Details for: SDG&E Advice Letter 3562-E.pdf

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Clay Faber - Director
Regulatory Affairs
8330 Century Park Court, CP32F
San Diego, CA 92123-1548

June 29, 2020

San Diego Gas & Electric Company (SDG&E) hereby submits its Tier 1 Advice Letter
(AL) to comply with California Public Utilities Commission (Commission) Decision (D.)1712-003 Ordering Paragraph (OP) 53, approved on December 14, 2017.
D.17-12-003 OP 53 directs SDG&E to submit a Tier 1 AL in June 2020 demonstrating
the costs and cost effectiveness of SDG&E’s Demand Response (DR) programs
administered in the previous program year.
D.17-12-003 adopted the DR activities and budgets for the Utilities1 (IOUs) to conduct
and administer their DR programs, pilots, and associated activities for program years
2018 through 2022. In addition, SDG&E continues to hold meetings with the Energy
Division on a quarterly basis to discuss its progress in improving the cost effectiveness of
its DR programs and portfolio.2
D.17-12-003 OP 53 specifically directed SDG&E to submit a Tier 1 AL in June 2019 and
2020 that included the following:
1. The costs and cost effectiveness of SDG&E’s DR programs administered in the
previous program year;
2. Progress reports on all the 2017 improvements SDG&E is in the process of
implementing or has implemented, including a description of the improvement, its

Pacific Gas & Electric Company, Southern California Edison Company and SDG&E.
As ordered per D.17-12-003 Ordering Paragraph 53.


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Public Utilities Commission 2 June 29, 2020 implementation status, and how it will impact or has impacted the Total Resource Cost (TRC) ratios; 3. Report on the new changes and improvements to SDG&E’s portfolio to improve the cost effectiveness, including description of the programmatic change, timeline for implementation, and how it will impact the TRC ratio of the affected program; and 4. Updated cost effectiveness ratios based on changing conditions, e.g. programmatic changes, reductions in spending, market conditions, etc. DISCUSSION Costs and Cost Effectiveness of SDG&E’s DR Programs Administered in the Previous Program Year (2019) Table 1 presents 2019 expenditures for the demand response programs included in the DR cost effectiveness tests. Table 2 presents 2019 expenditures for all DR programs and pilots. Table 1: 2019 Program Expenditures Program AC Saver Day Ahead (ACS DA) AC Saver Day Of (ACS DO) Base Interruptible Program (BIP) Capacity Bidding Program (CBP) Peak Time Rebate (PTR)3 Emerging Technology (ET) Technology Deployment (TD) Technology Incentives (TI) Local Marketing General Admin Information Technology (IT) EM&V Total 3 Direct Costs $782 $441,035 $1,840 $1,278 $220,209 $38,247 $10,960 $1,217,42 $12,239 1,141,175 $484,504 $3,569,691 Incentives Labor $316,720 $828,983 $63,627 $144,108 $243,950 $17,664 $1,615,052 $106,706 $84,813 $98,083 $166,825 $(194) $186,634 $234,775 $268,406 $5,310 $401,668 $294,906 $327,401 $2,175,33 PTR only approved for 2018. Credit is related to a labor accrual reversal. Total Costs $424,208 $1,354,831 $163,550 $312,211 $(194) $406,843 $516,972 $297,030 $1,222,732 $413,907 $1,436,081 $811,905 $7,360,076
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Public Utilities Commission 3 June 29, 2020 Table 2: 2019 Demand Response Expenditures and Budget Cost Category 1: Supply Side DR Programs AC Saver Day-Ahead AC Saver Day-Of Base Interruptible Program (BIP) Capacity Bidding Program (CBP) Peak Time Rebate (PTR) Budget Category 1 Total 2019 Expenditures 2019 Funding4 $424,208 $1,354,831 $163,550 $312,211 ($194) $2,254,606 $511,300 $1,884,200 $933,200 $2,068,918 $0 $5,397,618 $0 $0 $0 $0 Category 3: Demand Response Auction Mechanism (DRAM) Demand Response Auction Mechanism Pilot (DRAM) Budget Category 3 Total $1,470,050 $1,470,050 $1,500,000 $1,500,000 Category 4: Emerging & Enabling Technologies Emerging Technology (ET) Technology Deployment (TD) Technology Incentives (TI) Budget Category 4 Total $406,843 $516,972 $297,030 $1,220,845 $675,795 $762,478 $2,665,281 $4,103,554 $0 $0 $36,216 ($21.00) $36,195 $869,427 $125,000 $716,000 $340,000 $2,050,427 Category 6: Marketing, Education, and Outreach Local Marketing Education & Outreach (LME&O) Budget Category 6 Total $1,222,732 $1,222,732 $882,000 $882,000 Category 7: Portfolio Support Regulatory Policy & Program Support (Gen. Admin.) IT Infrastructure & Systems Support EM&V DR Potential Study Budget Category 7 Total $413,907 $1,436,082 $811,905 $197,530 $2,859,424 $793,638 $1,723,006 $1,345,090 $300,000 $4,161,734 Total $7,593,802 $16,585,234 Category 2: Load Modifying Demand Response Program Budget Category 2 Total Category 5: Pilots Armed Forces Pilot (AFP) Constrained Local Capacity Program (CLCP) Over Generation Pilot (OGP) Small Business Energy Management Pilot (SBEMP)5 Budget Category 5 Total 4 2019 Funding represents one-year budget and does not include program cycle total approved funding 2018-2022. 5 SBEMP was closed effective 12/31/2018. Credit is related to labor accrual reversal.
