BEFORE THE PUBLIC UTILITIES COMMISSION                             OF THE STATE OF CALIFORNIAApplication of Pacific Gas an...
After nearly a year of active intervention in PG&E’s GRC A.1003014, Phase II,KernTax has come to two undeniable conclusion...
Current regulatory complexities have become the hobgoblin of fair ratemaking.       Vague legislative wording addresses an...
“PD acknowledges the role of rate design in promoting residential PV and, therefore,   furthering the goals of the Califor...
fairness to upper-tier valley residents who in the summer heat not only bear an unfavorable ratestructure but also carry t...
$100,000 to $149,999                              26,951.00       11.30%          93.80%$150,000 to $199,999              ...
CERTIFICATE OF SERVICE, A.1003014I certify that I have, by electronic mail, served a true copy of “REPLY COMMENTS OF THEKE...
A1003014   judypau@dwt.com                        JUDY            PAUA1003014   tculley@keyesandfox.com                THA...
A1003014   dbp@cpuc.ca.gov                David       PeckA1003014   bsl@cpuc.ca.gov                Dexter E.   KhouryA100...
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A 1003014 KermTax Reply to Comments filing 110502 final(4)

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A 1003014 KermTax Reply to Comments filing 110502 final(4)

  1. 1. BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIAApplication of Pacific Gas and ElectricCompany to Revise Its Electric Marginal Costs,Revenue Allocation, and Rate Design IncludingReal Time Pricing, to Revise Its CustomerEnergy Statements, and to Seek Recovery of Application No. 10-03-014Incremental Expenditures. (U 39 M) (Filed March 22, 2010) REPLY COMMENTS OF THE KERN COUNTY TAXPAYERS ASSOCIATION TO THE COMMENTS TO THE DRAFT OPINONS OF PRESIDENT PEEVEY AND ALJ PULSIFER IN GRC A.10-03-014 Michael Turnipseed, Executive Director Kern County Taxpayers Association 331 Truxtun Avenue Bakersfield, CA 93301-5313 TEL: 661-322-2973 FAX: 661-321-9550 michael@kerntaxpayers.org May 2, 2011A.10-03-014Michael Peevey, CommissionerThomas R. Pulsifer, Administrative Law JudgeA.1003014 Kerntax Reply Comments 110502 1
  2. 2. After nearly a year of active intervention in PG&E’s GRC A.1003014, Phase II,KernTax has come to two undeniable conclusions during intervention in GRCA.1003014:1. PG&E’s residential service territory is unique in the United States in the fact that it extends 500miles North-to-South (equivalent to the North-to-South distance from Canada to Georgia) and 330miles East-to-West (covering the Coast, Mountains and Desert Regions. It serves millions ofCalifornians of various economic means and lifestyles.2. After studying over 10 years of legislative and regulatory actions that have affected upper-tierresidential rate payers, KernTax have not found that the concept of tiered rates moved rapidly froma means to achieve repayment of out-of-market energy costs to a means of selectively providing areturn stream for a selected and unregulated industry. No person or organization has given dueconsideration that actually produced any meaningful benefit to upper-tier ratepayers.When do we start to resolve that which has become known as the “Bakersfield problem”? Under the much celebrated SB 695, passed in 2009 and implemented on January 1, 2010,Tier 5 rates jumped (at the hands of interveners) from $.44/kwh on December 31, 2009 to$.473/KWH on January 1, 2010 to $.498/kWh on March 1, 2010; a 13 percent increase in only athree month period! On February 24, 2010, KernTax shared its concerns and our first analysis ofresidential electric rates with PG&E. Thankfully, PG&E, with its own concerns, respondedimmediately and filed for an emergency rate