Before the Public Utilities Commission of the State of California s17

ALJ/KHY/lil Date of Issuance 1/20/2017

Decision 17-01-021 January 19, 2017

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Enhance the Role of Demand Response in Meeting the State’s Resource Rulemaking 13-09-011 Planning Needs and Operational Requirements. (Filed September 19, 2013)

DECISION GRANTING INTERVENOR COMPENSATION TO SIERRA CLUB FOR SUBSTANTIAL CONTRIBUTION TO DECISION 16-09-056

Intervenor: Sierra Club For contribution to Decision 16-09-056 Claimed: $26,934.25 Awarded: $26,934.25 Assigned Commissioner: Michel Peter Assigned ALJ: Kelly Hymes Florio

PART I: PROCEDURAL ISSUES A. Brief description of Decision: D.16-09-056 (“Decision”) modifies the earlier decision in this docket (D. 14-12-024) by rescinding the requirement to collect data on fossil-fueled back-up generation in demand response programs, and instead instituting a prohibition on using diesel, natural gas, gasoline, propane, or liquefied petroleum gas technologies to respond to demand response calls beginning January 1, 2018. The Decision also establishes a process through which parties will propose an enforcement program for the prohibition. In addition, the Decision provides general guidance on future demand response programs, establishing guiding principles and a five-year budget cycle. B. Intervenor must satisfy intervenor compensation requirements set forth in Pub. Util. Code §§ 1801-1812:

Intervenor CPUC Verified Timely filing of notice of intent to claim compensation (NOI) (§ 1804(a)): 1. Date of Prehearing Conference (PHC): 10/24/2013 Verified. 2. Other specified date for NOI: n/a 3. Date NOI filed: 11/25/2013 Verified.

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4. Was the NOI timely filed? Yes, Sierra Club timely filed the notice of intent to claim intervenor compensation. Showing of customer or customer-related status (§ 1802(b)): 5. Based on ALJ ruling issued in R.14-02-001 Verified. proceeding number: 6. Date of ALJ ruling: July 25, 2014 Verified. 7. Based on another CPUC determination (specify): 8. Has the Intervenor demonstrated customer or customer-related Yes, Sierra Club status? demonstrated appropriate status. Showing of “significant financial hardship” (§ 1802(g)): 9. Based on ALJ ruling issued in R.14-02-001 Verified. proceeding number: 10. Date of ALJ ruling: July 25, 2014 Verified. [See Comment #1] 11. Based on another CPUC determination (specify): 12. Has the Intervenor demonstrated significant financial Yes, Sierra Club hardship? demonstrated significant financial hardship. Timely request for compensation (§ 1804(c)): 13. Identify Final Decision: D.16-09-056 Verified. 14. Date of issuance of Final Order or 10/05/2016 Verified. Decision: 15. File date of compensation request: 11/14/2016 11/15/2016 16. Was the request for compensation timely? Yes, Sierra Club timely filed the request for intervenor compensation.

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C. Additional Comments on Part I (use line reference # as appropriate):

# Intervenor’s Comment(s) CPUC Discussion

1 It has been more than one year since Sierra Club’s last Verified. The finding of significant financial hardship. Requests for a Commission recognizes renewed finding are currently pending in the following that Sierra Club has dockets: R. 14-10-003, R. 15-03-010, R. 16-02-007, demonstrated A. 16-06-013, and A. 15-09-013. significant financial hardship and is eligible for intervenor compensation in this proceeding.

PART II: SUBSTANTIAL CONTRIBUTION A. Did the Intervenor substantially contribute to the final decision (see § 1802(i), § 1803(a), and D.98-04-059).

Intervenor’s Claimed Specific References to Intervenor’s CPUC Contribution(s) Claimed Contribution(s) Discussion After the initial decision in this The Decision adopts the position of Verified. docket, Sierra Club focused on Sierra Club and other environmental resolving the open issues and ratepayer parties, and decides to surrounding the use of “move forward with a prohibition of fossil-fueled engines to provide certain resources in demand response demand response (DR). Sierra programs.” Decision, p. 2. Club consistently bugged the Commission (pun intended) “to take definitive action to enforce its 13-year-old statements that demand response cannot be provided by fossil-fueled generators.” Sierra Club Response to ALJ Ruling on 2018 and Beyond DR Programs (July 1, 2016), p. 1.

1. Utility Data Collection Advice Letters: Our first area of engagement The Decision ultimately accepted the was protesting the utilities’ protests of Sierra Club and other plans to collect data on the use parties, and abandoned the data of fossil resources in DR collection effort. Decision, p. 2. programs, as required by

D.14-12-024.