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Public Utilities Commission 4 June 29, 2020 Progress Reports of 2019 Improvements and New Changes to Improve Cost Effectiveness by DR Program Base Interruptible Program (BIP) 1. Aggregator Outreach to Increase the Number of Aggregators Enrolling Customers In 2018, SDG&E conducted a review of the tariffs looking for ways to encourage aggregator participation. The hope was that aggregators might be able to bring in new customers and increase the load impact of BIP, which would then increase the program’s cost effectiveness. One item of focus was the requirement that aggregators had to supply a minimum of 1 megawatt of load shed. Regulatory research revealed that this requirement could be changed.6 A second issue of concern was the fact that several aggregator requirements were described differently in various different tariffs, making compliance obligations unclear and difficult for aggregators to understand. Therefore, SDG&E submitted ALs 3385-E and 3385-E-A to encourage aggregator participation and clarify the BIP tariffs. These changes included: (1) reducing the minimum Committed Load that aggregators must achieve from 1 megawatt to 100 kilowatts; (2) streamlining and clarifying the BIP tariffs; and (3) various cleanup items.[7][8] The Commission approved ALs 3385-E and 3385-E-A on December 16, 2019. SDG&E is now looking to leverage aggregators to mass market BIP to groups of customers. 2. Direct Outreach to Customers to Increase Direct Participation in BIP In 2018, SDG&E completed an analysis to identify potential customers to target for BIP. We also focused on SDG&E assigned accounts (these are accounts that SDG&E’s Account Executives have more direct contact with) and provided our Account Executives with customer names and BIP talking points for their meetings with customers. Although there were a few customers who expressed interest in joining the program, none of them signed contracts for enrollment. SDG&E will continue its direct outreach efforts to assigned customer accounts. 6 D.06-11-049 p. 31. For example, some obligations in the tariff that had to do with signing up aggregator customers were left to be implied. In AL 3385-E, SDG&E listed them out so that aggregators wouldn’t have to do that guesswork. 8 For reference, AL 3385-E can be found here: 7
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Public Utilities Commission 5 June 29, 2020 Presentations on demand response programs to the Trade Pro Alliance forums also included BIP. These presentations occurred quarterly in 2019 and were conducted in person at SDG&E’s Energy Innovation Center by DR Program Staff. Lastly, SDG&E hired a third-party to create an analysis tool in addition to performing an analysis that would determine what customers would be a good fit for CBP and BIP. 3. Barriers For years SDG&E has struggled to subscribe new BIP customers. This is due, in large part, to some structural barriers that make it difficult. One barrier that SDG&E faces is that the local customer composition is not well suited for BIP. Unlike the other IOUs in California who have substantial large industrial loads that are ideal for BIP, these kinds of industrial customers largely do not exist in SDG&E’s service territory. It should therefore be expected that SDG&E would have many fewer ideal BIP customers to enroll as new customers as it is hard to find potential candidates. Additionally, the ban on dual participation in more than one DR program9 has also been a barrier to subscribing new customers. After SDG&E updated its BIP tariffs to encourage aggregator participation, one aggregator submitted 40 new customers for participation in BIP, but they were all on Critical Peak Pricing (CPP-D), and therefore the dual participation ban prevented us from enrolling all those customers. Another aggregator submitted two large customers for participation in BIP and one of them was already on CPP-D and therefore the dual participation ban again prevented us from enrolling one of those two large customers. SDG&E has reached out to our BIP aggregators and they have been given additional training on customer eligibility, but that barrier remains. Capacity Bidding Program Day-Ahead (CBP DA) and Capacity Bidding Program Day-Of (CBP DO) The 2019 program year for CBP was slow with a minor increase to participation. The program had one new aggregator join and several customers participate. Growth is not as strong as SDG&E would like to see; however minor progress was achieved. SDG&E hired a third-party to create an analysis tool in addition to performing an analysis that would determine what customers would be a good fit for CBP and BIP. SDG&E’s CBP program advisor continued one-on-one meetings with SDG&E account executives. This is in addition to meetings with CBP aggregators regarding targeting customers. The purpose of these meetings is to continually discuss CBP and to help reiterate the importance of increasing participation of CBP while understanding better challenges and barriers to growth. Two potential markets being explored is with a pool pump manufacturer and customers with energy storage batteries. Presentations on demand 9 D.18-11-029 OP 1 banned customers from enrolling in both Critical Peak Pricing (one of SDG&E’s other DR programs), and any other DR program (e.g., BIP or CBP).