reduction, A.1002029, on February 26, 2010. Withunprecedented speed PG&E, along with prior interveners such as TURN and DRA reached arevenue-neutral settlement agreement, resulting in a 20 percent reduction in the top tier rate. Bymending the staggering 2009/2010 rate structure, those parties acknowledged for the first time inover 15 years, that major structural flaws existed in the ratemaking process in which they creatednew residential subclasses based on income, health, geography and climate. After two years, inspite of SB 695’s promises, the draconian rate structure still punishes non-protected upper-tierenergy users who must pay the economically unjustified Tier 4 rates, regardless of income (abovethe CARE cutoffs). KernTax believes that these super-rates serve only one purpose–they facilitatereturns to the investors in the unregulated Residential Roof Top Solar industry.A.1003014 Kerntax Reply Comments 110502 2
  3. 3. Current regulatory complexities have become the hobgoblin of fair ratemaking. Vague legislative wording addresses and provides contradictory instructions on matters suchas: social concerns for the disadvantaged, conservation considerations, and stimulation of residentialinstallations of economically non-competitive (but desired) technologies. Legislative activists also acting as ratemaking interveners have created a new paradigm inwhich the needs for comfort of certain selected groups of persons or businesses (i.e., disadvantagedfamilies, lower-tier ratepayers and investors in Solar PV companies) trumps any notion of non-discriminatory fairness and equity. We believe that the best intentions of all stakeholders arethwarted by the complex allocation and rate procedures and that revenue requirement will simplycontinue to rise under pressure for us to spend our way to solve a problem that has become toocomplex by our own design.There seems a common bond between interveners who propose higher rates tiers. High tier rate proponents seem to believe as a group that a Residential Roof Top Solar Tier,Tier 4, must be preserved at all costs and that this economically-unjustified tier must have at least atleast a seven cent differential as one sees in their various comments below: “A four cent differential is not sufficient to incentivize the residential solar market… The PD and the Alternative should be amended to establish in findings of fact and in findings of the law that continuation of a four-tier rate design with a seven cent per kWh differential between Tiers 3 and 4 will preserve a price signal to encourage solar PV and promote progress toward achieving the CSI goal of creating a self-sustaining residential solar photovoltaic market.” “(PD) preserves the ability of residential rates to advance important state policy objectives.”… Residential rates convey price signals to (certain) customers that both incentivize energy efficiency and investment in PV.” “The PD rejects PG&E’s proposed customer charge and tier consolidation, in part, because both proposals diminish the ability of volumetric rate price signals to achieve these important state objectives.” “A more meaningful price signal between Tiers 3 and 4 will further reinforce the residential price signal that incentivizes high usage customers(only unprotected, non-CARE, upper-tier ratepayers) to invest in PV and adopt energy efficiency measures.” “Promotion of energy conservation and distributive generation resources, such as residential PV, is a core principle of California energy policy…”A.1003014 Kerntax Reply Comments 110502 3
