PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Item 8 (Rev.1)

Agenda ID 15931

ENERGY DIVISION RESOLUTION E-4878

September 28, 2017

RESOLUTION

Resolution E-4878. Authorization to continue and expand the Mobile Home Park Utility Upgrade Pilot Program (MHP Pilot) for currently participating electric and gas utilities.

PROPOSED OUTCOME:

·  Authorization for all currently participating electric and gas utilities to continue their MHP Pilot until the earlier date of either December 31, 2019, or the issuance of a Commission Decision for the continuation, expansion or modification of the program beyond December 31, 2019. The number of spaces converted in years 2018 and 2019 may not exceed the levels specified in the utility’s respective advice letter filing.

SAFETY CONSIDERATIONS:

·  Continuation of the MHP Pilot for electric and gas utilities will increase the safety of Mobilehome Parks for its residents.

ESTIMATED COST:

·  A minimum of $70 million to extend the Utility Upgrade program from January 1, 2018 to December 31, 2019.[1]

By Pacific Gas and Electric Company (PG&E) Advice Letter (AL) 3822-G/5033-E, Filed on March 17, 2017.

By PG&E Supplemental Advice Letter 3822-G-A/5033-E-A, Filed on March 28, 2017.

By PG&E Supplemental Advice Letter 3822-G-B/5033-E-B, Filed on August 10, 2017

By Southern California Edison Company (SCE) AL 3576-E, Filed on March 17, 2017.

By San Diego Gas & Electric Company (SDG&E) AL 3057-E/2563-G, Filed on March 17, 2017.

By Liberty Utilities (CalPeco Electric) LLC AL 76-E, Filed on April 18, 2017.

By Southern California Gas Company (SoCalGas) AL 5106-G, Filed on March 17, 2017.

By Southwest Gas Corporation (Southwest Gas) AL 1035-G, Filed on March 17, 2017.

______

Summary

Decision (D.) 14-03-021 authorized a three year pilot program to convert mobilehome parks and manufactured housing communities (collectively, MHPs) to direct utility service. The program is scheduled to end December 31, 2017. Pursuant to Ordering Paragraph (OP) 13 of D.14-03-021,[2] this Resolution authorizes all currently participating electric and gas utilities to continue their Mobile Home Park Utility Upgrade Pilot Program until the earlier date of either December 31, 2019, or the issuance of a Commission Decision for the continuation, expansion or modification of the program beyond
December 31, 2019. The number of spaces converted in years 2018 and 2019 may not exceed the levels specified in the utility’s respective advice letter filing.

Background

Many residents of MHPs built in California before 1997 do not receive electricity and/or natural gas directly from the utility providing distribution level service. Instead, the utility serves a master-meter customer (typically, the MHP owner or operator) who then distributes the electricity, natural gas, or both to individual coaches or homes at the MHP through a privately owned submeter system.

Effective 1997, Public Utilities (PU) Code §§ 2791-2799 required:

•  All mobilehome parks (MHP) constructed after January 1, 1997, provide directly metered natural gas and/or electric service to individual coaches/manufactured homes.

•  MHP owners transfer existing master-meter/submeter systems at MHPs constructed prior to January 1, 1997 to utility ownership and control, if those systems meet specified requirements.

•  The costs of the transfer process not be passed through to MHP residents.

Central to the issue was the safety, reliability and reasonably priced delivery of electricity, natural gas, or both to residents of mobilehome parks and manufactured housing communities served in areas within electric and/or natural gas corporations regulated by the Commission. Despite the provisions of the above PU Code, only approximately two dozen master-meter/submeter gas and electric systems had been converted since 1997.

In 2010, the Western Manufactured Housing Community Association (WMA) filed a petition urging the CPUC to review this historical deficiency in conversions. In response, the CPUC issued an Order Instituting Rulemaking
(R.) 11-02-018 to: “examine what the Commission can and should do to encourage the replacement by direct utility service of the master-meter/submeter systems that supply electricity, natural gas, or both to mobilehome parks and manufactured housing communities located within the franchise areas of electric and/or natural gas corporations.”[3]

R.11-02-018 was initiated on February 24, 2011. On March 13, 2014, the Commission adopted Decision (D.) 14-03-021 which:

•  Approved a three-year Mobile Home Park Utility Upgrade Pilot Program (January 1, 2015 to December 31, 2017) to incentivize voluntary conversion of 10% of the master-metered residential spaces in each utility’s service territory to direct utility service.

•  Applied to both electric and gas services.

•  Included “to-the-meter” and “beyond-the-meter” distribution system conversions.

