BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA. And Related Applications. Application Application

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1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U338E) for Approval Demand Response Programs, Goals, and Budgets for Application (Filed June 2, 2008) And Related Applications. Application Application REPLY OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) TO RESPONSE OF CALIFORNIA LARGE ENERGY CONSUMERS ASSOCIATION TO ADMINISTRATIVE LAW JUDGE S RULING REQUIRING ADDITIONAL COST EFFECTIVENESS INFORMATION JENNIFER T. SHIGEKAWA JANET S. COMBS STACIE SCHAFFER Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) janet.combs@sce.com Dated: March 5, 2009 LAW #

2 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U338E) for Approval Demand Response Programs, Goals, and Budgets for Application (Filed June 2, 2008) And Related Applications. Application Application REPLY OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) TO RESPONSE OF CALIFORNIA LARGE ENERGY CONSUMERS ASSOCIATION TO ADMINISTRATIVE LAW JUDGE S RULING REQUIRING ADDITIONAL COST EFFECTIVENESS INFORMATION Pursuant to Administrative Law Judge (ALJ) Hecht s February 19, , 1 Southern California Edison Company (SCE) hereby files its reply to the March 2, 2009 response of California Large Energy Consumers Association (CLECA) to SCE s responses to Energy Division s data requests filed February 23, In its response, CLECA notes that the February 23, 2009 responses of SCE and the other investor owned electric utilities (IOUs) provided additional clarity to the record by allowing for easier comparisons among the IOUs cost effectiveness evaluations and data, but also highlighted the differences in the IOUs cost effectiveness evaluations and data. In particular, CLECA pointed to differences among the IOUs in the treatment of Transmission and Distribution (T&D) benefits, in avoided costs, discount rates, load impacts and 1 In her February 19, , ALJ Hecht granted a request of San Diego Gas & Electric Company, joined by SCE, to allow the IOUs to file reply comments to the responses filed on March 2,

3 administrative/incentives costs. CLECA proposes to hold a workshop to explore such matters, perhaps in the Demand Response (DR) Rulemaking (R ). 2 CLECA should recognize that this DR program cycle is the first time the IOUs have attempted to implement a common framework (the Consensus Framework) for evaluating DR program cost effectiveness. It is not surprising that the process has revealed quantification differences among the IOUs. SCE does not oppose workshops in the DR Rulemaking to explore such differences. Phase 1 of the DR Rulemaking is the appropriate proceeding to build the record on inputs and methods for evaluating DR program cost effectiveness. However, the differences noted by CLECA should not delay approval of the IOUs DR applications in this proceeding, because these differences do not materially impact the ability of the Commission to determine the fundamental issue in this proceeding: whether the proposed DR programs are reasonable and should be authorized for Accordingly, SCE responds in brief to CLECA s concerns below, and is willing to explore these issues in more detail in a workshop in the DR Rulemaking. T&D Values. CLECA suggests that it is not reasonable for the same program under similar circumstances to be deemed to avoid T&D costs for one IOU but not for another IOU. 3 For SCE, the ability of the Base Interruptible Program (BIP) to be locationally dispatched is the result of internal programming changes that will be implemented during the DR program cycle. The Summer Discount Plan (SDP) already has this capability. Without knowing the details about how PG&E and SDG&E have designed their internal processes, SCE cannot opine on the different treatment of the T&D benefits, but there may very well be reasonable explanations for different treatment. Discount Rates. CLECA questions the differences in the IOUs discount rates. 4 SCE's ten percent (10%) discount rate is an incremental cost of capital that reflects what SCE expects 2 See generally Response of CLECA, filed March 2, 2009 in this proceeding. 3 See Response of CLECA, p See Response of CLECA, p. 4. 2

4 to be the financial cost of new investments. This is not necessarily the same as SCE s embedded cost of capital, which includes historic bond costs, for example. SCE uses an incremental cost of capital for evaluating supply side resources, and used an incremental cost of capital for DR to be consistent. Load Impacts and Administrative/Incentive Costs. CLECA questions why SCE s incentive costs rise over the three-year program cycle while the load impacts remain relatively flat. 5 In SCE s response to Energy Division s request for cost effectiveness information, SCE reported the cost and benefit values for the three program years ( ) cumulatively. SCE s response shows the lifecycle costs and benefits for the three program years. In comparison to the other IOUs responses, SCE s costs and benefits appear to be anomalous because the other IOUs chose to report only annual values. SCE s cumulative values give the appearance of increasing costs not only for incentives, but also for administrative costs, participant costs, etc. The annual costs as proposed in SCE s application are, however, relatively flat over the three program years. Respectfully submitted, JENNIFER T. SHIGEKAWA JANET S. COMBS STACIE SCHAFFER March 5, 2009 /s/ Janet S. Combs By: Janet S. Combs Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 5 See Response of CLECA, pp