  4. 4. “PD acknowledges the role of rate design in promoting residential PV and, therefore, furthering the goals of the California Solar Initiative, AB32 greenhouse gas reduction and the RPS.” Furthermore, certain interveners advance the idea that costs moved from protected partieswill only be borne by the richest of Californians as they invest their way to a new solar future byavoiding the price signal in the “solar” tiers. KernTax believes that the chilling effect of thebillions of dollars being allocated amongst non-protected ratepayers in these proceedings will spillinto lower and middle class families adversely impacting many of California’s hardest working andmost deserving families.We believe that both the Proposed and Alternative Decisions are a move to returning to fair andequitable rates. KernTax is participating in this GRC, A.1003014, because upper-tier ratepayers, particularlythose in Kern County, realized with the early installation of Smart Meters that something was amiss.KernTax now fully understands that non-protected upper-tier ratepayers have simply been forgottenor worse, thrown under the bus, for well over a decade by policy advocates acting through the StateLegislature and the regulatory process. The arguments made by high rate proponents againstPresident Peevey’s Alternative opinion show their misdirected attempt at class warfare that haspunished all PG&E non-CARE upper-tier ratepayers (regardless of income)--- consumption andincome do not go hand-in-hand.KernTax believes that Customer Charges are fair.Some have written opinions that it is clearly illegal for PG&E to have a fair and rate-equalizingcustomer charge. KernTax notes that this argument is false given that the other IOU’s have similarmechanisms and their ratepayers have a much fairer and more equitable rate structures.KernTax believes conservation is important to California’s future. Some have written that residential use must be curtailed by demand response mechanismsby using rates that convey price signals to non-CARE upper-tier customers that both incentivizeenergy efficiency and promote investment in high-priced Residential Roof Top solar PV. KernTaxconcurs with the conservation notion but finds fault in the investment argument. But where is theA.1003014 Kerntax Reply Comments 110502 4
  5. 5. fairness to upper-tier valley residents who in the summer heat not only bear an unfavorable ratestructure but also carry the negative socio-economic impact of the quantities of in-valley generationenjoyed by non-Valley residents. If conservation is critical, all customers should have price signalsto conserve. Adding to this is the fact that even with different climate-based baselines the first costof solar panels to offset coastal high tier use is substantially lower than the first cost for the largersolar unit needed in the Central Valley to avoid the high tier prices. During a June 30, 2010 data request, TURN asked PG&E, “for the last 12 months of recorded data, to provide the following information for all-electric and electric CARE and non-CARE residential customers in each climate Zone: Question D, Percentage customers using more than 300% of baseline in their peak month of usage CLIMATE ZONES Q R S T W XNon-Care >300% 27% 22% 15% 30% 16%CARE >300% 22% 17% 12% 21% 11% Obviously, high-use CARE customers are exempt from state’s conservation price signals.During spring, 2010, CARE customers with Tier 5 usage paid $.095/kWh, while non-Care Tier 5ratepayers paid $.498/kWh. KernTax would ask the Commission to consider the obvious failure inthe arguments made when PG&E is forced to provide an 81 percent discount and the interveningparties expect energy efficiency and conservation by subsidized CARE customers with Tier 5 usageKernTax supports residential solar energy at a fair cost. Kern County produces more alternative energy than any other place in California andpossibly