STATE OF CALIFORNIA EDMUND G. BROWN JR.

, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
FILED
7-24-17
01:03 PM

July 24, 2017 Agenda ID #15883

Ratesetting

TO PARTIES OF RECORD IN APPLICATION 17-04-015:

This is the proposed decision of Administrative Law Judge Park. Until and
unless the Commission hears the item and votes to approve it, the proposed
decision has no legal effect. This item may be heard, at the earliest, at the
Commissions August 24, 2017 Business Meeting. To confirm when the item
will be heard, please see the Business Meeting agenda, which is posted on the
Commissions website 10 days before each Business Meeting.

Upon the request of any Commissioner, a Ratesetting Deliberative Meeting

(RDM) may be held. If that occurs, the Commission will prepare and publish
an agenda for the RDM 10 days beforehand. When the RDM is held, there is a
related ex parte communications prohibition period. (See Rule 8.3(c)(4).)

Parties of record may file comments on the proposed decision as provided in

Rule 14.3 of the Commissions Rules of Practice and Procedure.

/s/ DARWIN E. FARRAR

Darwin E. Farrar
Acting Chief Administrative Law Judge

EDF:ek4
Attachment
ALJ/SJP/ek4 PROPOSED DECISION Agenda ID #15883
Ratesetting

Decision PROPOSED DECISION OF ALJ PARK (Mailed 7/24/2017)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison

Company (U 338-E) for Approval of its Application 17-04-015
Proposal to Implement Residential Default (Filed April 14, 2017)
Time-Of-Use Rates.

DECISION DISMISSING APPLICATION

Summary
The application of Southern California Edison Company to implement
residential default Time-of-Use rates beginning in 2018 is dismissed. Consistent
with Decision 15-07-001, Southern California Edison Company shall file a
residential rate design window application proposing default Time-of-Use rates
by January 1, 2018. This proceeding is closed.
1. Background
In Decision (D.) 15-07-001 (Decision), the Commission adopted a number
of significant residential rate reform measures. The Decision also set a course for
residential rate reform over the next few years and for a transition of most
Californians to Time-of-Use (TOU) rates in 2019. The Commission ordered
Southern California Edison Company (SCE), Pacific Gas and Electric Company
(PG&E), and San Diego Gas & Electric Company (SDG&E) to each file a
residential rate design window (RDW) application no later than January 1, 2018

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that proposes a default TOU rate structure to begin in 2019, assuming that the
requirements of Public Utilities Code Section 745 have been met.1
On April 14, 2017, SCE filed the instant application seeking approval of a
proposal to implement default TOU rates for eligible residential customers
beginning in the fourth quarter of 2018 (Q4 2018). Under SCEs plan, it would
default approximately 1.6 million residential customers to TOU rates during the
period from Q4 2018 through Q1 2019 (Wave 1). Only non-California Alternate
Rates for Energy (CARE) and non-Family Electric Rate Assistance (FERA)
customers residing in SCEs cool and moderate climate zones would be eligible
for Wave 1. Subsequently, starting in Q4 2020, SCE would apply default TOU
rates to the remaining residential customers that the Commission deems eligible
for default TOU (Wave 2).
SCEs timelines for Waves 1 and 2 are based on its timeline for replacing its
current Information Technology (IT) billing system (the Customer Service
System) with a new customer technology platform in 2019. This replacement
project is known as the Customer Service Re-Platform (CSRP) project. According
to SCE, CSRPs testing and stabilization process requires a major system freeze
that will prevent SCE from undertaking any significant new transactions, such as
defaulting residential customers onto TOU rates, from Q2 2019 through Q3 2020.
SCE requests an expedited procedural schedule for its application with a
final Commission decision in November 2017. SCE states that its request is
time-sensitive because its Customer Service and IT operational staff must have
sufficient time to default the customers eligible for Wave 1.

1 D.15-07-001 at 5, 172-173 and Ordering Paragraphs (OPs) 9-11. All subsequent section
references are to the Public Utilities Code.

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The following parties filed protests to the application: the City of

Lancaster, the Center for Accessible Technology, the Environmental Defense
Fund, the Natural Resources Defense Council, the Office of Ratepayer
Advocates, the Solar Energy Industries Association, and The Utility Reform
Network.
SCE filed a reply to the protests on May 26, 2017.
2. Discussion
In D.15-07-001, the Commission recognized that the details of
implementing default TOU in California need further study and refinement and
that several steps were necessary before default TOU rates could be employed.
Therefore, the Commission determined that default TOU rates should begin in
2019 assuming that the statutory findings required by Section 745 could be made
by that time.2 To evaluate SCEs request to deviate from the timeline set forth in
D.15-07-001 we must consider the steps the Commission had contemplated
would be completed prior to the rollout of default TOU. These steps include the
design, implementation, and evaluation of opt-in and default TOU pilots; the
development of marketing, education and outreach (ME&O) strategies; and the
Commission making the requisite statutory findings pursuant to Section 745.

