Amended Energy Resource Recovery Account (ERRA) Review Of Operations, 2017 Chapters VIII-XVI

Transcription

1 Application No.: A Exhibit No.: SCE-02A Witnesses: G. Ahn T. Frontino J. Barrett G. Henry M. Bennett C. Jacobs K. Blebu K. Koyano T. Cameron M. Litos E. Castano J. Montanye D. Coher A. Quon E. De Anda G. Sakota S. DiBernardo S. Willis R. Drummond (U 338-E) Amended Energy Resource Recovery Account (ERRA) Review Of Operations, 2017 Chapters VIII-XVI PUBLIC VERSION Before the Public Utilities Commission of the State of California Rosemead, California January 25, 2019

2 Amended Energy Resource Recovery Account (ERRA) Review Of Operations, 2017Chapters VIII-XVI Amendments to SCE-02 Testimony Page Line(s) Amendment (Redlined in Replacement Page) Reason for Amending 34 5 Amended to Amended on January 25, New amendments to comply with Resolution E issued January 10, See also Supplemental Testimony SCE , 15 Amended to Previously served on October 3, 2018, 121 3, 5 Amended to included for ease of the parties and Amended 36.5 to 36.2 completeness.* Amended to *The changes served October 3, 2018 to SCE-02 were served the following explanation: On September 14, 2018, SCE submitted four data request responses indicating SCE s intent to revise its testimony related to the Demand Response Program Balancing Account. (See responses to Data Request ORA-SCE-22, Questions 1-4.) In testimony supporting its 2017 ERRA Review of Operations Application (A.) , Chapter XIII Demand Response Program Balancing Account, SCE proposed to carry over a total of $36.5 million of Demand Response Program funds. Of this amount, $571 thousand supports implementation of the Prohibited Resources Policy. The prohibited resources carryover consists of implementation costs for Customer Outreach and System Enhancements. D states that 2017 funding can be used for the Customer Outreach and System Enhancement costs, and SCE began work on the Customer Outreach and System Enhancements categories in (See D , Ordering Paragraph 4c at p. 96.) Following discussion with representatives from the Public Advocate s Office (PAO) of the California Public Utilities Commission (Commission) related to Advice Letter 3828-E, SCE determined that it is appropriate to reduce the amount carried over by $0.257 million to fund implementation of the prohibited resources policy from its demand response funding authorized in D SCE intends to reduce the Prohibited Resources Policy carryover funds from $571 thousand to $314 thousand. SCE plans to utilize the $314 thousand carryover funds for the customer outreach and system enhancements approved in Resolution E This will also reduce the 2017 total Demand Response Program carryover funds from $36.5 million to $36.2 million. Due to this proposed change SCE's 2017 unspent and uncommitted funds returned to customers will increase from $ million to $ million.

3 authorized a two-year budget for to be recovered through the same ratemaking methodology as that approved in the current agreements. SCE proposed recovery of capacity costs through the distribution subaccount of the BRRBA. In D , the Commission authorized bridge funding for 2017 Demand Response Programs and Activities, including AMP contract funding. As shown on Line 21 of Table XI-14, during the 2017 Record Period SCE recorded a debit amount of $ million for Demand Response AMP contract capacity payments in the distribution sub-account of the BRRBA. D and D , respectively, established and then modified funding levels for the 21st Century Energy Systems (CES-21) Program. The CES-21 Program is a public-private collaborative effort between the Joint Utilities and Lawrence Livermore National Laboratory (LLNL). Resolution E-4677 approved the CES-21 5-year budget of $35 million, of which $ million is SCE s share (including FF&U). Pursuant to Preliminary Statement YY, Section 4.18, SCE makes a debit entry to record SCE s share of 21 st Century Energy Systems cyber security research project (CES-21) expenses. As shown on Line 22 of Table XI-14, SCE recorded $4.429 million for this project in 2016 in the distribution sub-account of the BRRBA. On December 29, 2017, SCE filed a letter of notification with the Energy Division Executive Director establishing a Z-factor for costs associated with incremental wildfirerelated liability insurance. SCE s notification letter indicated that it was establishing a Z-Factor for approximately $108 million incurred to obtain a 12-month, $300 million wildfire insurance policy for SCE obtained this insurance policy from the only insurer in the global market willing to provide this much capacity of sufficiently broad insurance coverage this low in the insurance tower for a California private electric utility. Prudence dictated SCE acquiring replacement wildfire liability coverage, however, following the unprecedented, catastrophic 2017 wildfire season and, in particular, the Thomas Fire. The Thomas Fire started on December 4, 2017, and became the largest wildfire by acreage in California s history, causing widespread damage in Ventura and Santa Barbara Counties. It was also the first catastrophic fire to take place as late in the year as December, signaling a new normal of year-round fire risk due to ongoing drought and climate change. Indeed, the Thomas Fire came on the heels of 22 fires in northern California in October Without speculating about the 34