the US. The avoided cost of commercial sized solar fields is less than half of that providedby the subsidized and uncompetitive Residential Roof Top Solar production. KernTax seeks protection that only the CPUC can provide from unreasonably high electricrates that punitively discriminate against upper-tier customers to enrich the Residential Roof TopSolar industry, while other rate subclasses have a favorable discrimination that encourages higherconsumption and easily avoids any incentive to use solar.Kern CountyINCOME AND BENEFITS (IN 2009 INFLATION-ADJUSTED $)Total households 239,277 239,277 Cumulative %Less than $10,000 16,266.00 6.80% 6.80%$10,000 to $14,999 17,798.00 7.40% 14.20%$15,000 to $24,999 30,464.00 12.70% 26.90%$25,000 to $34,999 27,370.00 11.40% 38.30%$35,000 to $49,999 35,965.00 15.00% 53.30%$50,000 to $74,999 42,173.00 17.60% 70.90%$75,000 to $99,999 27,840.00 11.60% 82.50%A.1003014 Kerntax Reply Comments 110502 5
  6. 6. $100,000 to $149,999 26,951.00 11.30% 93.80%$150,000 to $199,999 8,373.00 3.50% 97.30%$200,000 or more 6,077.00 2.50% 99.80%Median household income ($) 46,216.00 (X)Mean household income ($) 62,245.00 (X)Source: U.S. Census Bureau, 2005-2009 American Community Survey The chart above shows that while 53 percent of Kern County households are CARE eligible,no one seems to care about the 29 percent of Kern County households that have their own economicchallenges. These working class Californians are not CARE eligible and must pay above requiredrates to satisfy investors in the unregulated Residential Roof Top Solar industry while their CAREqualified neighbors use the upper tier electricity at below cost of service prices. No ResidentialRoof Top Solar advocate cares for the misfortune of warm climate, upper-tier ratepayers earning afew dollars more than the CARE cutoff. If an industry’s profits must be guaranteed, then theCommission should use the same arrangement as Californians have with the utility itself – let’shave open hearings and set industry returns to reasonable levels that are sufficient for capitalattraction (i.e., approximately12%). KernTax is interested in helping the commission to arrive at the best rates structure servingall of the residents in PG&E’s service territory. Our efforts are driven by a belief that fair burden isnecessary to achieve workable solutions. Please adopt President Peevey’s desperately-needed Alternative Opinion on May 5. Respectfully Submitted, /x/Michael Turnipseed Michael Turnipseed, Executive Director Kern County Taxpayers Association 331 Truxtun Avenue Bakersfield, CA 93301-5313 TEL: 661-322-2973 FAX: 661-321-9550 michael@KernTaxpayers.org May 2, 2011A.1003014 Kerntax Reply Comments 110502 6
  7. 7. CERTIFICATE OF SERVICE, A.1003014I certify that I have, by electronic mail, served a true copy of “REPLY COMMENTS OF THEKERN COUNTY TAXPAYERS ASSOCIATION TO THE COMMENTS TO THE DRAFTOPINONS OF PRESIDENT PEEVEY AND ALJ PULSIFER IN GRC A.10-03-014”to all parties of A.1003014 listed below. __________/s/__________ Michael Turnipseed May 2, 2011A1003014 douglass@energyattorney.com DANIEL W. DOUGLASSA1003014 kmills@cfbf.com KAREN N. MILLSA1003014 kfox@keyesandfox.com KEVIN T. FOXA1003014 matthew@turn.org MATTHEW FREEDMANA1003014 keith.mccrea@sutherland.com KEITH R. MCCREAA1003014 bruce.reed@sce.com BRUCE A. REEDA1003014 ccollins@co.kern.ca.us CHARLES F. COLLINSA1003014 kerntax@kerntaxpayers.org MICHAEL TURNIPSEEDA1003014 pk@utilitycostmanagement.com PAUL KERKORIANA1003014 dbyers@landuselaw.com DAVID J. BYERS, ESQ.A1003014 sue.mara@rtoadvisors.com SUE MARAA1003014 nao@cpuc.ca.gov Noel ObioraA1003014 rhd@cpuc.ca.gov Rashid A. RashidA1003014 thomas.long@sfgov.org THOMAS J. LONGA1003014 norman.furuta@navy.mil NORMAN