3. Discussion

The Legislature has directed this Commission to suspend the right of retail end-use customers to acquire direct access service until DWR no longer procures power for the retail end-users. The legislative direction is clear. The suspension of the right to acquire direct access service should apply to Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E). Currently, the State of California through the DWR is purchasing electric energy on behalf of the utilities' existing ratepayers (except those purchasing electric energy from ESPs) with funds from the State's General Fund and an interim loan. To repay the General Fund and continue the power purchase program, state agencies are preparing to issue DWR Power Supply Revenue Bonds. We have been informed by the State Treasurer's Office, the Department of Finance, the DWR, and members of the financing team for the DWR Power Purchase Revenue Bonds that "to sell the bonds with the investment grade ratings required by law, it will be necessary to control the conditions under which ratepayers (generally large users, such as industrial customers) `exit the system'." (See Appendix A, emphasis added.)

We agree that suspending the right to acquire direct access service will assist the Administration and the State Treasurer in proceeding with the bond transaction that they are currently undertaking. Suspending the right to acquire direct access service will assist in issuing these bonds at investment grade, by providing DWR with a stable customer base from which to recover its costs. Furthermore, we note that the suspension of the ability to acquire direct access service will provide DWR with a stable customer base from which to recover the cost of the power it has purchased and continues to purchase.

The statute gives the Commission some discretion as to when the right to acquire direct access service should be suspended. However, the Commission is statutorily required to suspend that right. Moreover, as noted above, suspending the right to acquire direct access service will help ensure the recovery of DWR's costs and, thus, successful issuance of the bonds as currently contemplated by the Administration and the State Treasurer. DWR has been purchasing power since January 2001, and the Administration and the State Treasurer are proceeding apace with the bond transaction.