•  Allowed utilities to enter actual program costs in a balancing account, and recover both “to-the-meter” and “beyond-the-meter” in General Rate Cases (GRCs).

All electric and gas utilities (IOUs) submitted Advice Letters (AL)[4] to the Commission for approval to implement their MHP Pilot and new electric and/or gas tariffs. The Commission approved these ALs and electric and gas tariffs.

The IOUs were required to file annual reports to Energy Division and Safety and Enforcement Division (SED) on February of 2016, 2017, and 2018 to provide program status, identify construction costs, and provide assessments of the
3-year pilot program.

D.14-03-021 OP 13 states that any utility may file a Tier-2 AL within 45 days of the second annual status report to request continuation of the conversion program if the actual experience to that point appears to warrant continuation of the program without major modification. PG&E, SCE, SDG&E, CalPeco Electric, SoCalGas, and Southwest Gas (collectively, the IOUs) filed ALs to request continuation and expansion of the conversion program.

On May 5, 2017, SoCalGas and SDG&E filed applications to convert an additional 10% to 20% of MHPs and to continue the program to 2023 (Application 17-05-007 and Application 17-05-008, respectively).

Notice

Notices of AL 3822-G/5033-E, 3822-G-A/5033-E-A, 3822-G-B/5033-E-B,
AL 3576-E, AL 3057-E/2563-G, AL 76-E,
AL 5106-G, and AL 1035-G were made by publication in the Commission’s Daily Calendar. PG&E, SCE, SDG&E, CalPeco Electric, SoCalGas, and Southwest Gas state that a copy of the Advice Letter was mailed and distributed in accordance with Section 4 of General Order 96-B.

Protests

PG&E AL 3822-G-A/5033-E-A, SCE AL 3576-E, SDG&E AL 3057-E/2563-G, CalPeco Electric AL 76-E, SoCalGas AL 5106-G, and Southwest Gas AL 1035-G were protested.

The Utility Reform Network (TURN) filed a late protest on April 21, 2017 to ALs from PG&E, SDG&E, SoCal Gas, and Southwest Gas. TURN filed an amended protest on June 21, 2017 to all the IOUs ALs. TURN’s initial protests recommended the Commission reject the ALs and direct the IOUs to refile the ALs with additional information because the ALs did not include an assessment and results of the pilot programs, the actual costs incurred from the pilot programs, or the impacts of those costs on ratepayers. TURN argued that the ALs also failed to provide any concrete justification to expand the MHP conversion programs and details on the impacts of the expansions.

TURN’s amended protests recommended the Commission reject the ALs with prejudice and require the IOUs to submit formal applications because the magnitude of the cost increases and numerous issues raised in the ALs require development of an evidentiary record and the judgment of the full Commission. TURN argues that it is inappropriate for the Commission to contemplate a major expansion of the pilot program through the advice letter process. However, TURN did not protest the utilities’ requests to continue the existing pilot program through 2018 to complete the 10% goal of the program.[5]

The IOUs that received the initial protest from TURN replied on April 21, 2017. All the IOUs replied to TURN’s amended protest on June 28, 2017, except CalPeco Electric who replied on June 27, 2017.

PG&E

In response to TURN’s protests, PG&E argues that it has submitted annual reports to the Commission regarding the progress of the program. PG&E contends that the merits of the pilot program have been detailed in the original decision and related proceedings and was not a requirement of the AL filing per the Decision. In addition, PG&E states that it has submitted cost accounting to the Commission and will work with the Energy Division to provide additional cost information if necessary. Through the MHP Pilot, PG&E has detected and eliminated many gas leaks found at participating mobile home parks. Hence, according to PG&E, the MHP Pilot is warranted to promote improved safety in the distribution of natural gas and electricity.

In response to TURN’s amended protest, PG&E maintains that requiring utilities to submit an application to continue the MHP Pilot beyond the pilot period, was a suggestion by the Office of Ratepayer Advocates (ORA) in the rulemaking proceeding.[6] However this provision was not adopted into the final decision. Hence, PG&E appropriately followed this process specified in the decision when filing AL 3822-G/5033-E.

PG&E also states that the advice letter process avoids a costly and time-consuming relitigation of the CPUC's ruling. Therefore, the MHP Pilot with its important safety and reliability benefits can be continued without interruption. Furthermore, those delays would likely result in a suspension of MHP Pilot upgrade activities, which would have tangible cost impacts to restart the program.

