Resolution E-4910 February 9, 2018

SDG&E AL-2992-E/E-A/BSS

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION E-4910

February 8, 2018

RESOLUTION

Resolution E-4910. San Diego Gas and Electric Company’s (SDG&E) Marketing, Education and Outreach Plan in Compliance with the December 17, 2015 Assigned Commissioner and Administrative Law Judge’s Ruling and Decision 15-07-001 on Residential Default Time of Use Rates.

PROPOSED OUTCOME:

·  Approves with modifications Advice Letter 2992-E and Advice Letter 2992-E-A on SDG&E’s time-of-use marketing, education and outreach plan for 2017-2019.

·  SDG&E shall file a new Advice Letter in compliance with this Resolution by March 30, 2018.

SAFETY CONSIDERATIONS:

·  There is no impact on safety.

ESTIMATED COST:

·  The cost of SDG&E’s plan is estimated to be $19.4 million over 3 years.

By Advice Letter (AL) 2992-E, filed on November 1, 2016 and
AL 2992-E-A filed on March 15, 2017.

______

Summary

This Resolution approves, with modifications, SDG&E’s Marketing, Education and Outreach Plan (ME&O Plan) as presented in AL 2992-E and as supplemented in AL 2992-E-A.

On November 1, 2016, SDG&E filed its ME&O Plan in accordance with Decision (D.)15-07-001 and an Assigned Commissioner and Administrative Law Judge Ruling issued on December 17, 2015 (December 2015 Ruling) in Rulemaking (R.)12-06-013. AL 2992-E describes SDG&E’s time-of-use (TOU) customer engagement strategy for 2017-2019 leading up to the rolling default of approximately 1.3 million SDG&E residential customers onto a default TOU rate in 2019.[1]

SDG&E’s ME&O Plan was informed by decisions and rulings in (R.)12-06-013, portions of the Greenberg, Inc. Rate Reform ME&O Blueprint (Blueprint)[2], and thoughtful input from the ME&O Working Group. SDG&E requests adoption of the proposed ME&O Plan and for proposed budget expenditures to be collected and tracked through its Rate Reform Memorandum Account (RRMA), as authorized in D.15-07-001.

The overarching goal of the ME&O Plan for TOU is to increase customer awareness, understanding, and engagement with rate options and with energy management tools and behaviors that can help manage energy use, and to increase adoption and retention of customers on TOU rates.[3] The specific outcomes and objectives for default TOU marketing strategies are as follows:

·  Customers understand generally what TOU is, why and when transition to TOU is occurring, the benefits of a TOU rate, and that they have rate options.

·  Customers are educated on what TOU specifically means to them and how to be successful on a TOU rate.

·  Customers who are structural benefiters are encouraged to transition to TOU and start saving before TOU default, and others are encouraged to make behavioral changes before TOU default.

·  Customers choose the “best” rate for them.

·  Customers retain their TOU rate after the first 12 months of default TOU.

Background

Decision (D.)15-07-001 directed Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas & Electric Company (SDG&E) (collectively the IOUs) to begin the process of defaulting residential customers to TOU rates in 2019 after undertaking a series of opt-in TOU pilots in 2016 and default TOU pilots in 2018. In D.15-07-001, the Commission discussed the importance of providing adequate ME&O to customers and directed the IOUs to work with other parties to create an ME&O Working Group.[4] D.15-07-001 tasked the Working Group with examining ME&O strategies associated with customer awareness and understanding of changes to the tiered rate structure and the transition to default TOU rates, as well as consideration of long-term outreach to customers.[5]

ME&O Working Group and the Implementation Process

In late 2015 and early 2016, the Working Group met and created a set of draft metrics for ME&O activities and designed a baseline ME&O study to ascertain awareness and understanding of rates among ratepayers.[6] SDG&E's initial baseline study found that 52 percent of customers surveyed were aware of TOU; however, 46 percent were unaware of which rate plan they were on. Furthermore, of the 9 percent that thought they were on a TOU rate, only 1 percent were actually enrolled in one.[7]

On December 17, 2015, the Assigned Commissioner and Administrative Law Judge (ALJ) issued a ruling (December 2015 Ruling) which described the Commission’s desire for greater integration of marketing activities between rate reform, demand-side management (DSM) and other IOU programs, as well as a more systematic approach to planning for default TOU ME&O. This ruling directed the IOUs to hire an expert consultant to advise the Working Group on appropriate ME&O metrics, goals, and strategies, including a plan for statewide ME&O program coordination.

