Discussion

SDG&E's amended 2010 ERRA and CTC forecasts are $44 million lower that the 2009 ERRA forecast. Thus, for the second year in a row, SDG&E does not seek authority to increase its ERRA or CTC related rates. The key drivers behind the decrease are lower costs for fuel and market purchases, higher market sales and lower hedging costs. For example, SDG&E forecasts that:

· Bundled load for 2010 will be less than the bundled load forecasted for 2009;

· Contracted generation will decrease from 2009;

· The quantity of equivalent market purchases will decrease from the forecast for 2009 due to the lower load forecast and an increase in generation from SDG&E's resource portfolio attributable to new generation;

· ERRA expenses for SONGS nuclear fuel and carrying charge expenses will decrease from 2009; and

· ERRA expenses for CTC QF contracts will be lower in 2010 than 2009.

Thus, as set forth in the Application, testimony and updated information filed on October 1, 2009 and December 18, 2009, pursuant to the process established at the PHC, SDG&E has provided the necessary showing to support its request.

With no opposition to SDG&E's application and a record that affirms the reasonableness of its 2010 forecasts, we find SDG&E's resource supply and revenue requirement forecast for 2010 to be reasonable. We also find SDG&E's proposal to adopt a 2010 ongoing CTC Market Proxy Price of $58.54 per MWh and 2010 ongoing CTC revenue requirement forecast of $46.908 million reasonable.