Details for: PGE Reply to Protest to AL 5973-E-A.pdf

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Sidney Bob Dietz II
Regulatory Relations

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

September 10, 2021
California Public Utilities Commission - Energy Division
Tariff Unit
505 Van Ness Avenue, 4th Floor
San Francisco, CA 94102

Pacific Gas and Electric Company’s Reply to the Protest of the Direct
Access Customer Coalition (DACC) to Advice 5973-E-A –Establishing
a Prepayment Framework for the Power Charge Indifference
Adjustment in Compliance with Decisions 18-10-019 and 20-08-004

On October 12, 2020, Pacific Gas and Electric Company (PG&E), Southern California
Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) (collectively,
the IOUs) submitted Tier 2 advice letters to the California Public Utilities Commission
(CPUC) proposing a prepayment request processing framework in compliance with
Decision (D.) 18-10-019. On May 5 and June 9, 2021, the CPUC Energy Division hosted
workshops to determine the reasonableness of the IOUs’ PCIA prepayment framework,
specifically the IOUs’ proposals for: (1) ensuring the seriousness and financial viability of
prepayment requestors and (2) providing for cost recovery of the actual administrative
and negotiating costs incurred by the IOUs. In response to discussions at the workshops,
Energy Division staff requested the IOUs supplement their implementation advice letters
in order to: (1) provide an estimate of costs the IOUs expect to incur during prepayment
negotiations and (2) provide additional details on the proposed financial viability screening
for prepayment requestors to prepay their entire PCIA obligation.
On August 13, 2021, PG&E submitted Advice Letter 5973-E-A making several notable
changes to PG&E’s proposed prepayment request processing framework. Firstly, PG&E
proposed recovering its administrative costs via a “Pay-As-You-Go” mechanism rather
than deducting them from the proposed Negotiating and Processing (N&P) Deposit. 1
Additionally, PG&E modified the proposed N&P Deposit from 24 months of a prepayment
requestor’s historical PCIA obligation, in the form of cash, to 12 months of a prepayment
requestor’s historical PCIA obligation, in the form of cash or letter of credit. 2 Finally,


Advice Letter 5973-E-A, p. 3.
Id., pp. 5-6.


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PG&E Reply to Protest of Advice Letter 5973-E-A -2- September 10, 2021 PG&E provided an estimate of the work hours it expects to undertake in order to administer and negotiate prepayment requests of the entire PCIA obligation. 3 On September 2, 2021, DACC submitted a protest in response to the supplemental advice letter filings of PG&E, SCE, and SDG&E. II. Reply to the DACC Protest In its protest, DACC voiced concerns with the following items related to PG&E: 1. 2. PG&E’s estimate of the effort to negotiate with a direct access (DA) customer. Potential treatment of common negotiating costs by each of the three IOUs. As discussed below, PG&E believes the CPUC should reject these aspects of DACC’s protest. 1. The CPUC Should Not Direct PG&E to Revise its Estimate of the Effort to Administer the PCIA Prepayment Process In order to provide potential prepaying customers with an approximate sense of the scale of the administrative costs they could expect to incur, PG&E endeavored to develop an estimate of the work hours required to administer and negotiate prepayment of the PCIA obligation. This estimate was provided with specific disclaimers regarding the significant limitations associated with creating an estimate for an entirely new process. This estimate was not shared or developed in order to provide cost certainty and should not be used by parties for that purpose. While the limitations associated with such an estimate are significant, PG&E’s primary consideration in the development of this estimate was to be as reasonable as possible based on professional judgment of the activities required to conduct a due diligence process associated with PG&E’s complex PCIA portfolio. Providing an inaccurate estimate could mislead potential prepaying customers, leaving them with an unexpectedly high cost. Crucially, actual costs incurred are likely to vary significantly based on the activities of the party requesting to prepay their PCIA obligation. DACC’s suggestion that PG&E lower its estimate simply because it is higher than the other IOUs’ estimates violates the principles enumerated above. It is erroneous to assume that PG&E’s estimate is less accurate simply because it is higher. The opposite assumption is just as likely to be true. Each IOU has a different portfolio composition of PCIA-eligible contracts and a different mix of potential prepaying customers. For example, customer choice programs in PG&E’s service territory were created earlier and span over a longer period than the southern California IOUs. Thus, it is reasonable that the estimate of work hours varies among the IOUs. Moreover, directing PG&E to lower 3 Id., pp. 3-5.
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PG&E Reply to Protest of Advice Letter 5973-E-A -3- September 10, 2021 its estimate has no effect on the actual costs which prepaying customers are obligated to pay and may provide prepaying customers with a false sense of those costs. Consequently, the CPUC should reject this aspect of DACC’s protest. 2. The CPUC Should Not Adopt DACC’s Proposed Treatment of Common Costs DACC’s protest includes a proposed treatment of fixed or common costs that may arise during the prepayment process. Specifically, DACC suggested that the IOUs limit any single prepaying customer’s share of the fixed or common costs to no more than ten percent. PG&E appreciates DACC suggesting a potential treatment for this issue. However, this proposal is likely to shift significant prepayment costs onto non-prepaying customers. As the CPUC has appropriately maintained, non-prepaying customers should remain indifferent to customers choosing to voluntarily seek to prepay their entire PCIA obligation. If DACC’s proposal is adopted, non-prepaying customers will likely experience a cost shift if fewer than ten prepayment requestors pursue the prepayment option. PG&E remains committed to evaluating the proposed process, ensuring it is as efficient and cost effective as possible, and is receptive to further discussion with parties about these important issues. Sincerely, /S/ Sidney Bob Dietz II Director, Regulatory Relations cc: Daniel W. Douglass, Attorney for the DACC Service List of Rulemaking 17-06-026
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