Co., Inc. Linde Los Angeles County Integrated Waste Management Task Force Los Angeles Dept of Water & Power MRW & Associates Manatt Phelps Phillips Marin Energy Authority McKenzie & Associates Modesto Irrigation District Morgan Stanley NLine Energy, Inc. NRG Solar Office of Ratepayer Advocates OnGrid Solar Pacific Gas and Electric Company Pioneer Community Energy Praxair Regulatory & Cogeneration Service, Inc. SCD Energy Solutions SCE SDG&E and SoCalGas SPURR San Francisco Water Power and Sewer Seattle City Light Sempra Utilities Southern California Edison Company Southern California Gas Company Spark Energy Sun Light & Power Sunshine Design Tecogen, Inc. TerraVerde Renewable Partners Tiger Natural Gas, Inc. TransCanada Troutman Sanders LLP Utility Cost Management Utility Power Solutions Utility Specialists Verizon Water and Energy Consulting Wellhead Electric Company Western Manufactured Housing Communities Association (WMA) Yep Energy
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