X. Procurement Plan Process

As discussed above, we require each utility to modify its existing plans. In recognition that there is a pressing need to have plans fully modified and in place by January 1, 2003, we distinguish between what should be submitted November 12^th as immediately necessary modifications to address short-term procurement and what should be submitted subsequently to address long-term procurement plans. These two categories - short-term and long-term are discussed sequentially below. Anything required for the short-term plan should also be in the long-term plan.

A. Short-term Procurement Plans

In D.02-08-071 we authorized the utilities transitional procurement authority to cover up to 100% of their low-case forecast scenario RNS needs (a conservative estimate) beginning January 1, 2003. In an ideal world, our transitional procurement authorization would have covered all short-term needs and this decision would cover only long-term procurement planning. We recognize two realities, however:

· that there may be a gap between the authority we granted in D.02-08-071 and the utilities' actual RNS needs beginning January 1, 2003, and

· that there is not enough time between the issuance of this decision and January 1, 2003 for the utilities to present thoughtful and realistic long-term procurement plans and have them approved by the Commission before beginning procurement under those plans (to ensure compliance with AB57 requirements).

For these reasons, and in view of the modifications that we have identified as necessary in the preceding sections of this decision, we find it necessary for each utility to first file what we will call a "short-term procurement plan," that will incorporate the requisite modifications to the extant plans on November 12, 2002, to cover each utility's updated RNS needs. The short-term procurement plan should cover only plans for activities to procure electricity in 2003 (though the actual power bought or contracted for in 2003 may cover needs for up to five years). The short-term procurement plans may utilize all products and authorities granted within this decision, and should include all required elements of a procurement plan described in Section IV above, along with relevant information discussed in Sections V through IX. In the short-term procurement plan, we do not expect the utilities to undertake an exhaustive procurement planning process that takes into account all possible resource options. The short-term process will necessarily be narrowly focused and therefore only include a subset of resources (Section V) or transaction types (Section VII), for example.

We intend to issue a decision approving or modifying the utilities' short-term procurement plans by the end of 2002. To meet that deadline, we adopt an expedited procedural process that provides for comments and protests on December 2, 2002, reply comments from all interested parties on December 6, 2002, and preparation of a draft decision for the Commission's consideration at the 2nd meeting of December 2002.

Once a utility's short-term procurement plan is approved, all transactions entered into in compliance with the procurement plan should be filed for tracking purposes in a quarterly advice letter with the Commission Energy Division. The advice letter should include all information in the adopted master data request in Appendix B.

We recognize that it may be late in 2003 before we have an adopted long term plan. Therefore, to better ensure the short-term procurement plans adequately reflect the procurement needs of each utility, we afford each utility the opportunity to update its short-term procurement plan by expedited application filing. Before a filing, each utility shall meet and confer with its procurement review group.

B. Long-term Procurement Plans

While we view the short-term procurement plans described above as a stopgap measure to ensure that there are no unmet needs and the lights stay on beginning January 1, 2003, we believe that the bulk of our efforts going forward should be focused on putting a process in place to meet the long-term (up to 20-year) procurement needs of California electricity consumers. Indeed, most of the description of procurement plans in Sections V through IX above is focused on long-term procurement needs.

To that end, we require that the utilities file, no later than April 1, 2003, a long-term procurement plan to cover anticipated needs between 2004 and 2023. Thus, contract terms of up to 20 years may be authorized. This long-term procurement plan should include a mix of all of the resources and products authorized in this decision. In particular, the long-term plan should explicitly include all of the resources covered in Section V of this decision. If a utility chooses not to plan to procure any of the resources in Section V, the long-term plan should include a detailed description of the reasons for excluding those resources.

As part of its long-term plan, each utility should identify which procurement proposals will require environmental review, special permits, separate applications or other regulatory procedures or proceedings.

This advice letter process does not supplant the need to follow more traditional procedures for actions that would normally require such procedures. For example, proposals that rely on a budget increase, such as new expenditures for energy efficiency, must be advanced through an application. Similarly, new rate design, such as variations on Time-of-Use rates, require an application. New utility capital projects, such as transmission upgrades and power plants, often require a Certificate of Public Convenience and Necessity. These are only examples. The broader point is that the resource plan and advice letter process do not obviate compliance with other legal requirements.

We plan to review the long-term procurement plans through a full evidentiary process that will conclude with a final Commission decision prior to the end of 2003. To achieve this ambitious undertaking, we adopt the following preliminary schedule:

February 10, 2003	Interested parties file written comments on outlines
February 17, 2003	Prehearing Conference
April 1, 2003	Utilities file long-term procurement plans and supporting testimony
June 2, 2003	Interested parties file testimony
June 23, 2003	All parties file rebuttal testimony
June 30 - July 18, 2003	Hearings
August 8 & 15	Opening and Reply Briefs
October 17, 2003	Proposed Decision
November 2003	Final Decision

As with the short-term procurement process, utilities should file a quarterly compliance advice letter within 15 days after the end of each quarter detailing all transactions in compliance with the adopted plan. If a transaction falls outside of the approved plan, the utility should file an expedited application as detailed in Appendix C.