“A data collection process is “[T]he record shows that current also not necessary to confirm Commission and California policies, the Commission’s clear along with questions regarding the position. The survey may accuracy of the data and the potential illuminate the extent of the costs to collect the data, all combine BUG problem, but the to negate the benefit of collecting the Commission has already data.” Decision p. 19. determined that using BUGs to respond to a demand response event is ‘antithetical to the efforts of the Energy Action Plan and the Loading Order.’” Sierra Club Comments on Energy Division Staff Proposal (Oct. 15, 2015), p. 2.

The proposed plan did “not “Sierra Club maintains that the lax propose mandatory reporting current regulations on back-up and provide[d] no generation metering would also lead consequences for demand to inaccurate and incomplete data.” response participants who Decision, p. 23. decline to respond. The … permissiveness will likely result in limited data collection that will frustrate a full and accurate understanding of the scope of BUG use.” Protest of Sierra Club to PG&E Advice Letter (AL) 4582-E, SDG&E AL 2700-E, and SCE AL 3173-E (March 9, 2015), p. 2.

Sierra Club had four main The decision identified four “main critiques of the data collection ‘flaws’” [with the data collection effort: effort]: (1) “Many older fossil generators only have 1) “The meter data requested by the odometer-style meters.” Sierra Utilities is ‘likely to be in the form of Club Response to ALJ Ruling cumulative run hours’ and this data on 2018 and Beyond DR does not necessarily indicate whether Programs (July 1, 2016), p. 3. a back-up generator was used during a demand response event;” (2) “No AQMD requires customers to obtain permits for 2) “Operating data may only be

BUGs smaller than 50 available for back-up generators that horsepower. Therefore the are 50 horsepower or larger; …” absence of an AQMD permit does not prove a customer does not own a BUG: the customer could own a smaller engine that does not need a permit.” Sierra Club Comments on Staff Proposal (Oct. 15, 2015), p. 6.

(3) The proposed plans did “not propose mandatory 3) “The data collection plan relies on reporting and provide[d] no the back-up generator owners consequences for demand voluntarily providing the required response participants who data; and …” decline to respond.” Protest of Sierra Club to PG&E Advice Letter (AL) 4582-E, SDG&E AL 2700-E, and SCE AL 3173-E (March 9, 2015), p. 2

(4) “A data collection process will result in unnecessary delay and cost and may not even 4) “Cost estimates for the data yield accurate results.” See collection are unknown.” Decision, also Comments on Proposed pp. 21-22. Guidance for the 2017 DR Programs (Aug. 26, 2015), p. 3. 2. Use of Fossil-Fueled Verified. Generation in Demand Response Auction Mechanism (DRAM) Pilot:

Sierra Club successfully The prohibition on certain fossil fuel advocated for a prohibition on resources approved in the DRAM is a fossil resources in the DRAM, direct precursor to this Decision, setting the stage for the broader which extends the same prohibition prohibition adopted by the to all utility DR programs. Decision.

In Sierra Club’s Protest to The Commission approved the SCE Advice Letter (AL) 3208- Alternate Resolution of E and PG&E AL 4618-E on Commissioner Sandoval, which Demand Response Auction accepted Sierra Club’s protest and Pilot Pursuant to Ordering prohibited fossil resources in the

Paragraph 5 of Decision 14- DRAM. Resolution E-4728 (July 23, 12-024 (May 11, 2015), Sierra 2015). In doing so, the Commission Club argued that “Only by wrote that this exclusion would be disallowing participation by instructive on the feasibility of a fossil generators will the pilot broader prohibition, writing, truly provide useful data on “Disallowing fossil-fueled BUGs in how carbon-free resources can this pilot program could provide support California’s transition additional insight for the Commission to a more flexible, renewables- when it decides the overall policy on based grid.” (p. 3) fossil-fueled BUGs.” Resolution E-4728, p. 15. Sierra Club then advocated for consistency between the DRAM and other DR programs The Commission agreed that rules on to prevent reshuffling, writing fossil resources in DRAM and the that any rules adopted for utility programs should move utility demand response together, “concur[ring] with ORA programs that differed from and Sierra Club that the pro forma existing DRAM rules should, [DRAM] contract should be modified for the sake of consistency, to be consistent with a broader also be extended to future Commission policy on the use of DRAM auctions. Sierra Club’s BUGs in conjunction with DR.” Protest to SCE AL 3292-E, Resolution E-4754 (Jan. 28, 2016), PG&E AL 4719-E, and p. 10. SDG&E AL 2796-E on the DRAM Pilot for 2017 (Oct. 29, 2015),

