XII. Ratemaking Treatment for Generation Procurement

As set forth in the ACR dated April 2, 2002, the objectives in developing an interim cost recovery procurement mechanism are to:

· improve the ability of the respondent utilities to meet their obligation to serve their customers' electric loads;

· assure just and reasonable electricity rates;

· enhance the financial stability and creditworthiness of respondent utilities;

· diminish the need for after-the-fact reasonableness reviews of procurement purchases;

· ensure the timely recovery in rates of procurement costs in order to support the credit of the utilities that function as load serving entities; and

· pursue our mandate to promote the development of renewable generation in California.

The ACR finds that "Edison's proposal is generally consistent with prior cost recovery mechanisms for PPs and it is therefore a familiar and understood approach to industry, advocates, and the financial community." The respondent utilities propose various cost recovery mechanisms to comply with the objectives and the preferred method. They indicate that a quick review and timely cost recovery process are critical to their financial stability and creditworthiness that would avoid any accumulation of large under-collections of purchased power costs.

The purpose of balancing accounts and timely recovery of procurement costs are intertwined in the AB 57. Proposed Section 454.5 (d) (3) contains certain procurement cost recovery objectives and provisions for the Commission to implement. The relevant part states that the Commission shall:

Ensure timely recovery of prospective procurement costs incurred pursuant to an approved procurement plan. The Commission shall establish rates based on forecasts of procurement costs adopted by the Commission, actual procurement costs incurred, or combination there of, as determined by the commission. The Commission shall establish power procurement balancing accounts to track the differences between recorded revenues and costs incurred pursuant to an approved procurement plan. The Commission shall review the power procurement balancing accounts, not less than semiannually, and shall adjust rates or order refunds, as necessary, to promptly amortize a balancing account, according to a schedule determined by the Commission. Until January 1, 2006, the commission shall ensure that any overcollection or under-collection in the power procurement balancing account does not exceed five percent of the electrical corporation's actual recorded generation revenues for the prior calendar year excluding revenues collected for the DWR. The Commission shall determine the schedule for amortizing the overcollection or undercollection in the balancing account to ensure that the five percent threshold is not exceeded. After January 1, 2006, this adjustment shall occur when deemed appropriate by the commission consistent with the objectives of this section.

Parties also state that their proposals are in harmony with the intent of proposed AB 57. The cost recovery mechanism proposals from PG&E, Edison, SDG&E, ORA and TURN are enumerated below.

A.

B. Parties Proposals

9. Parties Balancing Account Proposals

PG&E	SDG&E	EDISON	ORA	TURN
Purchased ElectricCommodity Account (PECA)18 Consisting of two sub-accounts:(1) It tracks monthly PG&E's costs and associated revenues and (2) It tracks DWR's revenues and costs.	Procurement Cost Adjustment Mechanism (PCAM) that tracks actual monthly energy procurement commitments and ancillary services costs and related revenues except for URG19 costs.	Existing Settlement Rates Balancing Account (SRBA) 20 that tracks the difference between "Settlement Rates"21 revenues and "Recoverable Costs."	Energy Cost Adjustment Clause (ECAC)22 Type balancing account that tracks billed revenues from established fuel and purchased power forecast rate and actual costs.	Balancing Account for fuel and procurement related costs including operations and maintenance (O&M)23 and capital costs for power from URG.

10. Scope of Included Expenses²⁴

Types of Cost	PG&E25	SDG&E26	EDISON27	ORA
URG Fuels	YES	NO	YES	YES
QF Contracts	YES	NO	YES	YES
Inter -Utility Contracts	YES	NO	YES	YES
ISO Charges Less RMR28	YES	NO	YES	YES
Irrigation District Contracts	YES	N/A	N/A	YES
Bilateral or Forward Market Purchases	YES	YES	YES	YES
Credit and Collateral	YES	YES	YES	YES
Ancillary Services	YES	YES	YES	YES

11. Edison Treatment of Pre and Post December 31, 2003

Edison proposes three approaches to record and recover costs associated with its RNS. Prior to its 2003 GRC decision, RNS costs would be recorded in the SRBA until new revenue requirements are established by the GRC decision to recover base costs and F&PP costs. Base costs include distribution, generation O&M, administrative and general (A&G), depreciation, return and taxes. After the GRC decision but before the PROACT Repayment Period (September 1,2001 to December 31, 2003), the authorized revenue requirements would be recorded in the SRBA as Recoverable Costs. After the Repayment Period, Edison proposes that new revenue requirements be established for the base and F&PP costs and their associated rates. An F&PP balancing account would be created to track procurement rate revenues based on the established F&PP rate and recorded actual costs.

