A proposed decision for establishing parameters, minimum filing requirements, and principles for revisions to time-of-use rate windows has been issued in California’s TOU rate windows rulemaking. The proposed decision would adopt the following principles for TOU rate design (among others), but it would not adopt specific TOU time windows:
- Time periods and rate designs should be established independently in general rate cases and rate-design window applications. Geographically differentiated TOU periods within a single utility’s service territory are not required or encouraged.
- Base TOU periods should be based on individual utility marginal costs for generation and energy. Going forward, utilities should include information on marginal distribution costs that contribute to peak-load costs and TOU-related transmission data from FERC transmission rate proceedings.
- In filings or proposals, utilities should provide hourly load and net load data, and an explanation of differences between high- and low-marginal cost hours and net load shapes.
- TOU periods should be developed based on forward-looking data, using a forecast year at least three years beyond when the rate would take effect.
- TOU period analysis should be provided in each general rate case, regardless of whether any changes are proposed. Revisions should be proposed if the analysis shows a material change in the analysis used to set the existing TOU windows.
- TOU periods should continue for at least five years (unless material changes require more frequent revisions) ,and each utility should propose changes, if necessary, at least every two rate case cycles.
- Utilities should take steps to minimize the impact of changes on customers who have invested in on-site DG or technology to conserve energy during peak periods. This could include grandfathering for five years or predetermined limits on changes, and must include customer outreach.
- Customers should have access to a menu of TOU rate options suitable for addressing different customer profiles and needs, including at least one option design featuring a complex combination of seasons and time periods and possibly dynamic pricing features.
- TOU rates should be designed around base periods, but may be modified to consider customer preferences, understanding and ability to respond.
Significantly, in addition to these principles, the proposed also proposes to extend five-year grandfathering to any on-site solar customer that opts into an existing TOU rate schedule prior to the effective date of a TOU window change in any pending general rate case.