CPUC Public Agenda 3266Thursday, December 16, 2010, 9:00 a.m.

505 Van Ness Ave, San Francisco

Commissioners: Michael R. Peevey Dian M. Grueneich

John A. Bohn Timothy Alan Simon

Nancy E. Ryan

www.cpuc.ca.gov

Public Comment• Per Resolution ALJ-252, any member of the public who wishes to address the CPUC about matters before the Commission must either sign up at the Commission's webpage section "Public Comment Sign-Up" or with the Public Advisor before the meeting begins.

• Once called, each speaker has up to 3 minutes at the discretion of the Commission President, depending on the number of speakers.

• A sign will be posted when 1 minute remains.

• A bell will ring when time has expired.

•Those who sign up after 9:00 a.m. will only have 1 minute.

The following items are NOT subject to Public Comment: Item: 17, 38, 45 & 49 All items on the Closed Session Agenda

Public Comment• Per Resolution ALJ-252, any member of the public who wishes to address the CPUC about matters before the Commission must either sign up at the Commission's webpage section "Public Comment Sign-Up" or with the Public Advisor before the meeting begins.

• Once called, each speaker has up to 2 minutes to address the Commission.

• A sign will be posted when 1 minute remains.

• A bell will ring when time has expired.

•Those who sign up after 9:00 a.m. will only have 1 minute.

The following items are NOT subject to Public Comment: Item: 17, 38, 45 & 49All items on the Closed Session Agenda

Agenda Changes• Items shown on the Consent Agenda will be taken up and voted on as a group in one of the first items of business of each CPUC meeting.

• Items on Today’s Consent Agenda are: 1, 4, 5, 6, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 40, 41, 42, 43, 44, 45, 46 & 47

• Any Commissioner, with consent of the other Commissioners, may request an item from the Regular Agenda be moved to the Consent Agenda prior to the meeting.Items: 55, 59, 60 & 65 from the Regular Agenda have been added to the Consent Agenda.

• Any Commissioner may request an item be removed from the Consent Agenda for discussion on the Regular Agenda prior to the meeting. Item: 26 has been moved to the Regular Agenda.

• Items: 48, 52a & 59a have been withdrawn.

• The following items have been held to future Commission Meetings:

Held to 1/13/10: 2, 3, 7, 8, 9, 39, 49, 49a, 50, 50a, 53, 53a, 57, 61 & 62

Regular Agenda

• Each item on the Regular Agenda (and its alternate if any) will be introduced by the assigned Commissioner or CPUC staff and discussed before it is moved for a vote.

• For each agenda item, a summary of the proposed action is included on the agenda; the CPUC’s decision may, however, differ from that proposed.

• The complete text of every Proposed Decision or Draft Resolution is available for download on the CPUC’s website: www.cpuc.ca.gov.

• Late changes to agenda items are available on the Escutia Table.

Regular Agenda – Energy OrdersItem #26 [9980] Review of Proposed Settlement

A08-11-001, R06-02-013, R04-04-003, R04-04-025, R99-11-022 - Related matters.Application of Southern California Edison Company for Applying the Market Index Formula and As-Available Capacity Prices adopted in D.07-09-040 to Calculate Short-Run Avoided Cost for Payments to Qualifying Facilities beginning July 2003 and Associated Relief.

Ratesetting Comr. Peevey/ ALJ Wetzell-------------------------------------------------------------------------------------------------------

PROPOSED OUTCOME:

• Approves Proposed Settlement.

ESTIMATED COST:

• Substantial reduction in litigation costs for the parties and the Commission.

• Impact on the Qualifying Facilities Market significant, but not quantified.

Regular Agenda – Energy OrdersItem #51 [9730] California Renewables Portfolio Standard Program Renewable Auction Mechanism

R08-08-009 Order Instituting Rulemaking to Continue Implementation and Administration of California Renewables Portfolio Standard Program.

Ratesetting Comr. Peevey/ ALJ Mattson------------------------------------------------------------------------------------------------------------------------------

PROPOSED OUTCOME:

• Adopts a new procurement protocol called the Renewable Auction Mechanism (RAM). RAM employs standard contracts for purchases from certain renewable portfolio standard (RPS) projects by three utilities: Southern California Edison Company, Pacific Gas and Electric Company, San Diego Gas & Electric Company. RAM includes:

• Projects up to 20 megawatts (MW).

• A program limit of 1,000 MW, procured over four solicitations of 250 MW each, allocated proportionately to the three utilities.