4 1 XIII. 2 DEMAND RESPONSE PROGRAM BALANCING ACCOUNT 3 A. Introduction 4 This section supports SCE s recovery of expenses related to its demand response programs 5 recorded in the Demand Response Program Balancing Account (DRPBA). The objectives of the 6 Commission-supported 131 demand response (DR) initiatives are to deploy utility-supported DR 7 programs and supporting activities designed to reduce electricity consumption during periods of supply 8 constraint, high wholesale electricity prices, or local distribution and transmission emergencies. The 9 Commission and the CEC have stated that their common objective is to adopt cost-effective demand 10 response programs that improve system reliability and mitigate utility system costs. 132 In this chapter, 11 SCE presents the DR-related costs incurred during the 2017 funding cycle that recorded to the DRPBA. 12 The total over-collection recorded in the DRPBA as of December 31, 2017 is $133.3 million. Of this 13 amount, the unspent and uncommitted funds consist of $ million in 2017 and $79.2 million in Effective upon a decision in this proceeding, SCE will return the 2017 unspent and 15 uncommitted funds to customers by crediting $ million to the Base Revenue Requirement 16 Balancing Account (BRRBA). 17 B. Background and Ratemaking Establishment of DRPBA 19 On March 15, 2006, the Commission issued Decision (D.) , which authorized: 20 (1) DR programs and funding for the years 2006 through 2008, and (2) the creation of a one-way 21 balancing account, the DRPBA, to track the demand response program costs and authorized revenues. 131 The Energy Action Plan II was signed by the California Public Utilities Commission (Commission) and the California Energy Commission (CEC) in October 2005, finding that energy efficiency and demand response should be the first resources to be used by the utilities in resource planning. 132 D , pp The 2016 unspent and uncommitted amount of $79.2 million is reviewed in the 2016 ERRA ReviewApplication A which is pending a Commission final decision. 113

5 Table XIII-49 Summary of the Demand Response Expenditures by Budget Category Carryover Funding From and Program Cycles January 1, 2017 through December 31, 2017 ($000) Budget Category 2017 Reliability Programs (24) Price-Responsive Programs 25 Emerging and Enabling Technologies 2,882 Pilots 0 Evaluation, Measurement and Verification 441 Marketing, Education and Outreach (3) DR System Support Activities 929 Integrated Programs and Activities 503 Special Projects 2,409 Dynamic Pricing and Program Support Costs 1 Total 7,164 1 F. Disposition of the Year-End Balance in the DRPBA 2 The total over-collection recorded in the DRPBA as of December 31, 2017 is $133.3 million. Of 3 this amount, the unspent and uncommitted funds consist of $ million in 2017 and $79.2 million in Effective upon a decision in this proceeding, SCE will return 2017 unspent and uncommitted 5 funds of $ million to customers by crediting the Base Revenue Requirement Balancing Account 6 (BRRBA). 137 The December 31 st balance recorded in BRRBA will be consolidated into rate levels on 7 January 1 st of the subsequent year as part of SCE s annual year-end consolidated revenue requirement 8 and rate change advice filing. Remaining funds of $ million will be used to continue funding the 136 The 2016 unspent and uncommitted amount is reviewed in the 2016 ERRA Review A which is pending a Commission final decision. 137 SCE s currently authorized Preliminary Statement Part Y, DRPBA, states that SCE is to propose disposition of any over-collection remaining in this account at the end of 2017 in SCE s April 2018 ERRA Review application. 121

6 1 commitments made under the previous DR program cycles. These commitments include, but are not 2 limited to, AutoDR Technology Incentive and Permanent Load Shifting Incentive reservations made to 3 customers in prior cycles, carryover funding for Emerging Markets and Technologies projects, 4 Prohibited Resources policy implementation activities 138 and miscellaneous received or pending 5 invoices to be paid in 2018 for obligations incurred in 2017 for DR program activities. 6 G. SCE s Demand Response Programs Costs Are Reasonable 7 SCE respectfully requests the Commission to find that its above-listed costs recorded in the 8 DRPBA for the 2017 DR funding cycle are reasonable and consistent with the categories adopted in 9 D SCE also requests authority to return to customers $ million in unspent and 10 uncommitted DR funds effective upon a Commission decision in this proceeding by crediting BRRBA. 138 In AL 3542-E, SCE stated that the estimated cost to implement Prohibited Resources policy activities could be absorbed by the unspent DR authorized funding in the affected budget categories for AL 3542-E/ AL 3653-E are pending Commission Resolution. 122