ALJ/JSW/sid Mailed 12/23/2002

Decision 02-12-072 December 19, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (E 3338-E) for Authority to Institute a Rate Stabilization Plan with a Rate Increase and End of Rate Freeze Tariffs.	Application 00-11-038 (Filed November 16, 2000)
Emergency Application of Pacific Gas and Electric Company to Adopt a Rate Stabilization Plan. (U 39 E)	Application 00-11-056 (Filed November 22, 2000)
Petition of THE UTILITY REFORM NETWORK for Modification of Resolution E-3527.	Application 00-10-028 (Filed October 17, 2000)

OPINION APPROVING THE 2003 SERVICING ORDER CONCERNING PACIFIC GAS AND ELECTRIC COMPANY AND THE CALIFORNIA DEPARTMENT OF WATER RESOURCES

Summary

On October 8, 2002, the California Department of Water Resources (DWR) submitted to this Commission a memorandum and proposed modifications to the "Servicing Order Concerning State of California Department of Water Resources And Pacific Gas and Electric Company" (Original Servicing Order).¹ DWR's submission was made in response to D.02-09-053 (the "Contract Allocation Decision"), which directed DWR to request that the Commission make appropriate modifications to the Original Servicing Order governing PG&E as a result of the allocation of energy from, and operational responsibility for, DWR's electricity contracts to PG&E and the other two large electric utilities.

Today's decision approves a modified version of DWR's proposed modifications to the Original Servicing Order, which has been labeled as the "2003 Servicing Order Concerning State of California Department of Water Resources And Pacific Gas and Electric Company" (2003 Servicing Order). Appendix A of this decision contains a marked version of the revisions to the 2003 Servicing Order that we approve today. Appendix B of this decision is a "clean" copy of the approved 2003 Servicing Order. PG&E is ordered to comply with the terms and conditions of the 2003 Servicing Order. The 2003 Servicing Order sets forth the terms and conditions under which PG&E will provide the transmission and distribution of DWR-purchased electricity, as well as billing, collection, and related services on behalf of DWR. The 2003 Servicing Order also addresses DWR's compensation to PG&E for providing those services.

The Contract Allocation Decision ordered that PG&E, and the other two large electric utilities, are to assume operational control of the DWR contracts beginning on January 1, 2003. Since the utilities will be responsible for selling surplus energy from the DWR contracts, the utilities will have to remit the revenues from such sales to DWR. In order to do so, the 2003 Servicing Order addressing the remittance of the revenues from the sales of surplus energy needs to be put into place prior to year's end.