12. Rate Adjustments and Amortization Periods

Utility	Rate Adjustment and Amortization Period Proposals
PG&E	Proposed to establish the initial PECA rate by advice letter based on costs associated with the approved procurement plan. Proposed to adjust rates monthly based on changes between monthly forecast of procurement costs and prior month's balancing account balance. Monthly rate adjustments will be by advice letter process similar to current core gas procurement charge (CGPC).
SDG&E	Proposed to establish PCAM rate29 by advice based on procurement costs associated with its approved procurement plan. Proposed to adjust rates to reflect changes between monthly forecast of procurement costs and prior month's balancing account balance. Edison also proposed to adjust rates by advice letter if the balance in the PCAM reaches 5%30 of the combined revenues in the PCAM and URGRA in view of proposed AB 57 trigger mechanism.
EDISON	Proposed to adjust Settlement Rates if at the end of any month the balance in its approved Rate Change Tracking Account (RCTA)31 reaches the 5% (trigger) of its prior year recorded generation revenues excluding DWR revenues or $280 million and reflect an updated procurement cost estimates by advice letter filing.32 Edison states that its proposal reflects the Agreement33 with the Commission and AB 57 proposed trigger mechanism. Edison proposes to establish Fuel and PP rate 34 and terminate the Settlement Rates after the Repayment Period.
ORA	Proposed that procurement cost forecasts be established annually by expedited application to be approved within 75 days of filing. ORA would adjust rates when the balancing account balance exceeds the 5% trigger proposed by AB 57 and amortized at a balancing rate.

C. Discussion

13. Balancing Account and Related Issues

There are several ratemaking issues raised by parties. These include a process to establish a procurement rate for fuel and purchased power-related costs, tracking procurement cost rate revenues against actual recorded costs in a balancing account, adjusting procurement rates based on monthly procurement forecasts and prior balancing account's balance or according to a balancing account balance threshold or specific amount, and adjusting Edison's Settlement Rates based on the language in the Settlement Agreement between Edison and the Commission. We have strong concerns with utilities' proposals to set rates beginning January 1, 2003 and to institute monthly rate adjustments.

First, Edison proposes to adjust Settlement Rates in this proceeding. The major factor contributing to Edison's proposal for a rate increase or decrease effective January 1, 2003 is not before us in this proceeding but in the DWR revenue requirement proceeding in A.00-11-038 et al. As a threshold issue, we do not know the magnitude of the change in DWR's revenue requirement for 2003 compared to 2002 that would be allocated to Edison. In addition, this proceeding focuses solely on RNS that DWR would not be able to procure in 2003 because of prohibition by law and not on the rate impact due to an increase in DWR's overall revenue requirement. We also do not consider here the operation of the SRBA³⁵ and the related PROACT. Thus, we will not grant Edison's request for a rate increase or decrease effective January 1, 2003 because this proceeding is not the appropriate forum to set rates. Edison's request is denied without prejudice.

Second, we will not adopt a process to establish procurement rates by January 2003 at this time. We recognize that we must establish rates, but there are many factors that we must consider and not all of these are determined at this time. We do not yet know the size of RNS energy the utilities will need to procure in 2003 and their associated costs. In addition, existing rates collected from customers include surcharges. The embedded energy rate and the surcharges are used to determine whether end-use customer retail rates must be increased because of the impact of DWR's revenue requirements and the rate remittances to DWR for power charges, which customers do not see on their bills. In addition, in A.00-11-038 et al. we are establishing a bond charge for the costs of issuing bonds related to DWR's purchase power. We must determine whether existing rates and surcharges contain enough "headroom" as the Commission has used this term to absorb the expected RNS costs, the DWR charges, and any other provisions established by this Commission. Until the Commission considers the impact of all of these rate elements, we cannot determine the current allocated specific components of present rates for fuel and purchased power rates for PG&E, SDG&E, and Edison. Therefore, we deny the utilities' requests for fuel and purchased power rates at this time. However, we firmly intend to establish a process to track all necessary costs and to make the utilities whole, as appropriate. We now turn our attention to the remainder of the ratemaking issues raised by parties.