2.1 TOU Pilots

D.15-07-001 directed the investor-owned utilities (IOUs) to develop and
design opt-in TOU pilots for immediate implementation and default TOU pilots
to be implemented in 2018 as permitted by statute. The primary objectives of the
opt-in TOU pilots are to study various TOU rates and customer responses and

2 D.15-07-001 at 172-173.

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impacts. The primary objectives of the default TOU pilots are to study aspects of
TOU that are directly impacted by the self-selection bias, to fine-tune customer
education, and to test system operability prior to full rollout of default TOU.3
The opt-in pilots began in June 2016. The first interim report, which covers
the first summer of the pilots, was issued in November 2016. A final version of
this first Interim Evaluation was issued on April 11, 2017. A second interim
report covering the first 12 months of the pilots is scheduled to be issued in
November 2017. A final report covering the total 18 months of the pilots is
scheduled to be issued at the end of Q1 2018.
The default pilots are scheduled to begin in March 2018. The first set of
results covering March 2018 through the first summer is expected to be issued in
Fall 2018. The second set of results covering March 2018 through March 2019 is
expected to be issued in Summer 2019.
Under the schedule for default TOU contemplated in D.15-07-001, at least
two full summers worth of opt-in pilot data and the first set of results from the
default pilots would be available prior to the rollout of default TOU. In contrast,
under SCEs requested timeline for Wave 1, the Commission would not be able
to review the final results from the opt-in pilots prior to issuing a decision on
SCEs proposal or incorporate any lessons from the default pilots prior to
Wave 1.

2.2 Statewide Rate Reform ME&O

The Commission has recognized that customer awareness, understanding,
and engagement with electricity rate choices is essential in order for TOU rates to

3 D.15-07-001 at 170.

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be effective. In D.15-07-001, the Commission contemplated an ME&O

framework for rate reform that would include the development of both broad
and specific outreach strategies.
In Rulemaking (R.) 12-06-013, the Commission is currently considering
strategies for statewide rate reform ME&O.4 The purpose behind statewide rate
reform ME&O is to provide high-level, emotion-based messaging that is tied to
the states energy policy goals rather than a specific IOU. This statewide
message will prepare customers for the fact-based, rate-specific communications
that will be undertaken separately by each utility. The next steps for the
statewide ME&O campaign include choosing a consultant, determining an
appropriate budget, developing a plan that will integrate and coordinate
messaging strategies to achieve efficiencies and increased customer engagement,
and setting appropriate tracking metrics for statewide outreach. These ME&O
strategies are being developed based on the timeline for default TOU set forth in
D.15-07-001. SCEs proposed Wave 1 would occur prior to default TOU in any
other service territory and prior to the foundational statewide ME&O campaign.
Any advance ME&O would have to be implemented by SCE individually. This
would undermine the effectiveness of the statewide campaign.

2.3 Findings Required Pursuant to Section 745

Under Section 745(c)(2): The commission shall ensure that any time-of use
schedule does not cause unreasonable hardship for senior citizens or
economically vulnerable customers in hot zones. Under Section 745(d), the
Commission must consider evidence regarding hardship for customers in hot,

4 Administrative Law Judges Ruling Seeking Comment on Statewide Marketing, Education,

and Outreach on Residential Rate Reform, issued in R.12-06-013 on April 14, 2017.

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inland areas, and residential customers living in areas with hot summer weather,
prior to authorizing default TOU.5
The statutory findings required pursuant to Section 745 have not yet been
made. The Commission adopted D.16-09-016 on September 15, 2016, which
resolved Section 745 interpretation and implementation issues to the extent
necessary for the opt-in pilots to collect appropriate data. Data from the first
months of the opt-in pilots are now available and are under consideration in
R.12-06-013. Under the current procedural schedule in R.12-06-013, a final
decision on Section 745 issues is not expected until September 28, 2017.
It is not prudent to proceed with SCEs application to default residential
customers to TOU prior to a final decision on Section 745 issues. SCE asserts that
it requires a Commission decision by November 2017 in order to have sufficient
time to implement Wave 1, which would require the issuance of a proposed
decision by October 2017.6 Depending on the determinations in the Section 745
decision, further proceedings may be needed to ensure consistency with the
Section 745 decision and compliance with Section 745, in which case a final
decision by November 2017 would not be possible. In this case, SCE may not

5 Section 745(d) states:

(d) The commission shall not require or authorize an electrical
corporation to employ default time-of-use rates for residential
customers unless it has first explicitly considered evidence
addressing the extent to which hardship will be caused on either
of the following:
(1) Customers located in hot, inland areas, assuming no changes
in overall usage by those customers during peak periods.
(2) Residential customers living in areas with hot summer
weather, as a result of seasonal bill volatility, assuming no change
in summertime usage or in usage during peak periods.
6 Pub. Util. Code, 311(d).

