BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 811 - Keeley Hearing
Date: July 13, 1999 A
As Amended: July 12, 1999 FISCAL B
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DESCRIPTION
This bill requires the California Public Utilities
Commission (CPUC) to establish a Power Exchange energy
credit (PX credit) that is calculated according to actual
hourly data for customers with time-of-use (TOU) meters
installed on or after January 1, 2000.
The bill allows customers with TOU meters installed before
January 1, 2000 to make a one-time choice, before January
30, 2000, to have their PX credit calculated according to
actual hourly data or the average load profile for their
customer class.
The bill requires additional billing costs resulting from
the hourly calculation methodology to be recoverable from
that customer class and prohibits shifting any costs
between customer classes.
KEY QUESTIONS
1.What impact will hourly calculation of the PX credit have
on customers' energy consumption incentives and
Competition Transition Cost (CTC) obligations?
2.Should customers with existing TOU meters be allowed to
choose between PX credit methods (actual hourly or class
average), depending on which method benefits them? If
so, is it feasible to require that choice within 29 days
from the date of enactment of this bill?
3.Why should ratepayers in the customer class at large be
charged for additional billing costs associated with an
hourly PX credit, instead of limiting the charges to the
customers who are actually getting the credit?
BACKGROUND
The value, and price, of electricity varies by time of day
and season. Consumption of electricity is much lower at
4:00 a.m. than it is at 4:00 p.m. and so is the price.
Traditional mechanical meters record the total amount of
electricity consumed between readings, but do not record
actual consumption patterns (temporal data). TOU meters
measure energy as it is being used, providing an exact
reading of how much energy was used at any given time.
According to the sponsor of this bill, the California
Retailers Association, retail stores and office buildings
have above average loads (high usage during the day) and
little ability to shift loads due to the constraints of
normal business hours. Customers exceeding a certain load
who choose a direct access energy service provider (ESP)
are required to install a TOU meter. The meter data is
used to precisely calculate their bill - actual usage in
any hour multiplied by the actual energy cost for that
hour. Before the ESP can bill the customer, the local
utility must generate a bill for transmission and
distribution services, and for the CTC. AB 1890 requires
that these charges be determined residually by subtracting
a credit for the commodity portion of the bill. This
credit is referred to as the PX credit.
Currently, the PX credit is calculated based on average
"load profiles," even for customers with TOU meters. All
customers within a given customer class (e.g., residential,
small commercial, agricultural, industrial) are credited
for the total energy they consume according to a load
profile for their customer class, rather than according to
their own actual hourly usage. The load profile uses
average historical data to estimate how much energy is
purchased at any given hour by each customer class.
As a result, customers with a below average load
(relatively low peak usage) get a higher PX credit relative
to the actual value of the energy they consume than
customers with an above average load (relatively high peak
usage). Because of the relationship between the PX credit
and CTC calculations, above average customers also pay
relatively more CTC. If customers are allowed to take
advantage of TOU meter readings in the calculation of the
PX credit, those with above average loads will get a larger
PX credit and smaller CTC obligation than they get under
the current method.
COMMENTS
1.Potential impact on consumption patterns and CTC
collection. The current PX credit methodology
effectively rewards efficient usage patterns, to the
extent that a customer can "beat" the average load
profile for his or her class. When the PX credit is
calculated according to an average load profile,
customers who are more efficient than average receive a
higher PX credit and, consequently, pay a lower CTC
amount than they would if the PX credit is calculated
according to hourly usage. By enabling customers to
collect a PX credit calculated according to hourly usage,
this bill benefits above average energy consumers by
increasing their PX credit and, consequently, decreasing
their relative CTC contribution. Essentially, these
customers will be rewarded, compared to the current
rules, for using an above average energy load. The bill
confines the CTC impact by prohibiting cost-shifting
between customer classes, consistent with existing law.
2.Who pays for the choice? The provision of the bill
allowing customers with existing TOU meters to choose
between PX credit methods (actual hourly or class
average), may contribute to the impacts described in
Comment 1. This is due to the fact that customers will
choose whichever method gives them the largest PX credit.
For customers with above average loads, the choice will
be the hourly credit. For customers with below average
loads, the choice will be the average credit (status
quo). The Committee may wish to consider whether direct
access customers with TOU meters should be allowed to
choose their preferred PX credit methodology.
3.Is 29 days enough? If customers are allowed to choose,
the Committee may wish to consider the appropriate
duration of that choice and whether the 29 days provided
by this bill is sufficient. One practical problem with
this deadline is that the hourly PX credit methodology
that the bill requires the CPUC to implement will almost
certainly take longer than 29 days from the enactment of
the bill to implement. As a result, customers would not
know the exact terms of the hourly credit option before
being forced to choose between it and the average credit.
4.Who should foot the bill for the billing? Establishing a
new PX credit method may result in increased billing
costs for the utilities. AB 811 requires additional
billing costs (for customers in a given class) due to the
hourly calculation methodology to be recovered through
rates from that customer class. It is not clear why all
customers in any given class should share the costs
associated with a program that benefits only those who
choose to participate in it, potentially to the detriment
of the customer class at large. If the billing costs
associated with an hourly PX credit are going to be
assigned to ratepayers, the Committee may wish to
consider whether the costs should be confined to the
customers who have chosen to take advantage of the hourly
PX credit.
5.Conflict with SB 1063 (Bowen). Should the Committee
approve this bill, it should include an amendment to
change the number of the code section that the bill
establishes (367.5) to resolve the technical conflict
with SB 1063 (Bowen).
ASSEMBLY VOTES
Assembly U & C Committee (11-0)
Assembly Appropriations Committee (21-0)
Assembly Floor (76-0)
POSITIONS
Support:
Agricultural Energy Consumers Association
Association of California Water Agencies (ACWA)
Building Owners & Managers Association of California
Building Owners & Managers Association of San Francisco
California Cast Metals Association
California Manufacturers Assocation (CMA)
California Retailers Association
Chemical Industry Council of California
Green Mountain Energy Resources
New Energy Ventures
Southern California Edison
Oppose:
Enron Corporation
Utility.com
Lawrence Lingbloom
AB 811 Analysis
Hearing Date: July 13, 1999