5 CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of REPLY OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) TO RESPONSE OF CALIFORNIA LARGE ENERGY CONSUMERS ASSOCIATION TO ADMINISTRATIVE LAW JUDGE S RULING REQUIRING ADDITIONAL COST EFFECTIVENESS INFORMATION on all parties identified on the attached service list(s). Transmitting the copies via to all parties who have provided an address. First class mail will be used if electronic service cannot be effectuated. Executed this 5th day of March 2009, at Rosemead, California. /s/ Meraj Rizvi Meraj Rizvi Project Analyst SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

6 CPUC - Service Lists - A Page 1 of 5 3/5/2009 CPUC Home CALIFORNIA PUBLIC UTILITIES COMMISSION Service Lists PROCEEDING: A EDISON - FOR APPROVA FILER: SOUTHERN CALIFORNIA EDISON COMPANY (U338E) LIST NAME: LIST LAST CHANGED: MARCH 2, 2009 DOWNLOAD THE COMMA-DELIMITED FILE ABOUT COMMA-DELIMITED FILES Back to Service Lists Index Parties GLEN SMITH STEVEN D. PATRICK PRESIDENT AND CEO ENERGY CURTAILMENT SPECIALISTS SOUTHERN CALIFORNIA GAS COMPANY 4455 GENESEE STREET 555 WEST FIFTH STREET, GT14E7 BUFFALO, NY LOS ANGELES, CA FOR: ENERGY CURTAILMENT SPECIALISTS, FOR: SOUTHERN CALIFORNIA GAS COMPANY INC. DANIEL W. DOUGLASS JANET COMBS DOUGLASS & LIDDELL SOUTHERN CALIFORNIA EDISON OXNARD STREET, SUITE WALNUT GROVE AVENUE WOODLAND HILLS, CA ROSEMEAD, CA FOR: ALLIANCE FOR RETAIL ENERGY MARKETS FOR: SOUTHERN CALIFORNIA EDISON STACIE SCHAFFER DONALD C. LIDDELL SOUTHERN CALIFORNIA EDISON DOUGLASS & LIDDELL 2244 WALNUT GROVE AVE ND AVENUE ROSEMEAD, CA SAN DIEGO, CA FOR: SOUTHERN CALIFORNIA EDISON COMPANY FOR: ICE ENERGY, INC., KINDER MORGAN ENERGY PARTNERS, L.P. DOUGLAS A. AMES PETER MALTBECK TRANSPHASE COMPANY CPOWER, INC LOS PATOS AVE ELENA PRIVADA HUNTINGTON BEACH, CA MOUNTAIN VIEW, CA FOR: TRANSPHASE COMPANY FOR: CP POWER, INC. MARCEL HAWIGER STAFF ATTORNEY THE UTILITY REFORM NETWORK LISA-MARIE SALVACION LEGAL DIVISION

