Today's hearing at the CPUC

(I feel like a reporter in a warzone)

The morning was taken up with Barbara Barkovich testifying for CLECA and
CMTA. She is a sharp witness and no one got anything off her she didn't want
to give. She gave a long prepared statement that addressed equity
considerations, conservation, and added that reliability is a key factor to
consider, and that any allocation and rate design should encourage efficieny
use of energy, should not disadvantage nay particular group
disproportionately, and should discourage use in the periods most likely to
see outages. The Top 100 hours as an allocator is equitable as it is an
allocator that both accounts for capacity and energy use. Barkovich had no
problems with SCE's billing determinants, but did have issues with PG&E's, as
she couldn't figure out the appropraite revenue requirement from their
exhibits and workpapers. She forgot to exclude CARE costs in her
calculations (everyone else did too). She noted that the classes all have
customers with wide ranges of usage, and rates should be designed to
encourage conservation. Tiering might be a way to do that, but the problem
is that the utilities have said that they can't do that right now. CLECA and
CMTA do have different approaches; CMTA wants significant rate increases in
the on-peak rates, a lesser increase for mid peak and an even lesser increase
for off-peak. They prefer a broader spreading of costs than CLECA. SInce no
one knows what the DWR contracts look like, we cannot predict what, if any,
shortfalls will occur in revenue collection. The CLECA proposal to collect
costs on peak will create the biggest bang for the buck in terms of reducing
peak usage. If usage shifts enough that the peak needs to be redefined, this
can be done in a rate case. Another problem with tiering, is that while the
utilities do have records of each customer's historic usage, that information
may not be readily available to the billing systems and may not be easy to
get at. She noted that a study is coming out tomorrow showing the impact of
rolling blackouts on Northern California businesses, and will send that
report in to the hearing examiner.

She favors an even handed approach to increasing prices, and does not want to
reallocate costs. Keep the 130% residential shortfall in the residential
class. There will be some reallocation necessary to keep ag rates from being
increased all the way. The goal is to avoid reallocation as much as
possible. Practical considerations argue against setting an arbitrary kwh
breakpoint, as some classes have a wide variety of users. Tiering should be
customer-specific and we need to find a way to do this. The variablity of
usage in the residential class is much less than other classes, and so
tiering is less of an issue. The Top 100 method allocates costs based on the
class's relative share of of peak usage during the 100 hours of highest
demand. This means both demand and usage. She agreed that DA customers
should not pay the surcharge as the power is not being purchased for them.
Shell's attorney questioned Barkovich at length about whether we shouldn't
redevelop rates here from the bottom up and only charge DA customers for T&D
and other costs properly allocated to them (nuke decommissioning, public
programs). Ms. B noted that that would mean they would not pay CTC and would
affect the PX credit.

The Street and Traffic light witness testified, and if you want to know about
the most efficient lights, call me

Kinder Morgan (our old friend Rich Kinder) which has products pipelines in
CA, testified that they want an allocation that places costs on peak power
usage, to a cap of 35 cents, and then also has a set-off to the demand charge
to reduce any overrecovery. The notion is that a customer who conserves is
still paying a demand charge for peak power not used, and this is a
disincentive to conservation.

Aglet, which is a small consumer group, testified that there is no revenue
requirement yet, since the DWR deals are secret, and so they recommend no
reallocation of shortfalls, since shortfalls can't exist. They support a
limited dollar impact until the DWR rates are known. This may drive the
revenue requirements closer to those of the Governor's. The residential 130%
shortfall and the CARE customers should be allocated to all other customers.
He also supports an equal cents per KWH charge. Increasing volatility of
prices means you cant base future rates on past costs. The world has changes
drastically since May 2000 and old data is not indicative of future. The top
100 hours is a capacity allocator, not to be used for the type of costs at
issue here.

Harry goes on either 1st or 2nd tomorrow. Also up are CIU, CEC, AReM and
possibly ORA.