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Public Utilities Commission 6 June 29, 2020 response programs to the Trade Pro Alliance forums also included CBP. These presentations occurred quarterly in 2019 and were conducted in person at SDG&E’s Energy Innovation Center by DR Program Staff. SDG&E identified a couple barriers that are a concern. First is the new dual participation rule.10 The new rule made 24 accounts not eligible to join CBP in 2019 that would have otherwise been able to join before the new dual participation rule change. A second barrier is for customers who have batteries for energy storage, and the duration of CBP events which can be called up to four hours in duration. Speaking with aggregators, battery suppliers and other customers, the four-hour duration is too long and hinders participation. In order to get customers with energy storage batteries to join CBP, SDG&E would have to provide a one- and two-hour event duration product, which is believed would attract new customers although may have CAISO issues for Resource Adequacy (RA) credits. AC Saver Day Ahead Program (ACS DA) and Technology Deployment In 2019, the technology deployment and AC Saver day-ahead thermostat programs increased. SDG&E issued technology deployment incentives to an additional 4,800 qualifying residential customers with thermostats in 2019. Most of these residential customers are enrolled in the AC Saver day-ahead program and the rest are enrolled in either a rate with events or in Demand Response Auction Mechanism (DRAM). The Bring Your Own Thermostat offer for commercial customers launched successfully in July 2019. The program offers $50 rebate per thermostat to commercial customers who purchase and install eligible thermostats. To promote the program SDG&E sent 37,000 emails out to commercial customers in August and again in October. Additional efforts to promote the program included working with Business Services and Outreach teams to educate them on the program and how to promote it. Presentations by the SDG&E Program Advisor on demand response programs to the Trade Pro Alliance forums also included the bring your own thermostat Smart Thermostat Program. These presentations occurred quarterly in 2019 and were conducted in person at SDG&E’s Energy Innovation Center. Because thermostat signaling and home automation technology is rapidly changing, SDG&E launched a Request for Proposal (RFP) in October of 2018 for a Distributed Energy Resource Management System (DERMS) with the capability to facilitate enrollment and signaling of multiple thermostat brands. In 2019 SDG&E selected a vendor, worked with the vendor to finalize a detailed system design document and negotiated a contract with the vendor resulting in a signed agreement in February of 2020. Working with a DERMS vendor gives SDG&E access to more types of thermostats since some thermostat manufacturers work primarily with DERMS vendors rather than directly 10 Id.
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Public Utilities Commission 7 June 29, 2020 with utilities. For example, one major vendor is changing its business practices beginning in 2020 to work primarily through DERMS providers rather than with utilities directly, so moving to a new platform is necessary to continue that large vendor’s participation. The move to a consolidated platform will also improve the customer enrollment experience by offering instant eligibility checks and allowing all customers regardless of thermostat type to enroll at the same website. The DERMS providers will also allow events to be dispatched in a single portal instead of having to dispatch events by going to multiple thermostat portals to trigger. The system will also eliminate and/or automate several tasks which are currently performed by SDG&E employees. AC Saver Day Of Program (ACS DO)11 Since the approval of D.17-12-003, we have continually worked to try and improve cost effectiveness by reducing our administrative costs by renegotiating our contract with our third-party program Administrator for an additional two years (2019 and 2020) at a lower cost than 2017. We continue to work to maintain customer retention in the program. In early 2019, we were able to increase our customer participation to 15,101 compared to November of 2018 – 15,090. SDG&E submitted AL 3321-E which proposed to modify program triggers. The Commission approved AL 3321 effective as of May 1, 2019. Despite the increase in the trigger, which typically would decrease the number of events, the AC Saver Day Of program still reached the maximum of 20 events, so the goal of reducing the number of events was not achieved. However, the new trigger and event limits still prevented several events. In 2019, even with record events in comparison to 2018, we only lost 250 customers during the summer months. As mentioned in AL 3396-E, dated June 28, 2019, we would like to reiterate that in June of 2018, D.18-06-030 changed the RA measurement hours used to calculate the load impact for Demand Response from 1 p.m. – 6 p.m. to 4 p.m. to 9 p.m., the program continues to experience negative cost effectiveness numbers because the amount of capacity SDG&E can claim is lower during this timeframe. Marketing, Education & Outreach In 2019, SDG&E continued to promote our Demand Response programs through the “Save the Day” marketing campaign. “Save the Day” messaging focused on Demand Response programs helping customers to be “energy heroes” by saving energy and money. 11 Formally Known as Summer Saver..
