PG&E Economic Development Rates

Background

In March 2012, PG&E filed an application requesting CPUC approval to charge its customers an Economic Development Rate (EDR) for 2012-2017, which would replace its current EDR program that is set to expire at the end of 2012. The EDR is a discounted rate for commercial and industrial customers with at least 200 kW of load, designed to attract or retain “at risk” businesses (that is, businesses that would not otherwise locate in California or existing California businesses at risk of moving out of state or going out of business).  PG&E proposed to offer: 

  • A rate discount of 12% for 5 years to qualifying businesses.
  • An enhanced discount of 35% for 5 years to businesses located in counties with unemployment rates that are 125% of the state average.

Evidentiary hearings were held at the CPUC on November 19, 27, and 28, 2012. 

On October 3, 2013, the CPUC issued its Final Decision approving PG&E’s proposal with modifications, including:

  • Reduces Enhanced EDR offers a 30% discount for 5 years, available in cities or counties in PG&E’s service area with 125% of the statewide unemployment rate.
  • Sets an expiration date for PG&E’s authority to offer EDR discounts effective as of PG&E’s 2017 GRC Phase II, addressing rate design.  
  • Requires PG&E to report on the Contribution to Margin provided by EDR customers.
  • Requires EDR applications to be approved by the Governor’s Office of Business and Economic Development (“GoBIZ”).
  • Requires all retention EDR program participants to sign an affidavit, under penalty of perjury, stating that but for the EDR discount they would close or relocate their facilities.
  • Imposes a 200 MW combined participation cap for both the Standard and Enhanced EDR programs.

On November 4, 2013, PG&E submitted its Advice Letter 4308-E to the CPUC, seeking to implement its Economic Development Rates. 
  

DRA's Policy Position

ORA supported the objective to promote economic growth in California through an Economic Development Rate. While ORA appreciates that the CPUC adopted several of ORA’s recommendations to protect ratepayers, ORA finds that the CPUC’s October 2013 Decision creates too much risk for nonparticipating customers. The Decision acknowledges the price floors previously adopted in the CPUC’s 2007 Decision, yet it contains no mechanism to enforce those price floors. Therefore, it leaves open the possibility of negative contribution to margin (“CTM”), in which case ratepayers would be harmed.

ORA had previously recommended that the CPUC set an average discount rate over the five years of 22% in the enhanced EDR program, which would achieve the program’s objectives, follow established CPUC rules, and protect customers:

  • A Standard Option Economic Development Rate (EDR) program with a 12% discount over a 5-year contract term should be available everywhere in PG&E’s service territory, subject to pricing floors which may limit the available discount in a few cases. 
  • An Enhanced Option EDR program offering a declining discount, subject to pricing floors,  starting at 35% should be available in counties with unemployment rates of more than 125% of the statewide average, declining to 30% in year 2, and then to 20%, 15%, and 10% in years 3, 4, and 5, respectively.   
  • The CPUC should impose a cap of 200 MW on EDR program participation. 

See ORA’s August 29, 2013 Opening Comments on the Proposed Decision.

See ORA’s September 6, 2013 Reply Comments.

 

See DRA's January 4, 2013 Opening Brief
See DRA's January 18, 2013 Reply Brief

See DRA’s August 24, 2012 Testimony

See DRA's November 2, 2012 Rebuttal Testimony.

 

For more detail, see DRA’s EDR Policy Position page.


Proceeding Status: 

See the proceeding docket card. 

 

Other Resources

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