The December 2015 ruling also directed the IOUs to prepare a comprehensive ME&O plan by September 1, 2016,[8] with the following provisions:

·  Specific timelines for rate-reform related ME&O activities;

·  Budgets for such activities;

·  Descriptions of segmented ME&O for certain customer groups;

·  Surveying methodologies and questions to evaluate the metrics;

·  Coordination between the IOU’s’ ME&O activities and the statewide ME&O program (Energy Upgrade California or EUC), including how messaging content, campaigns and communication plans will be aligned. [9]

The Greenberg Blueprint

Following the solicitation of Requests for Proposals during the first quarter of 2016, the Working Group selected Greenberg, Inc. (Greenberg) as the ME&O consultant.[10] After significant consultation with Working Group members, as well as Commission and IOU staff, Greenberg delivered its Blueprint on August 20, 2016.[11] Through their research, Greenberg confirmed the findings of the baseline study, which indicated that customers are generally not engaged with energy. A set of focus groups and in-depth interviews with customers in the three IOU territories found that customers did not connect their personal actions with demand on the electric grid and did not adequately understand how they were billed for energy.[12]

The Blueprint included a strategic action plan for statewide and local utility marketing as well as a proposed vision, metrics, timeline and budgets for 2017 through 2019. The ME&O strategies and tactics include:

·  Steps to engage customers on an emotional level as well as an intellectual level in order to affect change in behavior, with an emotional quotient (EQ) based statewide message to increase customer engagement while the IOUs would provide a more intellectual quotient (IQ) based message (i.e. details on rate plans, rate comparisons, and tips on how to adapt and conserve);

·  An impact-based segmentation strategy which emphasizes spending the most time and money on customers who would be the most negatively impacted by default TOU rates, then applying psychographics to those segments to further refine the message;

·  A “go-to-market” plan which increases the amount of messaging closer to default on a 90/60/30 day timeline;

·  Plans for default and post-default messaging.

On September 12, 2016, a workshop was held by the Commission to discuss how best to incorporate the Greenberg Blueprint into the IOUs’ ME&O plans. Parties evaluated certain portions of the Blueprint at the workshop, including the proposed budgets.

Other parts of the Blueprint, such as establishing formal alignment and management processes between ME&O in different proceedings and programs, were evaluated and agreed upon internally by Commission staff. This resulted in a common outline that was provided to the IOUs by ALJ ruling on
September 30, 2016 (September 2016 Ruling).[13]

The ME&O Plan and Supplemental Information

On November 1, 2016, SDG&E submitted AL 2992-E, setting forth its ME&O Plan, detailing strategies, tactics and timelines for customer engagement in accordance with the December 2015 Ruling. SDG&E’s ME&O Plan includes the following four phases for transitioning to TOU rates:

•  Phase 1 in 2017 (outdated): SDG&E ME&O Plan activities technically began in 2017, and any expenditures recorded pending AL 2992-E and 2992-E-A review will be evaluated in a future GRC. In 2017, SDG&E focused on building awareness of TOU rates and setting the contextual groundwork for TOU. This will include an opt-in TOU customer acquisition campaign that continues through 2018.

•  Phase 2 in 2018: Emphasizes the benefits of TOU rates and how customers can be successful on them.

•  Phase 3 in 2019: Will continue education and engagement efforts during TOU default rollout.

•  Phase 4 in late 2019: Will focus on sustained action and TOU rate retention.

SDG&E’s ME&O Plan includes established IOU metrics and those recommended by Greenberg as appropriate, associated targets, and plans for evaluating progress towards residential TOU goals. Moreover, it incorporates a modified version of the basic segmentation strategy identified in the Blueprint, with SDG&E tailoring the messaging, depth of engagement, and level of investment based on monetary impact per segment. A timeline which shows when each tactic will be deployed and a set of customer profiles showing when customers will be receiving specific messages were also provided. In addition, the ME&O Plan as presented contains a budget estimate of $19.4 million total for the activities described herein, and may be supplemented in the future based on input from the Working Group.

In response to direction provided by ALJ McKinney at the February 6, 2017 prehearing conference (PHC), SDG&E submitted supplemental AL 2992-E-A on March 15, 2017, which included new information and updates to the ME&O Plan. AL 2992-E-A included a budget presented in more detail and in a manner comparable to the other IOUs, as well as additional information on the following: segmentation data, a sample of what customers will be receiving over the transition timeline, guidelines for tracking of community based organizations (CBOs) outreach effectiveness, and a description of how rate reform costs are incremental to DSM efforts.

Notice

Notice of AL 2992-E was made by publication in the Commission’s Daily Calendar. SDG&E states that a copy of the Advice Letter was mailed and distributed in accordance with Section 4 of General Order 96-B.