• Non-negotiable price-determined by seller in a competitive auction.

• Simplified Commission review for executed contracts within the allocated capacity limit.

• An eligible seller need not be a retail customer, seller need not be a qualifying facility, and project need not be on property of a retail customer.

ESTIMATED COST:

• Unknown, but expected to be no additional RPS costs.

Regular Agenda – Energy OrdersItem #52 [9815] Incentive True-Up for 2006-2008

R09-01-019 Order Instituting Rulemaking to Examine the Commission’s Energy Efficiency Risk/Reward Incentive Mechanism.

Ratesetting Comr. Bohn/ALJ Pulsifer--------------------------------------------------------------------------------------

PROPOSED OUTCOME:

• No additional incentive earnings are due for the 2006-2008 cycle of energy efficiency programs.

ESTIMATED COST:

• No incremental costs.

Regular Agenda – Energy Orders

Item #52b [9983] ALTERNATE TO ITEM 9815

Comr. Peevey--------------------------------------------------------------------------------------This Alternate Proposed Decision differs from the Administrative Law Judge’s proposed decision in that it:

• Relies on ex ante assumptions to assess the performance of the utilities energy efficiency programs for purposes of determining incentives under the risk/reward incentive mechanism for the 2006-2008 period.

• Adopts a shared savings rate of 7% to be applied to the performance earnings basis provided the utilities’ energy efficiency portfolios and programs are found to have delivered savings equal to at least 85% of the energy efficiency goals using ex ante assumptions.

• Approves additional incentive payments of $29.1 million, $18.6 million, $5.1 million, and $9.9 million for Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company and Southern California Gas Company,

respectively.

Regular Agenda – Energy OrdersItem #54 [9955] Order Instituting Rulemaking

R_____________ Order Instituting Rulemaking Pursuant to Assembly Bill 2514 to Consider the Adoption of Procurement Targets for Viable and Cost-Effective Energy Storage Systems.-------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Initiates a rulemaking and establishes preliminary schedule for

submission of Comments, Initial Workshop, and a Prehearing Conference.

ESTIMATED COST:• None.

Regular Agenda – Energy OrdersItem #56 [9967] Eldorado-Ivanpah Transmission Project for a Certificate of Public Convenience and Necessity

A09-05-027

Ratesetting Comr. Peevey/ALJ DeAngelis------------------------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Denies Southern California Edison Company a certificate of public convenience and

necessity for the Eldorado-Ivanpah Transmission Project. • The proposed project is intended to connect renewable generation and will not address

reliability concerns or increased demand. • Applicant has not established need under Public Utilities Code §§ 1001 and 399.2.5 due to

the renewable generator’s acknowledgement of the existence of other potential transmission options in the area.

• Application 09-05-027 is closed.

ESTIMATED COST:• $306 million plus contingency and other related expenses.

Regular Agenda – Energy OrdersItem #56a [9970] ALTERNATE TO ITEM 9967

Comr. Peevey-----------------------------------------------------------------------------------------------------PROPOSED OUTCOME:• Grants Southern California Edison Company a certificate of public convenience and necessity for the Eldorado-

Ivanpah Transmission Project using the Environmentally Preferred Route, as identified in the Final Environmental Impact Report.

• Finds the project is “necessary to facilitate” achievement of the renewable power goals of § 399.11 et seq. pursuant to Public Utilities Code § 399.2.5 as (1) the line will bring to the grid renewable resources that would otherwise remain unavailable as evidenced by several Commission approved purchase power agreements (PPAs) totaling 717 MWs that will interconnect to the line and which would be subject to indefinite delay absent the line, (2) the area within the line’s reach could play a critical role in meeting the renewable goals based on approved PPAs, the large number of projects in the area in the CAISO Queue, and the renewable resource potential of the area identified by the Renewable Energy Transmission Initiative, and (3) the cost of the project is reasonably balanced against the certainty of the line’s contribution to economically rational Renewable Portfolio Standard compliance.

• The role the line will play in achieving the state’s 20 percent renewable mandate and the greenhouse gas mitigation goals under Assembly Bill 32 serves as the basis for a finding of overriding considerations, recognizing that the Final Joint Environmental Impact Report/Environmental Impact Study determined that the project will have several significant and non-mitigable impacts.

ESTIMATED COST:• $306.338 million plus a 15% contingency.