“The Commission should extend the same prohibition on BUGs, using the same definition as in Resolution The DRAM Resolution then E-4728, to all Utility demand prompted the ALJ to scope in the response programs. This question, “Should the Commission change is necessary not only adopt this policy [on fossil resources] because it is sound for the overall demand response environmental policy, but also program beginning with the 2017 because of the importance of program year?” maintaining consistent rules ALJ Ruling Allowing Parties to between the DRAM and the Comment on Proposed Guidance for Utilities’ other demand Utilities’ Proposals for 2017 response programs.” Sierra Demand Response Programs and Club Comments on Proposed Activities (August 6, 2015), p. 6. In Guidance for 2017 DR this way, the Sierra Club’s advocacy Programs (Aug. 26, 2015), on the design of the DRAM p. 2. precipitated this Decision’s

prohibition on the same resources, based on the same principles, in all DR programs.

3. Use of Fossil-Fueled Verified. Generation in Utility Demand Response Programs:

(A) DR is Load Reduction, Not Behind-the-Meter Generation.

“As the Commission has The Decision adopts Sierra Club’s repeatedly determined, the position that demand response is purpose of ratepayer-funded intended to be provided by demand demand response programs is reductions, not by burning fossil to reduce system demand fuels: “Considered by the through load shifting, not to Commission to be policies of the subsidize highly polluting highest importance, the Energy back-up generation.” Protest Action Plan and the Loading Order of Sierra Club to PG&E AL indicate a preference for cleaner 4582-E et al., p. 1 (citing D. technologies. More recently, Public 14-12-024, p. 50, holding that Utilities Code Section 380.5 … “the use of back-up generation makes clear that efforts to incorporate in demand response programs demand response into the state’s is antithetical to the Energy resource adequacy program should Action Plan and the Loading also reduce greenhouse gas Order.”) emissions.” Decision p. 20.

“This consistent and straightforward understanding that true demand response is provided only by load reductions is shared by the California legislature, which found that the purpose of authorizing demand response programs is to ‘reduce emissions of greenhouse gases and other pollutants from the electricity sector’ and in doing so ‘help meet the state’s greenhouse gas reduction goals.’” Sierra Club Comments on Proposed Guidance for 2017 DR Programs (Aug. 26,

2015), p. 2.

“Yet absent a definitive prohibition, this shadow The Decision also notes that the practice has been allowed to Commission’s long-standing policy continue, polluting local statement against the use of backup communities, undermining generation in DR must be public confidence in demand enforceable, writing, “The response as a clean energy Commission’s adopted policy resource, and crowding out statement regarding fossil-fueled legitimate demand response back-up generation essentially has no solutions.” Sierra Club Reply effect without any associated Comments on Staff Proposal conditions or requirements.” (Oct. 19, 2015), p. 1. Decision, p. 21

B) Verification of Prohibited Resource Ownership

“[S]ite visits are needed to verify that customers do not own a BUG because verification through air quality The Decision ultimately appears to management district support site visits to verify prohibited (“AQMD”) records will not be resource ownership, holding that “a sufficient. No AQMD requires selective audit program should customers to obtain permits for provide the balance of verification.” BUGs smaller than 50 Decision, p. 42. horsepower. Therefore the absence of an AQMD permit The Decision recognizes Sierra does not prove a customer does Club’s position that site visits are not own a BUG.” Sierra Club necessary to verify ownership of Comments on ED Staff prohibited resources: “ORA and Proposal, p. 6. Sierra Club argue that annual site visits are needed because neither self-attestation nor verification C) Enforcement of Ban on Use through [local Air District permit] of Prohibited Resources data are sufficient.” Decision, p. 41.

A separate issue in this proceeding was -- once ownership of prohibited resources has been verified Enforcement was extensively --how compliance with the ban discussed throughout the proceeding,

8 R.13-09-011 ALJ/KHY/lil on generator usage should be but the Commission ultimately did monitored. not make a decision on what type of enforcement and monitoring regime was appropriate, instead directing the Sierra Club argued strongly utilities to hire a consultant to make a that the proposal for determination. Decision, p. 40. non-residential customers “to merely attest that they will not “In comments to the proposed rely on fossil-fueled generation decision, ORA and Sierra Club/EDF should not be an acceptable argue that the Commission should compliance method.” Sierra impose metering requirements as Club Comments on Proposed opposed to attestation, contending Guidance for 2017 DR that attestation is insufficient.” Programs (Aug. 26, 2015), Decision, p. 39. p. 3.

