II. Background
The Commission made the preliminary finding in resolution ALJ 176-3036, issued on April 6, 2000, that the category for these proceedings is ratesetting and determined that the matter requires hearings. We have considered our preliminary determinations and find that a hearing is not necessary for these proceedings.
In Decision (D.) 99-10-057, we had determined that PG&E and Edison may not recover costs incurred during the rate freeze in the post-rate-freeze period.4 We had held that deferring recovery of costs incurred during the rate freeze until afterward is unlawful under § 367(a).5
In response to D.99-10-057, both utilities filed applications seeking to recover certain costs while the freeze was still in place.6 On March 20, 2000, PG&E filed Application (A.) 00-03-038, and on March 22, 2000, Edison filed A.00-03-047. Both companies requested authority to modify their Transition Revenue Accounts (TRAs) and Transition Cost Balancing Accounts (TCBAs) accounting mechanisms. They wanted authority to transfer and recover costs, and return of revenues recorded in various previously-authorized regulatory accounts during the rate freeze. They asserted that nothing in our prior decisions precluded such recovery even though they both acknowledged that allowing recovery was anticipated to postpone the end of the rate freeze. This was argued because the rate freeze could not end until either the utility had recovered its transition costs, or until the statutory deadline was reached. These applications were vigorously protested. The parties' positions, as argued in 2000, are discussed briefly in this decision.
In the summer of 2000, wholesale electric power prices rose drastically. PG&E and Edison incurred huge debts buying electricity through the California Power Exchange (CalPX). In an extraordinary session in January 2001, the Legislature enacted AB 6X, which amended several provisions of AB 1890, halting the transition to a competitive electricity market with market-based rates for the utilities' electric generation. See Southern California Edison Company v. Peevey (2003) 31 Cal.4th 781, 790. Due to the press of the energy crisis, these proceedings were not processed in a sufficiently timely fashion to authorize cost recovery before the expiration of the statutory freeze period. Since that deadline passed, the Commission has dealt elsewhere with many of the ratemaking aspects of the end of the freeze period. On January 8, 2004 in D.04-01-026, the Commission determined that the rate freeze for PG&E and Edison ended on January 18, 2001; the date that AB 6X went into effect. (Mimeo., p. 2.)
4 In the context of electric industry restructuring, the term "rate freeze" referred at the time these applications were filed to the provision in Pub. Util. Code § 368 that sets customer electric rates equal to those in effect on June 10, 1996, until the end of a "transition period." Pub. Util. Code §§ 367 and 368 provided for the termination of each electric utility's rate freeze period as soon as that utility recovered its uneconomic generation-related costs (known as "transition costs"), or on March 31, 2002, whichever was earliest. These transition costs were above-market generation-related costs (e.g., nuclear power generation costs) considered to be uneconomic in a market-based rate context. In contrast, under cost-of-service rates, these costs were recoverable, so long as they were reasonably incurred. 5 We denied, in relevant part, PG&E's Application for Rehearing of D.99-10-057 in D.00-03-058. 6 Because both Applications raise the same issues, the then-assigned Administrative Law Judge (ALJ) consolidated the proceedings in a Ruling issued on May 26, 2000.