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Public Utilities Commission 8 June 29, 2020 SDG&E engaged a multi-touch targeted marketing campaign to communicate this message to customers. Multiple creative executions were used to promote specific programs, as well as an overall “Demand Response Program” message. Communications went through various media including targeted Streaming Television Spots, Paid Online Search, Paid Social Media, Banner Ads and Pre-Roll Video Ads. Additionally, we used email campaigns to specifically promote our residential Smart Thermostat Program and Technology Incentives programs. Through this campaign, SDG&E nearly doubled traffic to our Demand Response web pages (71,735 pageviews in 2018 versus 141,869 in 2019), with the majority of traffic driven by digital advertising. SDG&E continues to increase traffic to but will look to improve program enrollments in 2020 through campaign optimization, updated creative,12 and an improved customer experience on the Demand Response web pages. Cost Effectiveness Ratios Based on Changing Conditions Table 3 presents the results of the cost effectiveness tests using actual expenditures for 2018 through 2019 and the approved budget for 2020 through 2022. The analysis uses the forecast filed in the April 2019 load impact reports for 2018 and the forecast filed in the April 2020 load impact reports for 2019 through 2022. In addition, the 2020 updated avoided costs were used for years 2020 through 2022. Table 3: Cost Effectiveness Ratios 2018 through 2020 BIP TRC PAC RIM 0.6 0.5 0.5 CBP DA 11 to 7 0.5 0.4 0.4 CBP DA 1 to 9 0.6 0.6 0.5 CBP DO 11 to 7 0.5 0.4 0.4 CBP DO 1 to 9 0.5 0.5 0.5 ACS DA ACS DO Portfolio 0.7 0.8 0.8 0.4 0.3 0.3 0.5 0.4 0.4 Table 4 presents a comparison of the TRC results with results from the 2019 midyear analysis. As shown, the programs and portfolio have made moderate improvements in the benefit cost ratios. 12 “Creative” is a term of art in marketing that refers to the art (print ads, TV spots, digital banners, etc.).
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Public Utilities Commission 9 June 29, 2020 Table 4: TRC Results Program BIP CBP DA 11 to 7 CBP DA 1 to 9 CBP DO 11 to 7 CBP DO 1 to 9 ACS DA ACS DO Portfolio 2019 Midyear 0.5 0.5 0.5 0.4 0.5 0.5 0.4 0.3 2020 Midyear 0.6 0.5 0.6 0.5 0.5 0.7 0.4 0.5 CONCLUSION DR Programs still managed to increase our cost effectiveness slightly, despite all of its challenges in 2019 related to the completion of SDG&E’s Residential Time of Use roll out and the change in the RA hours to 4 pm to 9 pm. We continued to work on lowering our administrative costs and overheads and continued to work diligently using all available avenues to introduce customers to DR programs. However, despite our best effots DR Programs still face substantial uphill struggles due to our smaller industrial base and the change to 4pm –9 pm RA hours which will continue to negatively impact our cost effectiveness for all of our programs. EFFECTIVE DATE Pursuant to D.17-12-003 OP 53, SDG&E believes that this submittal is subject to Energy Division disposition and should be classified as Tier 1 (effective pending disposition) and respectfully requests an approval date of June 29, 2020, the date submitted. PROTEST Anyone may protest this Advice Letter to the California Public Utilities Commission. The protest must state the grounds upon which it is based, including such items as financial and service impact, and should be submitted expeditiously. The protest must be made in writing and must be received no later than July 20, 2020, which is 21 days of the date this Advice Letter was submitted with the Commission. There is no restriction on who may submit a protest. The address for mailing or delivering a protest to the Commission is: CPUC Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102