J. FURUTAA1003014 nes@a-klaw.com NORA SHERIFFA1003014 gwen@votesolar.org GWEN ROSEA1003014 epoole@adplaw.com EDWARD G. POOLEA1003014 jarmstrong@goodinmacbride.com JEANNE B. ARMSTRONGA1003014 vidhyaprabhakaran@dwt.com VIDHYA PRABHAKARANA1003014 saw0@pge.com SHIRLEY WOOA1003014 wbooth@booth-law.com WILLIAM H. BOOTHA1003014 samk@greenlining.org SAMUEL KANGA1003014 pucservice@dralegal.org KARLA GILBRIDEA1003014 pucservice@dralegal.org MELISSA W. KASNITZA1003014 erasmussen@marinenergyauthority.org ELIZABETH RASMUSSENA1003014 wem@igc.org BARBARA GEORGEA1003014 cmkehrein@ems-ca.com CAROLYN KEHREINA1003014 jim.metropulos@sierraclub.org JIM METROPULOSA1003014 john@clfp.com JOHN LARREAA1003014 atrowbridge@daycartermurphy.com ANN L. TROWBRIDGEA1003014 liddell@energyattorney.com DONALD C. LIDDELLA1003014 jheckler@levincap.com JAMES J. HECKLERA1003014 rob@clfp.com ROB NEENANA1003014 tculley@keyesandfox.com THADEUS B. CULLEYA1003014 DWTcpucDockets@dwt.comA1003014 mrw@mrwassoc.comA.1003014 Kerntax Reply Comments 110502 7
  8. 8. A1003014 judypau@dwt.com JUDY PAUA1003014 tculley@keyesandfox.com THADEUS B. CALLEYA1003014 khojasteh.davoodi@navy.mil KHOJASTEH DAVOODIA1003014 larry.r.allen@navy.mil LARRY R. ALLENA1003014 jimross@r-c-s-inc.com JIM ROSSA1003014 mbrubaker@consultbai.com MAURICE BRUBAKERA1003014 kjsimonsen@ems-ca.com KEVIN J. SIMONSENA1003014 case.admin@sce.com CASE ADMINISTRATIONA1003014 CentralFiles@SempraUtilities.com CENTRAL FILESA1003014 JERRY O. CROWA1003014 DENNIS J. HERRERAA1003014 theresa.mueller@sfgov.org THERESA L. MUELLERA1003014 ethans@sunrunhome.com ETHAN SPRAGUE MARYBELLEA1003014 mang@turn.org C. ANGA1003014 bfinkelstein@turn.org ROBERT FINKELSTEINA1003014 ELL5@pge.com ED LUCHAA1003014 glsg@pge.com GAIL L. SLOCUMA1003014 J4LR@pge.com JANET LIUA1003014 filings@a-klaw.com KAREN TERRANOVAA1003014 kmsn@pge.com KASIA CRAINA1003014 LDRi@pge.com LAUREN ROHDEA1003014 cpuccases@pge.comA1003014 steven@moss.net STEVEN MOSSA1003014 salleyoo@dwt.com SALLE E. YOOA1003014 edwardoneill@dwt.com EDWARD ONEILLA1003014 jeffgray@dwt.com JEFFREY P. GRAYA1003014 cem@newsdata.comA1003014 rjl9@pge.com RANDALL J. LITTENEKERA1003014 regrelcpuccases@pge.com CASE COORDINATIONA1003014 ehw2@pge.com ELAINE WONGA1003014 chris@emeter.com CHRIS KINGA1003014 jwiedman@keyesandfox.com JOSEPH F. WIEDMANA1003014 rschmidt@bartlewells.com REED V. SCHMIDTA1003014 enriqueg@greenlining.org ENRIQUE GALLARDOA1003014 tomb@crossborderenergy.com R. THOMAS BEACHA1003014 sara@solaralliance.org SARA BIRMINGHAMA1003014 ed.mainland@sierraclub.org EDWARD A. MAINLANDA1003014 wendy@econinsights.com WENDY L. ILLINGWORTHA1003014 brbarkovich@earthlink.net BARBARA R. BARKOVICHA1003014 rmccann@umich.edu RICHARD MCCANNA1003014 kenneth.swain@navigantconsulting.com KENNETH SWAINA1003014 andykatz@sonic.net ANDY KATZA1003014 blaising@braunlegal.com SCOTT BLAISINGA1003014 lmh@eslawfirm.com LYNN HAUGA1003014 niki.bawa@cpuc.ca.gov NIKI BAWAA1003014 SGM@cpuc.ca.gov SCOTT MURTISHAWA1003014 cyc@cpuc.ca.gov Cherie ChanA1003014 ctd@cpuc.ca.gov Christopher DanforthA1003014 crv@cpuc.ca.gov Christopher R VillarrealA.1003014 Kerntax Reply Comments 110502 8
  9. 9. A1003014 dbp@cpuc.ca.gov David PeckA1003014 bsl@cpuc.ca.gov Dexter E. KhouryA1003014 dlf@cpuc.ca.gov Donald J. LafrenzA1003014 fvr@cpuc.ca.gov Felix RoblesA1003014 jw2@cpuc.ca.gov Jake WiseA1003014 kkm@cpuc.ca.gov Karl MeeusenA1003014 lwt@cpuc.ca.gov Lee-Whei TanA1003014 lmi@cpuc.ca.gov Louis M. IrwinA1003014 mmg@cpuc.ca.gov Maryam GhadessiA1003014 rl4@cpuc.ca.gov Robert LevinA1003014 scr@cpuc.ca.gov Steve RoscowA1003014 trp@cpuc.ca.gov Thomas R. PulsiferA1003014 tcr@cpuc.ca.gov Thomas RobertsA.1003014 Kerntax Reply Comments 110502 9

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