Stanford Seeks Exemption from Direct Access Cost Responsibility Surcharge for Historically Self-Served Load

Stanford University has requested that the California PUC modify Decision 03-04-030 to clarify that loads that were served by customer generation prior to February 1, 2001 and that subsequently switch to direct access (DA) service are only obligated to pay DA cost responsibility surcharges (CRS) based on the amount of total annual power consumption previously provided by Pacific Gas & Electric pursuant to a standby contract (A.11-100-21).

"This clarification is necessary because if a previously exempt customer generation load were to be charged CRS on every kilowatt hour of consumption after it switches to DA, the resulting CRS payment would be in excess of procurement costs undertaken on behalf of the customer and violate the 'indifference' principle mandated by statute and long-established Commission policy," Stanford said.

A gas-fired cogeneration plant located on the Stanford campus has served the full electric and thermal energy loads of the campus. Until recently, Stanford took backup power under Schedule S from Pacific Gas and Electric, for times when the cogeneration plant was down for maintenance, etc. The Schedule S rate included CRS charges that apply to customers only based on standby usage from the utility (kWh procured by the IOU and delivered to the customer) -- not on the basis of the customer's entire on-site load.

However, in March 2011 Stanford switched its main campus standby account to DA service. Similar to its CRS responsibility under PG&E standby service, Stanford argued that its DA energy purchases should be exempt from the DA-CRS except for a fixed amount per month reflecting the historical energy purchases provided to Stanford by PG&E (e.g. its historic standby usage for which PG&E had to procure supplies and included in its procurement planning).

PG&E has instead begun levying CRS charges on all DA energy purchased for the Stanford campus load, without regard for whether such charges reflect the amount of energy historically purchased from PG&E under Schedule S.

Stanford said that it should only pay a fixed monthly DA-CRS fee established by reference to the average historical energy purchases by Stanford from PG&E. This is because PG&E did not assume Department of Water Resources and other procurement obligations on behalf of the entire Stanford campus load historically served by the on-site generation, and PG&E's ratepayers would be unjustly enriched if PG&E were now allowed to impose CRS charges on Stanford’s DA energy purchases in excess of its historical purchases from PG&E, Stanford argued.

Stanford also compared its requested relief to special "split wheeling" rules adopted by the PUC to ensure that customers whose loads are served by both WAPA and by the IOUs pay CRS only on "actual usage" of electricity supplied by the IOU.

Specifically, Stanford is seeking a PUC determination that:

"In the event that an exempt 'Existing' or 'Grandfathered' customer account subsequently switches all or part of that load to direct access service the customer shall pay DWR bond charges and ongoing power charges and any other applicable CRS charges in an amount that is determined by reference to the average annual quantity of power actually delivered to the customer account pursuant to an IOU tariff (for example, under Standby service) on average during the 36 months preceding that month in which the customer account switched to direct access service."