Regular Agenda – Energy OrdersItem #58 [9977] "Z-Factor" Treatment for Liability Insurance Premium and Deductible Increases

A09-08-019 In the Matter of the Application of San Diego Gas & Electric Company for Authorization to Recover Unforeseen Liability Insurance Premium and Deductible Expense Increases as a Z-Factor Event.

Ratesetting Comr. Simon/ALJ Bushey-------------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Denies San Diego Gas & Electric Company’s request for Z-factor treatment for

2009 increased liability insurance costs.• Closes Application 09-08-019.

ESTIMATED COST:• None.

Regular Agenda – Energy Orders

Item #58a [9985] ALTERNATE TO ITEM 9977

Comr. Simon--------------------------------------------------------------------------------------PROPOSED OUTCOME:• Grants the request of San Diego Gas & Electric Company (SDG&E) for “Z-factor treatment”

for the one-year period 2009-2010 to recover the cost of increased liability insurance premiums amounting to $28,884,000.

• Authorizes SDG&E to increase its electric and natural gas revenue requirement by this amount to reflect unforeseen liability insurance premium and deductible expenses, and to create a new amortization process for future expenses until rates for its next general rate case become effective.

• Denies SDG&E’s request for related “Z-factor” advice letters for the two years 2010-2011 and 2011-2012; however, SDG&E instead may file Tier-3 advice letters for these years.

ESTIMATED COST:• Financial Impact: $28,884,000, plus possible additional costs based on future Advice

Letter filings.

Regular Agenda – Communication OrdersItem #63 [10020] New Order Instituting Rulemaking

R__________ Order Instituting Rulemaking to Consider Modifications to the California Advanced Services Fund Including Those Necessary to Implement Loan Programand Other Provisions of Recent Legislation.-------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Initiates a Rulemaking to consider modifications to California Advanced

Services Fund, including implementation of recent legislation.

ESTIMATED COST:• None.

Item # 63 OIR to Consider Modifications to the California Advanced

Services Fund in Response to Recent Legislation and Program Implementation Experience

Senate Bill 1040 (Padilla, Chapter 317, Stats 2010)

Possible changes to the program based on two - years’ program implementation experience and the Petition to Modify filed by the Division of Ratepayer Advocates

Senate Bill 1040o Increased funding for the program by $125 M (for a total of

$225M)

o Established two new accounts (in addition to the Broadband Infrastructure Grant Program): the Rural and Urban Regional Consortia Grant Account and the Broadband Infrastructure Revolving Loan Account

o Allocates the Additional $125 Million:Broadband Infrastructure Grant Account - $100 MRural and Urban Regional Consortia Grant Account- $10 MBroadband Infrastructure Revolving Loan Account - $15 M

o Extends CASF indefinitely but prohibits the Commission from collecting surcharges beyond CY 2015

OIR Focuso Poses questions to guide parties filing opening and reply comments on

issues such as: Loan program eligibility, terms, conditions, requirements and security Consortia grant eligibility, role, goals and objectives, reimbursable costs,

and payment Potential Changes to the Existing Infrastructure Grant Program

Change in the matching grant of 40%? Eligibility limited to CPCN or WIR holders? Change in the definition of unserved and underserved areas? More Transparency in handling applications Changes in the Evaluation Criteria Ceiling / Limit on the Cost per Household

o Anticipates resolving the Consortia Fund issue through an interim decision so that broadband deployment efforts can begin as soon as possible

Regular Agenda – Communication OrdersItem #63 [10020] New Order Instituting Rulemaking

R__________ Order Instituting Rulemaking to Consider Modifications to the California Advanced Services Fund Including Those Necessary to Implement Loan Programand Other Provisions of Recent Legislation.-------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Initiates a Rulemaking to consider modifications to California Advanced

Services Fund, including implementation of recent legislation.

ESTIMATED COST:• None.

Regular Agenda – Water/Sewer OrdersItem #64 [9927] Great Oaks Water Company's Base Year 2010 Cost of Capital and Subsequent Years’ Adjustment Mechanism

A09-05-007 Application of Great Oaks Water Company for Authority to Establish its Authorized Cost of Capital Pursuant to the Rate Case Plan for Water Utilities.

Ratesetting Comr. Bohn/ALJ Long----------------------------------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Adopts a capital structure and cost of capital for Base Year 2010 for Great Oaks Water Company.• Adopts an adjustment mechanism for subsequent years. • Orders Great Oaks Water Company to engage an independent Certified Public Accountant to

perform annual audits and allows for cost recovery in a separate Memorandum Account.• Closes the proceeding.