On August 10, 2017, PG&E filed a second Supplemental filing to delete changes to the tariff sheets originally included in AL 3822-G/5033-E, filed March 17, 2017 and in AL 3822-G-A/5033-E-A, filed March 28, 2017. PG&E also requests removal of the section with heading title “Program Continuation.” PG&E explains that the changes are in response to TURN’s concerns. With these changes, PG&E states that TURN supports completion of the pilot into 2018 as PG&E proposed and the proposed changes in PG&E’s second Supplemental filing.

Southwest Gas

In response to TURN’s protest, Southwest Gas argues that its AL 1035-G is consistent with OP 13 of D.14-03-021. Southwest Gas states that TURN is attempting to re-litigate an issue that was resolved in the rulemaking. Southwest Gas also states it does not seek to expand the MHP Pilot. No modifications are proposed to the framework of the existing pilot and a reasonableness review of the expanded program costs would be conducted as part of the subsequent general rate case. Southwest Gas seeks to continue the MHP Pilot under the same parameters (including cost recovery) under which the pilot is currently being conducted and as such, Southwest Gas AL 1035-G falls under the parameters of D.14-03-021, OP 13 for continuation of the MHP Pilot.

Southwest Gas further states that D.14-03-021 clearly says that a reasonableness review of costs incurred during the pilot period will occur in the utilities’ respective general rate cases.[7] Therefore, continuation of the program, particularly for utilities like Southwest Gas who seek to expand the MHP program without modifications to the framework of the existing pilot can be evaluated through a Tier 2 AL as supported by OP 13 of D.14-03-021.

SCE

SCE argues that in the rulemaking proceeding, the Office of Ratepayer Advocates (ORA) proposed that the Commission require the utilities submit an application for continuation of the MHP Pilot beyond the pilot period; however this provision was not adopted into the final decision. SCE states the Commission specifically contemplated the argument that the MHP Pilot should only be extended and expanded through an application, but rejected ORA’s proposal by adopting OP 13 of the Decision.

Therefore, because the Commission did not adopt that ORA’s approach, SCE argues that if TURN challenges the procedural venue, TURN must file a petition to modify the Decision. General Order 96-B, Section 5.1 provides that the AL process is appropriate where the utility “has been authorized or required… by other Commission order, to seek the requested relief by means of an Advice Letter…” Hence, OP 13 of the Decision has specifically authorized the utilities to seek this relief. SCE is seeking continuation of the same program, without major modification, without significant cost changes per unit, and using existing and approved ratemaking treatment. Therefore, SCE argues the AL in this proceeding is ministerial.

SCE also states that it records program costs for the MHP program in a balancing account, and the costs are subject to reasonableness review in SCE’s next General Rate Case (GRC).

CalPeco Electric

In response to TURN’s protests, CalPeco states that it does not propose any modifications to the existing MHP Pilot approved in D.14-03-021 and set forth in its tariffs. CalPeco argues that its request to continue the program does not result in a significant expansion of the MHP Pilot because it involves a total of only
180 additional spaces. CalPeco also states that it seeks to continue the MHP Pilot to ensure that its mobile home park customers receive safe and reliable electric service.

SDG&E and SoCalGas

SoCalGas and SDG&E filed similar replies in response to TURN’s protest. SoCalGas and SDG&E’s justifications for continuing the MHP Pilot include the following: 1) the conversions are in compliance with current safety standards,
2) the program increases safety and reliability, 3) no OSHA or Lost Time Safety incidents have occurred, 4) the program has received high customer satisfaction, and 5) new eligible customers have been identified for the California Alternate Rates for Energy and Medical Baseline Allowance programs.

SDG&E and SoCalGas also state that the Commission has already considered the policy arguments for and against the MHP Pilot and its various components, as well as costs, and ordered the initial step of the MHP Pilot to commence. SDG&E and SoCalGas contend that TURN’s end goal is to re-litigate the MHP Pilot and this should only be done by a petition for modification.

Furthermore, SDG&E argue that the Commission ordered that a request to continue the MHP Pilot could be done by advice letter despite ORA’s proposal to require an application to be filed after the second year of the MHP Pilot in order to continue the program. This is consistent with the Commission’s stated goal “[t]o ensure the pilot can be flexibly extended to permit further, voluntary conversions.”[8]

SDG&E and SoCalGas have filed applications to continue the MHP Pilot to include an additional twenty percent of spaces within SDG&E and SoCalGas’ territories (Application 17-05-008 and Application 17-05-007, respectively).

Letters of support

On April 2, 2017, the Western Manufactured Housing Community Association (WMA) sent a letter of support for the advice letter filings by PG&E, SCE, Southwest, SDG&E and SoCalGas. As an initial proponent of the program back in 2011, WMA agrees with the utilities that the program has been successful and should be continued.