We initially advocated for both “a contractual obligation and separate metering on BUG units to enable monitoring and enforcement.” Sierra Club “In regards to non-residential Comments on Proposed customers, Sierra and ORA stated in Guidance for 2017 DR their comments that they support the Programs (Aug. 26, 2015), [Staff Proposal’s] enforcement p. 3. When Energy Division mechanism, highlighting that the Staff Proposal proposed proposal provides options to allowing BUG owners the industrial and commercial choice of a default adjustment customers.” Decision, p. 34. or installation of a data collecting device, the Sierra Club supported this suggestion. See Sierra Club Comments on Energy Division Staff Proposal, p. 5.

We argued that the Staff Proposal’s requirements were not overly onerous, as “newer generators may already have this capability, and for older equipment simple data loggers “Sierra Club/EDF maintains that in are available for under $100. light of the high payments

By contrast, typical revenues participants receive, devices to meter from participating in PG&E’s the use of prohibited resources are Base Interruptible Program are not expensive.” Decision, p. 39 three orders of magnitude higher, averaging $120,000 per customer in 2015.” Sierra Club Response to ALJ Ruling on 2018 and Beyond DR Programs (July 1, 2016), p. 5. See also Sierra Club Comments on ED Staff Proposal, p. 5 (comparing meter requirements in SGIP Program).

Sierra Club pointed out throughout the proceeding that “many older fossil generators only have odometer-style meters. As a result, there is no way to verify whether the Consistent with this argument, the engine was on during a Commission recognized that demand response event…. “prudence requires some measure of With no way to verify verification.” Decision, p. 42. compliance, transparency is Implicitly agreeing with Sierra Club’s nonexistent and enforcement is fundamental point that verification not possible.” Comments on requires some sort of data on ALJ Ruling, p. 3. See also generator usage, it directed the Sierra Club/EDF Comments on utilities to hire “expert consultants to PD, pp. 2, 5 (“Indeed, it is 1) assess how to evaluate whether entirely unclear how a customers are complying with the legitimate audit can be prohibition, and 2) provide conducted where the only recommendations on a verification available record is attestation, plan.” Decision, p. 40. with no actual tracking of usage of the prohibited resource.”).

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B. Duplication of Effort (§ 1801.3(f) and § 1802.5):

Intervenor’s CPUC Assertion Discussion a. Was the Office of Ratepayer Advocates (ORA) a Yes Verified. party to the proceeding?1 b. Were there other parties to the proceeding with Yes Verified. positions similar to yours? c. If so, provide name of other parties: Office of Ratepayer Agreed. Advocates, TURN, Environmental Defense Fund, and the Natural Resources Defense Council. d. Intervenor’s claim of non-duplication: Sierra Club worked Agreed, Sierra closely with allied groups in this proceeding to form an effective Club did not coalition in support of a ban on fossil-fueled backup generators. By engage in collaborating closely with ORA and by filing jointly with NRDC excessive and EDF when appropriate, Sierra Club was able to keep duplicative duplication work to a minimum while still demonstrating to the Commission that with other a broad coalition of parties strongly supported this long-overdue parties. change in policy.

PART III: REASONABLENESS OF REQUESTED COMPENSATION A. General Claim of Reasonableness (§ 1801 and § 1806): a. Intervenor’s claim of cost reasonableness: CPUC As a result of Sierra Club’s participation in this proceeding, California Discussion ratepayers will no longer pay demand response participants to use polluting generation during demand response events. This new Verified. prohibition, if a sufficient enforcement regime is recommended by the utility consultant, will end the years’ long problem of utility customers paying for clean demand reductions they are not actually receiving. In addition, by removing the incentive to run these polluting resources in order to generate demand response revenue, all ratepayers will benefit from reduced air pollution and improved human and environmental health.

1 The Division of Ratepayer Advocates was renamed the Office of Ratepayer Advocates effective September 26, 2013, pursuant to Senate Bill No. 96 (Budget Act of 2013: public resources), which was approved by the Governor on September 26, 2013.