7 CPUC - Service Lists - A Page 2 of 5 3/5/ VAN NESS AVENUE, SUITE 350 ROOM 4107 SAN FRANCISCO, CA VAN NESS AVENUE FOR: THE UTILITY REFORM NETWORK SAN FRANCISCO, CA FOR: DIVISION OF RATEPAYER ADVOCATES MARY A. GANDESBERY EDWARD G. POOLE ANDERSON & POOLE PACIFIC GAS AND ELECTRIC COMPANY 601 CALIFORNIA STREET, SUITE BEALE STREET SAN FRANCISCO, CA SAN FRANCISCO, CA FOR: SAN FRANCISCO COMMUNITY POWER FOR: PACIFIC GAS AND ELECTRIC COMPANY BRIAN T. CRAGG SALLE YOO DAVIS WRIGHT TREMAINE LLP GOODIN, MACBRIDE, SQUERI, DAY & LAMPREY 505 MONTGOMERY STREET, SUITE SANSOME STREET, SUITE 900 SAN FRANCISCO, CA SAN FRANCISCO, CA FOR: CALIFORNIA DEMAND RESPONSE FOR: NORTH AMERICAN POWER PARTNERS, LLC SARA STECK MYERS WILLIAM H. BOOTH TH AVENUE LAW OFFICE OF WILLIAM H. BOOTH SAN FRANCISCO, CA CARR DRIVE FOR: ENRNOC, INC. MORAGA, CA FOR: CLECA ERIC WOYCHIK RICH QUATTRINI V.P. REGULARORY AFFAIRS VICE PRESIDENT - WESTERN REGION COMVERGE, INC. ENERGYCONNECT, INC CALODEN LANE, STE 1 51 E. CAMPBELL AVENUE, SUITE 145 OAKLAND, CA CAMPBELL, CA FOR: COMVERGE, INC. FOR: ENERGYCONNECT, INC. BALDASSARO DI CAPO MELANIE GILLETTE COUNSEL SR MGR WESTERN REG. AFFAIRS CALIFORNIA INDEPENDENT SYSTEM OPERATOR ENERNOC, INC. 151 BLUE RAVINE ROAD 115 HAZELMERE DRIVE FOLSOM, CA FOLSOM, CA FOR: CALIFORNIA INDEPENDENT SYSTEM FOR: ENERNOC, INC. OPERATOR CAROLYN KEHREIN ENERGY MANAGEMENT SERVICES 2602 CELEBRATION WAY WOODLAND, CA FOR: ENERGY USERS FORUM Information Only B.MARIE PIENIAZEK DARA BILTEKOFF CPOWER, INC. CORPORATE COUNSEL 17 STATE STREET ENERGY CURTAILMENT SPECIALISTS NEW YORK, NY GENESEE STREET BUFFALO, NY DENISE SERIO PAUL TYNO ENERGY CURTAILMENT SPECIALISTS, INC. EXE. V-PRES OF PROG. DEVELOPMENT 4455 GENESEE STREET, BLDG. 6 ENERGY CURTAILMENT SPECIALISTS NEW YORK, NY GENESEE STREET BUFFALO, NY PAM MELTON ENERGY CONNECT, INC. KEVIN J. SIMONSEN ENERGY MANAGEMENT SERVICES

8 CPUC - Service Lists - A Page 3 of 5 3/5/ N. HENDERSON RD., NO EAST THIRD AVENUE ARLINGTON, VA DURANGO, CO DAVID NEMTZOW GREGORY KLATT NEMTZOW & ASSOCIATES TH STREET, NO. 6 DOUGLASS & LIDDELL SANTA MONICA, CA OXNARD STREET, SUITE 1030 WOODLAND HILLS, CA CASE ADMINISTRATION JENNIFER SHIGEKAWA 2244 WALNUT GROVE AVENUE ROSEMEAD, CA SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVENUE ROSEMEAD, CA JOY C. YAMAGATA LINDA WRAZEN REGULATORY MANAGER SAN DIEGO GAS & ELECTRIC COMPANY SAN DIEGO GAS & ELECTRIC COMPANY 8330 CENTURY PARK COURT, CP32D 8330 CENTURY PARK COURT, CP 32 D SAN DIEGO, CA SAN DIEGO, CA FOR: SAN DIEGO GAS & ELECTRIC COMPANY NANCY PRIVITT JERRY MELCHER SDG&E ENERNEX 8306 CENTURY PARK COURT, CP42K 4623 TORREY CIRCLE, APT Q303 SAN DIEGO, CA SAN DIEGO, CA JOEL M. HVIDSTEN SHAWN COX KINDER MORGAN ENERGY FORECASTER KINDER MORGAN ENERGY FORECASTER 1100 TOWN & COUNTRY ROAD, SUITE TOWN & COUNTRY ROAD, SUITE 700 ORANGE, CA ORANGE, CA MONA TIERNEY-LLOYD PAUL KERKORIAN ENERNOC, INC. UTILITY COST MANAGEMENT LLC PO BOX N. PALM AVENUE, SUITE 105 CAYUCOS, CA FRESNO, CA JACK ELLIS THERESA BURKE PRINCIPAL CONSULTANT REGULATORY AFFAIRS ANALYST RESERO CONSULTING SAN FRANCISCO PUC 490 RAQUEL COURT 1155 MARKET STREET, 4TH FLOOR LOS ALTOS, CA SAN FRANCISO, CA HELEN ARRICK JOSEPHINE WU BUSINESS ENERGY COALITION PACIFIC GAS AND ELECTRIC COMPANY 77 BEALE STREET, RM 1848E 77 BEALE STREET, MC B9A SAN FRANCISCO, CA SAN FRANCISCO, CA RICHARD H. COUNIHAN STEVE HAERTLE VICE PRESIDENT REG. AFFAIRS PACIFIC GAS AND ELECTRIC COMPANY ENERNOC, INC. 77 BEALE STREET, MC B9A 500 HOWARD STREET, STE. 400 SAN FRANCISCO, CA SAN FRANCISCO, CA FOR: PACIFIC GAS AND ELECTRIC COMPANY STEVEN MOSS VIDHYA PRABHAKARAN SAN FRANCISCO COMMUNITY POWER GOODIN MACBRIDE SQUERI DAY & LAMPREY LLP 2325 THIRD STREET, STE SANSOME STREET, SUITE 900 SAN FRANCISCO, CA SAN FRANCISCO, CA JUDY PAU CALIFORNIA ENERGY MARKETS DAVIS WRIGHT TREMAINE LLP 425 DIVISADERO ST. SUITE MONTGOMERY STREET, SUITE 800 SAN FRANCISCO, CA SAN FRANCISCO, CA

