Details for: SDG&E Reply to Public Advocates Office Protest - SDG&E Advice Letter 3522-E.pdf


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Clay Faber - Director
Regulatory Affairs
8330 Century Park
Court San Diego, CA
92123-1548
Tel: 858-654-3563
CFaber@sdge.com

May 19, 2020
Energy Division Tariff Unit
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, California 94102
RE:

Reply of San Diego Gas & Electric Company to Protest of the Public Advocates
Office of San Diego Gas & Electric Company’s Advice Letter 3522-E (Mid-Cycle
Update in Compliance with Decision 16-09-056 Ordering Paragraph 9)

In accordance with Section 7.4.3 of General Order 96-B, San Diego Gas & Electric Company
(SDG&E) hereby replies to the Protest filed by Public Advocates Office at the California Public
Utilities Commission (Cal Advocates) to SDG&E Advice Letter (AL) 3522-E (Demand Response
2018-2022 Mid-Cycle Review).
Background
On March 27, 2020, SDG&E submitted Tier 3 AL 3522-E in compliance with Decision (D.) 1609-056 Ordering Paragraph (OP) 9 to provide a mid-cycle review (MCR) of its Demand
Response (DR) 2018-2022 Program Cycle. SDG&E received Cal Advocates’ protest on May 5,
2020. 1
SDG&E’s Reply to Cal Advocates Protest of SDG&E AL 3522-E
The Commission should not reduce demand response budgets from the approved
levels in 2020 and 2021 to the actual 2019 spending level.
Cal Advocates stated in their protest of SDG&E’s MCR that the Commission should reduce
SDG&E’s budgets because SDG&E is underspent when comparing its approved budget to the
actual expenses to date. Cal Advocates correctly notes that “...SDG&E, for example, spent only
spent 47% of its authorized budget in 2019, leaving $8.7 million unspent.” But Cal Advocates is
in error to imply that this is somehow unanticipated or not beneficial. SDG&E only spends and
collects in rates on average 50% of its budget in any DR cycle. SDG&E’s costs are 1) not
recovered unless they were actually spent (as opposed to budget or a plan to spend); and 2) are
recovered from customers the following year after they are spent.

1

On April 12, 2020, the California Public Utilities Commission (Commission) extended the protest period for
this Advice Letter from April 15, 2020 to May 5, 2020. On May 8, 2020, the Commission extended the
deadline for SDG&E, Pacific Gas & Electric Company and Southern California Edison Company to reply to
protests to May 19, 2020.





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Public Utilities Commission May 19, 2020 On page 1 of its protest, Cal Advocates further states: SDG&E’s DR budgets are higher than necessary and are wholly inappropriate. Rather than maintain SDG&E’s current budget levels, the Commission should authorize SDG&E’s DR budgets at SDG&E’s actual 2019 spending levels. Cal Advocates’ position ignores the facts of the matter and, as a result, draws the wrong conclusions. In D. 17-12-003 (the Commission Decision authorizing SGD&E’s spending for the DR cycle years of 2018 through 2022) the Commission affirmed SDG&E’s request to continue to use the same budgeting and cost recovery method that it has used for several cycles. SDG&E requested that: .....program costs related to DR Operation and Maintenance (O&M) expenses, capital related costs (i.e., depreciation, return and taxes), customer capacity incentive payments, and all other costs, not recovered through SDG&E’s General Rate Case (GRC), be recorded in AMDRMA. 2 As Ms. MacDonald noted in her testimony (at EMD-5), the Advanced Metering and Demand Response Memorandum Account (AMDRMA) is where SDG&E tracks its DR-related expenditures. The costs recorded there are recovered in the Rewards and Penalties Balancing Account (RPBA). The costs recovered in the RPBA are recovered when the rates are set on an annual basis, set each January 1. SDG&E’s DR actual expenses are recorded in the memo account and recovered through the RPBA. SDG&E reiterated this process for cost recovery and budgeting, which is unique to SDG&E in IOU DR cycles, in great detail in its MCR. 3 SDG&E reiterated the planning and actual process that is undertaken to ensure that the requested budgets SDG&E seeks and gets authorization to spend are adequate for the maximum number of DR events being called (akin to a 1 in 10 year with the highest number events and participants being hoped for) while ensuring that only what is spent ever gets collected in rates. 4 The unspent budget is never collected, and thus, ratepayers are protected. Also, SDG&E is protected should there be an unusually high number of events and participants, requiring high enrollment costs and incentive payments. With this process, SDG&E never has to return to the Commission to seek additional funds, nor does it collect unnecessarily or retain collected funds that were never spent for authorized DR activity. Further, Cal Advocates cite the COVID 19 pandemic as a related issue and reason to reduce DR budgets. 5 SDG&E notes that Cal Advocates produces no citations or evidence that the pandemic will impact DR. In fact, it is possible, that with a strong economic downturn, customers may be more likely to participate in DR, wanting to obtain rebates and incentives, and look for ways to further manage their energy costs. Cal Advocates’ protest also erroneously asserts that by reducing budgets now, SDG&E would leave more available funds during this pandemic to help in areas of needed assistance: Reducing the 2020 budget from the currently authorized $17 million to the 2019 actual spending of $7.5 million would leave approximately $9.5 million available for assisting vulnerable customers through reduced collections. 6 2 Prepared Direct Testimony of Elaine MacDonald, at page EMD-5, filed 2017 and approved in D.17-12-003. SDG&E AL 3522-E, page 11. 4 3522-E, page 11. 5 Cal Advocates’ Protest, page 2. 6 Cal Advocates’ Protest, page 3. 2 3
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Public Utilities Commission May 19, 2020 Cal Advocates’ request that SDG&E’s budgets be reduced in order to make $9.5 million “available for assisting vulnerable customers through reduced collections” is fundamentally flawed and reflects a misunderstanding of SDG&E’s process for cost recovery and budgeting. Since any unspent budget is already not collected in rates, any underspending in SDG&E’s DR budget is already available and remains in the pockets of our customers. No change is required to SDG&E’s budget. SDG&E believes that Cal Advocates’ request to adjust SDG&E’s budgets simply does not achieve what we believe to be Cal Advocates’ goal: i.e., to protect ratepayers. Thus, SDG&E requests that Cal Advocates’ protest of SDG&E’s budget reporting and its requests for changes be denied. Conclusion For all the foregoing reasons, SDG&E respectfully requests that SDG&E AL 3522-E be approved as submitted on March 27, 2020. Sincerely, /s/ Clay Faber CLAY FABER Director – Regulatory Affairs Cc: Mike Campbell, Program Manager, Public Advocates Office Aloke Gupta, Supervisor, CPUC Energy Division Jean Lamming, Analyst, CPUC Energy Division Service List A.17-01-012 et. al. Service List R.13-09-011. 3
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