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Public Utilities Commission 10 June 29, 2020 Copies of the protest should also be sent via e-mail to the attention of the Energy Division at A copy of the protest should also be sent via email to the address shown below on the same date it is mailed or delivered to the Commission. Attn: Greg Anderson Regulatory Tariff Manager E-mail: NOTICE A copy of this submittal has been served on the utilities and interested parties shown on the attached list, including interested parties in A.17-01-012, et. al., by providing them a copy hereof either electronically or via U.S. mail, properly stamped and addressed. Address changes should be directed to SDG&E Tariffs by email to /s/ Clay Faber _______________________________ CLAY FABER – DIRECTOR Regulatory Affairs
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ADVICE LETTER SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.: San Diego Gas & Electric Company (U902-E ) Utility type: ELC GAS PLC HEAT ELC = Electric PLC = Pipeline WATER Contact Person: Brittany Malowney Phone #: 858-637-3714 E-mail: E-mail Disposition Notice to: EXPLANATION OF UTILITY TYPE GAS = Gas WATER = Water HEAT = Heat (Date Submitted / Received Stamp by CPUC) Tier Designation: 1 Advice Letter (AL) #: 3562-E Subject of AL: Submittal of San Diego Gas & Electric Company’s Demand Response Programs’ Costs and Cost Effectiveness for Program Year 2019 Pursuant to Decision 17-12-003 Keywords (choose from CPUC listing): Compliance AL Type: Monthly Quarterly Annual One-Time Other: June 2019 & June 2020 If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: D. 17-12-003 Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: N/A Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/ access to confidential information: Resolution required? Yes No Requested effective date: 6/29/20 No. of tariff sheets: 0 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: N/A 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: Name: Gregory Anderson Title: Regulatory Tariff Manager Utility Name: San Diego Gas & Electric Company Address: 8330 Century Park Court; CP 31D 92123 City: San Diego State: California Telephone (xxx) xxx-xxxx: (858) 654-1717 Facsimile (xxx) xxx-xxxx: Email: Name: SDG&E Tariff Department Title: Utility Name: San Diego Gas & Electric Company Address: 8330 Century Park Court; CP 31D 92123 City: San Diego State: California Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: Email: Clear Form
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cc: (w/enclosures) General Order No. 96-B ADVICE LETTER SUBMITTAL MAILING LIST Public Utilities Commission Clean Energy Renewable Fuels, LLC Office of Ratepayer Advocates (ORA) P. DeVille R. Pocta Clean Power Research T. Schmid Energy Division M. Ghadessi G. Novotny M. Salinas Davis Wright Tremaine LLP L. Tan J. Pau R. Ciupagea Douglass & Liddell Tariff Unit D. Douglass CA Energy Commission D. Liddell B. Penning Ellison Schneider Harris & Donlan LLP B. Helft E. Janssen Advantage Energy C. Kappel C. Farrell Energy Policy Initiatives Center (USD) Alcantar & Kahl LLP S. Anders M. Cade Energy Regulatory Solutions Consultants K. Harteloo L. Medina AT&T Energy Strategies, Inc. Regulatory K. Campbell Barkovich & Yap, Inc. EQ Research B. Barkovich General Braun & Blaising, P.C. Goodin, MacBride, Squeri, & Day LLP S. Blaising B. Cragg D. Griffiths J. Squeri CA Dept. of General Services Green Charge H. Nanjo K. Lucas California Energy Markets Hanna and Morton LLP General N. Pedersen California Farm Bureau Federation JBS Energy K. Mills J. Nahigian California Wind Energy Keyes & Fox, LLP N. Rader B. Elder City of Poway Manatt, Phelps & Phillips LLP Poway City Hall D. Huard City of San Diego R. Keen L. Azar McKenna, Long & Aldridge LLP J. Cha J. Leslie D. Heard Morrison & Foerster LLP F. Ortlieb P. Hanschen H. Werner MRW & Associates LLC M. Rahman General NLine Energy M. Swindle NRG Energy D. Fellman Pacific Gas & Electric Co. M. Lawson M. Huffman Tariff Unit RTO Advisors S. Mara SCD Energy Solutions P. Muller Shute, Mihaly & Weinberger LLP O. Armi Solar Turbines C. Frank SPURR M. Rochman Southern California Edison Co. K. Gansecki TerraVerde Renewable Partners LLC F. Lee TURN M. Hawiger UCAN D. Kelly US Dept. of the Navy K. Davoodi US General Services Administration D. Bogni Valley Center Municipal Water Distr G. Broomell Western Manufactured Housing Communities Association S. Dey Interested Parties in: A.17-01-012, et. al.
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