Protests

ORA Protest

SDG&E’s Advice Letter AL 2992-E was timely protested by the Office of Ratepayer Advocates (ORA), and SDG&E replied to the protest on
December 28, 2016.

In its protest, ORA requests that the Commission reject AL 2992-E due to SDG&E’s failure to provide sufficient cost information to justify its estimated ME&O budget. They request that SDG&E submit a budget with additional, line-item detail, and assert that the recovery of expenditures in the RRMA should be contingent on SDG&E achieving the finalized targets identified in the ME&O Plan in a cost-effective manner. Additionally, they request that SDG&E modify its quarterly Progress on Residential Rate Reform (PRRR) filings to include variations between budgeted and actual spending on ME&O activities.

In reply to ORA’s request for a detailed line item budget, SDG&E provided a spreadsheet of budget items linked to each planned activity. In addition, SDG&E opposed tying any recovery of costs to success metrics as they currently exist, citing the numerous interdependent proceedings that attempt to influence customer behavior and what SDG&E sees as the inability of customers to isolate their opinion and feedback on rate reform based on the other energy related offers in the market.

Center for Accessible Technology / Greenlining Institute Response to AL 2992-E

A timely response to AL 2992-E was filed by the Center for Accessible Technology (CforAT) and the Greenlining Institute (Greenlining), and SDG&E replied to the response on December 28, 2016.

In their response, CforAT and Greenling ask for the development of consistent and effective ME&O plans and budgets through coordination between the various programs that are involved in demand-side program messaging, including the CARE/ESAP proceeding (A.14-11-007) and the Statewide ME&O proceeding (A.12-08-007). They believe that rather than continuing with two overlapping plans, the ME&O effort in R.12-06-013 should coordinate and potentially consolidate with the Statewide ME&O effort and its associated brand, Energy Upgrade California (EUC). They agree with SDG&E that expert assistance should be engaged to help with these efforts.

While CforAT and Greenlining agree on the need for comprehensive ME&O, they point out the many unknowns in the default TOU process, whether a transition will be big bang or rolling, the categories of customer that might be excluded from default, the actual default rates and the results of the pilots, among a few, that could hinder a coordinated ME&O process. They ask that the Commission defer the expansive plans submitted by SDG&E and authorize the more targeted areas including the opt-in TOU campaign until after the integration with the Statewide ME&O effort.

SDG&E agreed with Greenlining and CforAT that coordination with the statewide campaign is preferable and agrees that an additional AL may be necessary once there is a clear path forward for the statewide campaign. They do not agree that only portions of the plan as presented should be approved and contend that all ME&O to be performed at the local level should be authorized.

Discussion

Energy Division (ED) Staff reviewed AL 2992-E and AL 2992-E-A for consistency with the ME&O directives in D.15-07-001, the December 2015 Ruling, the September 2016 Ruling and the supplemental information requested by ALJ McKinney at the February 6, 2017 PHC. Additional guidance was provided through ME&O Working Group meetings and the September 12, 2016 workshop. SDG&E’s ME&O Plan includes a discussion of how it compares to the Blueprint, and follows a common outline as laid out in the September 2016 Ruling.

Timelines for Rate Reform Related Communications and Other Activities

The December 2015 Ruling requested that the ME&O plans include specific timelines for planned rate reform activities, and SDG&E included a series of milestones for rate reform activities between 2017 and 2020.[14] While the proposed activities for 2017 are now outdated, expenditures for any activities undertaken through 2017 will be reviewed in SDG&E’s Rate Reform Memorandum Account (RRMA). SDG&E launched its High Usage Charge (HUC) outreach in 2017 and will continue its outreach related to HUC and tier collapse throughout 2018 and 2019.

The Commission has not yet approved a start date for default TOU transition. The precise date in 2019 will be proposed by the IOUs in their January 1, 2018 rate design window applications as ordered by D.15-07-001. SDGE plans to launch ME&O efforts to support default TOU beginning in March 2019.[15]

SDG&E provides a communications calendar showing when communications will be deployed.[16] SDG&E plans to send notices to customers 60 and 30 days before default, with the precise number of touchpoints for various segments (i.e. those potentially negatively impacted by TOU) to be determined after testing in the default TOU pilot. This does not align with the Blueprint recommendation that the optimal default TOU engagement strategy begins with a 90/60/30 communication cadence for prelaunch. Low customer engagement necessitates that default TOU messaging should be deployed 90 days prior to launch.[17]
We direct SDG&E to send notices to customers 90 days before default.