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Taken together, the benefits obtained by Sierra Club far exceed the cost of Sierra Club’s participation in the proceeding. Sierra Club’s claim should be found to be reasonable.

b. Reasonableness of hours claimed: Verified. This phase of the proceeding required substantial time investment over a period of 2 years. Sierra Club was very cognizant of minimizing duplication, while also ensuring the concerns shared by all non-industry parties were fully raised and the broad consensus could be noted. Sierra Club coordinated the joint efforts of the interested environmental groups and took the lead on drafting many joint pleadings.

c. Allocation of hours by issue: Verified. 1) Data Collection: 32% 2) DRAM : 16% 3) IOU Programs: 52% B. Specific Claim:*

CLAIMED CPUC AWARD ATTORNEY, EXPERT, AND ADVOCATE FEES Item Year Hours Rate $ Basis for Rate* Total $ Hours Rate $ Total $ Alison Seel 2015 79.9 190 D.16-01-022 15,181 79.90 190.00 15,181.00 Alison Seel 2016 31.9 205 D.16-05-046 6,539.50 31.90 205.00 6,539.50 Matt Vespa 2016 12.7 350 D.16-05-046 4,445 12.70 350.00 4,445.00 Subtotal: $26,165.50 Subtotal: $26,165.50 INTERVENOR COMPENSATION CLAIM PREPARATION ** Item Year Hours Rate $ Basis for Rate* Total $ Hours Rate Total $ Alison Seel 2016 7.5 102.5 ½ Full Rate 768.75 7.50 102.50 768.75 Subtotal: $768.75 Subtotal: $768.75 TOTAL REQUEST: $26,934.25 TOTAL AWARD: $26,934.25 **We remind all intervenors that Commission staff may audit their records related to the award and that intervenors must make and retain adequate accounting and other documentation to support all claims for intervenor compensation. Intervenor’s records should identify specific issues for which it seeks compensation, the actual time spent by each employee or consultant, the applicable hourly rates, fees paid to consultants and any other costs for which compensation was claimed. The records pertaining to an award of compensation shall be retained for at least three years from the date of the final decision making the award. **Travel and Reasonable Claim preparation time typically compensated at ½ of preparer’s normal hourly rate

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ATTORNEY INFORMATION Attorney Date Admitted to CA Member Number Actions Affecting BAR2 Eligibility (Yes/No?) Matthew Vespa 2002 222265 No Alison Seel 2014 300602 No

PART IV: OPPOSITIONS AND COMMENTS

Within 30 days after service of this Claim, Commission Staff or any other party may file a response to the Claim (see § 1804(c))

A. Opposition: Did any party oppose the Claim? No.

B. Comment Period: Was the 30-day comment period waived (see Yes. Rule 14.6(c)(6))?

FINDINGS OF FACT

1. Sierra Club has made a substantial contribution to D.16-09-056.

2. The requested hourly rates for Sierra Club’s representatives are comparable to market rates paid to experts and advocates having comparable training and experience and offering similar services.

3. The total of reasonable compensation is $26,934.25.

CONCLUSION OF LAW

1. The Claim, with any adjustment set forth above, satisfies all requirements of Pub. Util. Code §§ 1801-1812.

1. Sierra Club is awarded $26,934.25.

2. Within 30 days of the effective date of this decision Pacific Gas and Electric Company, San Diego Gas & Electric, and Southern California Edison Company shall pay Sierra Club their respective shares of the award, based on their California-jurisdictional electric revenues for the 2014 calendar year, to reflect the year in which the proceeding was primarily litigated. Payment of the award shall include compound interest at the rate earned on prime, three-month non-financial commercial paper as reported in Federal Reserve Statistical Release H.15, 2 This information may be obtained through the State Bar of California’s website at http://members.calbar.ca.gov/fal/MemberSearch/QuickSearch.

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beginning January 29, 2017, the 75th day after the filing of Sierra Club’s request, and continuing until full payment is made.

3. The comment period for today’s decision is waived.

4. This decision is effective today.

Dated January 19, 2017, at San Francisco, California.

MICHAEL PICKER President CARLA J. PETERMAN LIANE M. RANDOLPH MARTHA GUZMAN ACEVES CLIFFORD RECHTSCHAFFEN Commissioners

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APPENDIX Compensation Decision Summary Information

Compensation Decision: D1701021 Modifies Decision? No Contribution Decision(s): D1609056 Proceeding(s): R1309011 Author: ALJ Hymes Payer(s): Pacific Gas and Electric Company, San Diego Gas & Electric, and Southern California Edison Company

Intervenor Information

Intervenor Claim Date Amount Amount Multiplier? Reason Requested Awarded Change/Disallowance Sierra Club November 15, 2016 $26,934.25 $26,934.25 N/A N/A

Advocate Information

First Last Name Type Intervenor Hourly Fee Year Hourly Fee Hourly Fee Name Requested Requested Adopted Matthew Vespa Attorney Sierra Club $350.00 2015 $350.00 Alison Seel Attorney Sierra Club $190.00 2015 $190.00 Alison Seel Attorney Sierra Club $205.00 2016 $205.00

(END OF APPENDIX)