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have sufficient time to implement Wave 1 and the Commission and stakeholders
would have unnecessarily spent time and resources on SCEs application.
According to SCE, its Wave 1 proposal is structured to avoid any potential
conflicts with the Commissions final interpretation and application of Section
745 by only including non-CARE and non-FERA customers residing in SCEs
cool and moderate climate zones. However, SCEs proposal for Wave 1 may not
be sufficient to ensure compliance with Section 745. For example, TURN has
recommended that SCEs climate zone 10 be re-classified from a moderate to a
hot climate zone.7 The Commission has not yet made a determination on this
issue.
3. Conclusion
Accelerating the timeline for residential default TOU would not allow
sufficient time for completion of the implementation steps required by the
Commission prior to the rollout of default TOU. Moreover, in order to have
sufficient time to implement Wave 1, SCE requests an expedited procedural
schedule for its application with a final Commission decision by November 2017.
Such a compressed timeline would not give sufficient opportunity for the
Commission or stakeholders to give due consideration to the various issues
raised in the application and protests.
Based on the foregoing, we find that the timeline for default TOU set forth
in D.15-07-001 should not be accelerated, and, therefore, dismiss SCEs
application. Consistent with D.15-07-001, SCE shall file a RDW application no
later than January 1, 2018 proposing default TOU rates for residential customers.
SCE states that if its proposed plan for Wave 1 and Wave 2 is not granted, it will

7 TURN Protest at 2.

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submit an alternative proposal to defer implementation of default TOU for all

residential customers until after CSRP has stabilized in Q4 2020.8 In dismissing
this application, we do not address or prejudge the issue of whether SCE should
be authorized to delay implementing residential default TOU rates until
Q4 2020.9
4. Comments on Proposed Decision
The proposed decision of Administrative Law Judge Park in this matter
was mailed to the parties in accordance with Section 311 of the Public Utilities
Code and comments were allowed under Rule 14.3 of the Commissions Rules of
Practice and Procedure. Comments were filed on _________ and reply comments
were filed on _________.
5. Assignment of Proceeding
Michael Picker is the assigned Commissioner and Sophia J. Park is the
assigned Administrative Law Judge in this proceeding.
Findings of Fact
1. D.15-07-001 directed SCE to file a RDW application no later than
January 1, 2018 that proposes a default TOU rate structure to begin in 2019,
assuming that the requirements of Section 745 have been met.
2. SCEs instant application seeks approval to default approximately
1.6 million residential customers to TOU rates during the period from Q4 2018
through Q1 2019 (Wave 1) and to default the remaining residential customers
that the Commission deems eligible for default TOU starting in Q4 2020
(Wave 2).

8 Application at 5-6.
9The Commissions consideration of SCEs CSRP project is currently pending in SCEs 2018
General Rate Case, Application 16-09-001.

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3. D.15-07-001 directed the IOUs to develop and design opt-in TOU pilots for
immediate implementation and default TOU pilots to be implemented in 2018 as
permitted by statute.
4. Under SCEs requested timeline for Wave 1, the Commission would not be
able to review the final results from the opt-in pilots prior to issuing a decision
on SCEs proposal or incorporate any lessons from the default pilots prior to
Wave 1.
5. In D.15-07-001, the Commission recognized that customer awareness,
understanding, and engagement with electricity rate choices is essential in order
for TOU rates to be effective.
6. The Commission is currently considering the next steps for statewide rate
reform ME&O.
7. A statewide rate reform ME&O campaign will not be developed and
implemented in time for SCEs requested Wave 1 and excluding SCE from the
campaign would undermine any statewide rate reform ME&O effort.
8. The Commission has not yet made the statutory findings required
pursuant to Section 745.
9. It is not prudent to proceed with SCEs application to default residential
customers to TOU prior to a final decision on Section 745 issues.
10. Accelerating the timeline for residential default TOU set forth in
D.15-07-001 would not allow for completion of all of the steps the Commission
required to be completed prior to the rollout of default TOU.

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Conclusions of Law
1. Until a decision on Section 745 findings has been issued in R.12-06-013, it is
not certain that SCEs proposal to apply default TOU only to non-CARE and
non-FERA customers residing in SCEs cool and moderate climate zones would
be sufficient to satisfy the requirements of Section 745.
2. SCEs proposed timeline for implementing default residential TOU rates
does not satisfy the prerequisites for default residential TOU as set forth in
D.15-07-001 and therefore should not be approved.
3. SCEs application should be dismissed.

O R D E R

IT IS ORDERED that:
1. The application of Southern California Edison Company (SCE) for
approval of its proposal to implement residential default Time-of-Use rates
beginning in 2018 is dismissed. Consistent with Decision 15-07-001, SCE shall
file a residential rate design window application proposing default Time-of-Use
rates by January 1, 2018.
2. All motions not previously addressed are denied.
3. Application 17-04-015 is closed.
This order is effective today.
Dated _______________, at San Francisco, California.

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