Pacific Gas & Electric Files Settlement to Offer Value-Add Renewable Option

Pacific Gas & Electric has filed for California PUC approval of a settlement agreement with certain parties, including TURN, to revise PG&E's original green option tariff and allow customers to voluntarily purchase up to 100% renewable power on a "bundled" (asset-backed) basis. PG&E said that the settlement, among other things, is competitively neutral and addresses certain protests concerning PG&E's original proposal.

Regarding competitive neutrality, PG&E said that customers who participate in the Green Option program will be charged no less than the full costs of the program under renewable procurement and cost accounting mechanisms previously approved by the CPUC, with no direct or indirect subsidies from other customers.

In the event of any PG&E under-procurement for Green Option customers, any additional renewable energy costs to supply Green Option customers will be borne solely by the Green Option customers. In the event of any PG&E over-procurement for Green Option customers, PG&E will only be able to use the excess to serve non-participating customers under existing CPUC rules for "banking" of renewable energy supplies.

PG&E also said that its marketing and customer outreach for the Green Option program will adhere strictly to all existing "code of conduct" rules applicable to PG&E's electricity services to customers currently or potentially served by CCAs and ESPs. In addition, PG&E has agreed to consult with the advisory group created by the settlement on the marketing and communications materials it will use to market the Green Option to customers generally.

Only voluntarily participating customers, or PG&E shareholders, will bear the costs of the green option, and other ratepayers will be held indifferent to any costs, PG&E said.

Specifically, costs under the voluntary Green Option program will include:

• The Renewable Power Rate charged to participating customers initially will be set at $107/MWh. This rate will be adjusted for new and existing subscribers, over time, to reflect the actual costs of new incremental renewable resources procured to serve Green Option subscribers.

• The Power Charge Indifference Adjustment (PCIA) charged to participating customers will be the PCIA that would otherwise be assessed to any customer departing bundled service based on the initial year the specific customer subscribes to the Green Option (assuming the customer remains on the program continuously). If a customer leaves the program and subsequently re-enrolls, the PCIA will be based on the most recent enrollment.

• A Renewable Integration Charge will be charged to participating customers as determined in R.12-03-014 or a successor proceeding. The charge will be applied to a new customer initially subscribing after the charge has been approved by the Commission.

• A Program Administration Charge will be charged to participating customers, with actual administrative costs in excess of revenues from this charge borne by PG&E.

• Resource Adequacy Costs will be included in participating customer charges to recover the costs to acquire sufficient resource adequacy to serve Green Option subscribers. The costs will be based on the CPUC-approved PCIA methodology.

• CAISO scheduling charges will be included in participant charges, based on California Independent System Operator (CAISO) tariffs and forecasted PG&E scheduling costs for renewable resources used to serve Green Option subscribers.

• WREGIS fees will be included in participant charges, based on charges assessed by the Western Renewable Energy Generation Information System (WREGIS) for generation used to serve Green Option subscribers.

Participating customers will also receive certain rate credits under the Green Option program, such as:

• Participating customer's rates will be credited with the Class Average Retail Generation Rate, as established in approved PG&E tariffs for the class to which the subscriber belongs.

• The participating customer's rates will be credited with the Solar Value Adjustment, which is intended to reflect the following:

(1) any differences between the Time Of Day (TOD) profile of the renewable resources used to serve the subscriber and the class average TOD profile.

(2) the resource adequacy value of any resources contained within the Green Option portfolio.

• The participating customer's rates will be credited with any other CPUC-approved values applicable to the renewable resources contained in the Green Option portfolio.

The Green Option tariff will allow PG&E's residential and commercial customers to voluntarily elect to purchase renewable power to satisfy up to 100% of their electrical demand. Under the program, PG&E will execute contracts for new renewable generation from facilities to be built within the PG&E service territory sufficient to serve the electrical demand of customers participating in the program. The amount paid by participating PG&E customers will be based on the actual cost of procuring new renewable generation, thereby providing them with a fair price and a long-term hedge against rising conventional supply costs, PG&E said.

Instead of the unbundled REC product originally proposed by PG&E, PG&E will offer a bundled renewable energy product under which customers may elect to satisfy either 100% of their electricity usage under the program, or some other specified amount (i.e. 50% or block of x kWh), which will be determined after market research is performed and in consultation with settling parties or an advisory group.

PG&E said that Green Option resources will not be double-counted for purposes of Renewable Procurement Standard (RPS) or AB 32 compliance.

PG&E may require participating customers to commit to an initial subscription term of at least one year. At the end of the initial subscription term, a participating customer will remain on the program on a month-to-month basis, under the same terms, unless the participating customers affirmatively elects to return to default bundled service.

PG&E also may require participating customers canceling prior to the end of their initial subscription term to pay a reasonable early termination fee. If such a fee is established, there will be an initial 60-day "cooling off period" after a participating customer subscribes during which time the participant may cancel without an early termination fee.

PG&E initially will be authorized to serve up to 250 MW (solar equivalent) of subscriber load with the bundled product. PG&E may seek an expansion of the 250 MW cap via a Tier 3 Advice Letter. No less than 125 MW shall be reserved for the residential class. PG&E may impose a limit on the amount of load a non-residential subscriber may enroll after consulting with its advisory group and filing a Tier 2 Advice Letter. This would be in response to any potential concentration of demand among a relative small number of customers.

The program will be open to new subscriptions for 5 years from the date of launch (assuming that the 250 MW cap described in subsection 2 has not been reached). Customers who have subscribed to the program may remain on the program past this date. PG&E may propose to extend the program through a Tier 3 Advice Letter.