ESTIMATED COST:• The cost will be consolidated in the rate changes adopted in Application 09-09-001.

Regular Agenda – Water/Sewer OrdersItem #66 [9976] Golden State Water Company's 2010 General Rate Case for Region I

A10-01-009 In the matter of the Application of the Golden State Water Company for an order authorizing it to increase rates for water service for years 2011 and 2012 in its Arden Cordova Service Area, Bay Point Service Area, Clearlake Service Area, Los Osos Service Area, Ojai Service Area, Santa Maria Service Area, and Simi Valley Service Area.

Ratesetting Comr. Bohn/ALJ Long-----------------------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Adopts a partial settlement and otherwise resolves the litigated issues for Golden State Water

Company Region I.

ESTIMATED COST:• Revenue increases range between 4.3% and 36.1%, depending on customer service area.

Regular Agenda – Other Utility Orders

Item #67 [10025] New Order Instituting Rulemaking

R__________ Order Instituting Rulemaking on the Commission’s Own Motion to Create the Small Business Advisory Council.-------------------------------------------------------------------------------------

PROPOSED OUTCOME:• Opens a proceeding to create the Small Business Advisory Council.• Sets forth the structure and composition of the Small Business Advisory

Council.

ESTIMATED COST:• None.

Regular Agenda – Consumer Services Division Reports and Resolutions

Item #68 [9920] Consumer Affairs Branch to Implement Decision 08-10-016

CSID-003-----------------------------------------------------------------------------------------------------PROPOSED OUTCOME:• Orders the Consumer Affairs Branch (CAB) to post the required data, along with the appropriate

disclosures and other information, annually on the Commission’s website; to design and implement a mechanism that allows interested stakeholders to provide comments, complaints, or suggestions with regard to the CAB Limited English-Proficiency data and other information posted on the website; and to review this feedback, the data posting process, and the data itself on a regular basis.

ESTIMATED COST:• Not within the scope of this resolution.

Regular Agenda – Commissioner’s Reports

Item #69 [10005] Discussion and Action Regarding the Low Income Oversight Board

Commissioner Grueneich Report------------------------------------------------------------------------

Discussion and action regarding the appointment of a public representative to the Low Income Oversight Board (LIOB). The 11-member LIOB advises the Commission on low-income electric, gas, and water customer issues and serves as a liaison for the Commission to low income ratepayers and representatives. Public Utilities Code Section 382.1(b)(1) states that five of the members of the LIOB must “have expertise in the low-income community.”

Commissioners’ Reports

Management Reports

Monitoring CommunicationsMarket and Prices

Jack LeutzaCommunications Division Director

California Public Utilities Commission

December 16, 2010

Expanding California Communications Market Requires Consideration of Competing and Substitute Services

Staff Will Track and Evaluate Price Changes Quarterly

• Create a price index for popular residential services– Index = 100 as of December 8, 2010– Next index date in March, 2011

• Compare basic service rate changes to closest comparable services and other communications services:– Wireless lowest priced monthly plan– Fixed VoIP lowest priced stand alone plan– Other services (prepaid, broadband, bundles, etc.)

• Evaluate significant price changes of individual providers relative to index

Monitoring Price Changes of These Communications Services and Providers Captures Most All of Market• Services

– Basic Service– Long Distance Plans

• Unlimited• Lowest price per minute

– Fixed and Nomadic VoIP– Wireless

• Unlimited texting• Prepaid• Lowest monthly plan

– Broadband• Fixed wireline• Mobile wireless card• Smartphone unlimited

– Bundles• One service with voice• Two services with voice

• Providers– ATT– Verizon– Sprint– T-Mobil – Comcast – Time Warner– Cox – Metro PCS– Cricket – Vonage– Frontier– SureWest– Skype– Magic Jack

Example Comparison of IndicesHypothetical Basic Service Provider Rate Changes

Compared to Market Index

90%

100%

110%

120%

130%

2010 2011

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Market Index Service Provider A

Further Staff Analysis

• Statewide Market Share Analysis to be published this month

• Conduct Geographic Competition Study in order to identify inconsistencies in service competition across the state– Urban vs. rural comparisons

– Representative areas by random selection

– GIS presentation of data

– Conclude by EOY 2011

Management Reports

The CPUC Thanks YouFor Attending Today’s Meeting

The Public Meeting is adjourned.

The next Public Meeting will be:

January 13, 2011, at 10:00 a.m.