9 CPUC - Service Lists - A Page 4 of 5 3/5/2009 SHIRLEY A. WOO CASE COORDINATION LAW DEPARTMENT PACIFIC GAS AND ELECTRIC COMPANY PACIFIC GAS AND ELECTRIC COMPANY PO BOX ; MC B9A PO BOX 7442 SAN FRANCISCO, CA SAN FRANCISCO, CA AVIS KOWALWESKI MRW & ASSOCIATES, INC. CALPINE CORPORATION 1814 FRANKLIN STREET, STE 720 PO BOX OAKLAND, CA PLEASANTON, CA MRW & ASSOCIATES, INC. DOCKET COORDINATOR 1814 FRANKLIN STREET, STE 720 KEYES & FOX LLP OAKLAND, CA KEITH ST. OAKLAND, CA THOMAS S. KIMBALL JOY A. WARREN MODESTO IRRIGATION DISTRICT REGULATORY ADMINISTRATOR TH STREET MODESTO IRRIGATION DISTRICT MODESTO, CA TH STREET MODESTO, CA BARBARA R. BARKOVICH GAYATRI SCHILBERG BARKOVICH & YAP, INC. JBS ENERGY ROSEWOOD TERRACE 311 D STREET, SUITE A MENDOCINO, CA WEST SACRAMENTO, CA JEFF NAHIGIAN JOHN GOODIN JBS ENERGY, INC. CALIFORNIA ISO 311 D STREET 151 BLUE RAVINE RD. WEST SACRAMENTO, CA FOLSOM, CA ROBERT EMMERT LEGAL & REGULATORY DEPARTMENT CAISO CALIFORNIA ISO 151 BLUE RAVINE RD. 151 BLUE RAVINE ROAD FOLSOM, CA FOLSOM, CA FOR: CALIFORNIA ISO ROBERT M. BREMAULT LON W. HOUSE, PH.D AXIS RESOURCE LLC WEC 1901 PLACER GOLD COURT 4901 FLYING C RD. GOLD RIVER, CA CAMERON PARK, CA JAMES R. METTLING RONALD LIEBERT BLUE POINT ENERGY 1190 SUNCAST LANE, STE 2 CALIFORNIA FARM BUREAU FEDERATION EL DORADO HILLS, CA RIVER PLAZA DRIVE SACRAMENTO, CA BENJAMIN SCHUMAN TYLER J. BERGAN PACIFIC CREST SECURITIES POWERIT SOLUTIONS 111 SW 5TH AVE, 42ND FLR 114 ALASKAN WAY SOUTH 201 PORTLAND, OR SEATTLE, WA State Service ALOKE GUPTA ANDREW CAMPBELL EXECUTIVE DIVISION AREA 4-A ROOM VAN NESS AVENUE 505 VAN NESS AVENUE

10 CPUC - Service Lists - A Page 5 of 5 3/5/2009 SAN FRANCISCO, CA SAN FRANCISCO, CA BRUCE KANESHIRO DAVID PECK ELECTRICITY PLANNING & POLICY BRANCH AREA 4-A ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA DORRIS LAM HAZLYN FORTUNE AREA 4-A AREA 4-A 505 VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA JENNIFER CARON JESSICA T. HECHT DIVISION OF ADMINISTRATIVE LAW JUDGES AREA 4-A ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA JOY MORGENSTERN SUDHEER GOKHALE ELECTRICITY PLANNING & POLICY BRANCH AREA 4-A ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA YULIYA SHMIDT ENERGY PRICING AND CUSTOMER PROGRAMS BRA ROOM VAN NESS AVENUE SAN FRANCISCO, CA TOP OF PAGE BACK TO INDEX OF SERVICE LISTS