SCE Seeks to Impose New World Nonbypassable Charge on Continuous Direct Access Customers

Southern California Edison Company (SCE) has sought to modify California PUC Decision 08-09-012 regarding nonbypassable charges for new world generation, in order to apply such charges to "continuous" direct access (DA) customers who leave direct access, return to the utility, and subsequently return to direct access (A.11-06-026).

New World Generation Costs are those costs associated generation resources procured after the investor-owned utilities (IOUs) were granted procurement authority after 2003, pursuant to D.04-12-048.

In the appendix to D.08-09-012, continuous direct access customers are listed as not having to pay nonbypassable charges for new world generation.

Continuous direct access customers are those, pursuant to D.02-11-022, that took direct access prior to January 17, 2001 and remained on direct access throughout 2001.

Despite the appendix exempting continuous direct access customers from new world generation nonbypassable charges, SCE said that the text of D.08-09-012 provides "absolutely no discussion" of any exemption for continuous direct access customers from the new world charges.

"Since this exemption was not discussed in D.08-09-012 and would conflict with the orders in the decision, SCE assumes that the table notation is in error and not intended by the Commission, and requests that the oversight be corrected," SCE said.

SCE said that while continuous direct access customers are properly exempted from the Department of Water Resources nonbypassable charges, since their load was not included in the DWR procurements, continuous direct access customers who return to bundled utility service do have their load included in the utilities' new procurement plans. If such customers again depart for direct access, they should be charged a nonbypassable charge related to their vintage of these procurements, similar to non-continuous direct access customers, SCE said.

SCE quoted D.08-09-012 as holding that bundled service customers who are eligible for direct access, making no distinction for continuous DA customers, "should be subject to the D.04-12-048 NBC [nonbypassable charge] for procurement commitments made on their behalf up until the date they provide notice to the IOUs of their intent to return to DA."

"More importantly ... an exemption [for continuous DA customers] would unfairly shift costs to bundled service customers," SCE said.

"For example, assume both a continuous DA and a non-continuous DA customer had returned to bundled service in 2006. Both customers would be required to fulfill a 3-year commitment on bundled service pursuant to Rule 22.1, and for those three years the IOU would include both customers in planning generation procurement. This planning includes long-term contracts for resources, including renewable resources. If both customers provided the required 6-month notice to return to DA following their 3-year stay, both customers would be identified as 2009 vintage for purposes of determining the applicable CRS [cost responsibility surcharge] pursuant to D.08-09-012. However, based on the exemption provided in Appendix D, the continuous DA customer would escape responsibility for any above-market costs associated with generation resources procured on her/his behalf over the 3-year period she/he received bundled service, while the non-continuous DA customer would be assigned a share of those costs. SCE submits that this result was not intended by the Commission in adopting D.08-09-012," SCE said.

Aside from striking the exemption listed in the chart in the appendix, SCE would add language to the ordering paragraphs in D.08-09-012 stating, "Continuous DA customers returning to bundled service and then returning to DA service are subject to the vintaging process as adopted herein, and are responsible for new world generation charges applicable to their assigned vintage."