The procurement cost recovery proposals by PG&E, SDG&E, Edison, and ORA reflect many aspects of the provisions of AB 57 to achieve the objective of timely recovery of procurement costs incurred for an approved procurement plan. The parties agree that a balancing account is needed to track procurement costs. They differ however, as to when and how often rates should change, what should trigger or be included in rate changes, the time period during which rate adjustments should be amortized, and what process should be used. PG&E, Edison, and ORA agree there should be a balancing account to track fuel and purchased power revenues against actual recorded costs. They also agree on the types of cost to be included in the account. SDG&E, however, proposes to exclude URG costs from its account. Edison proposes to delay its F&PP balancing account until after the Repayment Period or December 31, 2003. PG&E wants to establish its PECA by the beginning of 2003. The three utilities have different names for their balancing accounts. For the sake of uniformity and clarity, PG&E, SDG&E, and Edison should refer to their new balancing accounts as the Energy Resource Recovery Account (ERRA) instead of the names they have proposed. We adopt ERRA because it would account for the cost of different types of energy resources. In addition, a common account name for tracking energy costs would allow for different types of comparisons among utilities in the area of types of cost inclusion, tariff language, and filings with the Commission, similar to the ECAC proceedings, which were used for this purpose prior to electric restructuring.

A comparison of the ECAC and the recommended ERRA follows:

DESCRIPTION	ECAC	PROPOSED ERRA
Major Cost Items Provisions Recorded or now Proposed	Gas, oil, coal, nuclear fuels36, and their inventory carrying costs, and water for power. Purchased power and Department of Energy (DOE) fees.	URG fuels; QF, Bilateral, Irrigation Districts, and Inter utility, Contracts. Power Purchases, ISO, Credit/Collateral, and Other Items approved
When Set Rates Adjust	Annual Revision of Forecasts including balancing account amortization	Semiannual Revision of Forecasts and Specific Amount Trigger Filing
Balancing Account Amortized Length	12 Months	12 Months and 90 Days for triggers
Rate Adjustment Triggers and Review	Annual Revision of Forecasted Costs and Review	Semiannual Revision of Forecasted Costs and Review.
Process	Application	Application

PG&E, Edison and ORA want similar types of cost items to be included in their balancing account proposals or the new ERRA. TURN supports the concept of a balancing account for fuel and purchased power costs and also suggests that O&M and capital costs for power produced from URG should be tracked with these for ease of comparison between costs of different resources and different ownership. We find merit in TURN's proposal, but we do not adopt it at this time. We should revisit this proposal when the Commission addresses whether the respondent utilities should build or operate new generation resources.

We adopt the ECAC type-balancing account proposed by PG&E, Edison, and ORA. Edison should not delay establishing its new ERRA proposal because of its existing ratemaking structure. Edison's ERRA should eliminate the need for the ISO and purchase power balancing accounts. The Native Load balancing account should be amended to exclude all URG fuel costs since they are now to be included in the ERRA. ERRA should therefore be a line item in the SRBA. We reject SDG&E's proposal to exclude URG costs from its new ERRA and agree with ORA that these should be included. Accordingly, SDG&E should modify its proposal to include URG costs for the new ERRA. We support this approach since it would facilitate energy cost comparison among utilities and assist us to track variable energy related costs, and establish energy revenue requirement and associated rate in the near future.

Below, we describe the semiannual update process that we establish for fuel and purchased power forecasts and the ERRA mechanism.

Date	Description
Beginning January 2003	Track 2002 fuel and purchased power authorized revenue requirements against actual recorded costs in the ERRA.
February 1 SDG&E April 1 Edison June 1 PG&E	File applications proposing to establish annual fuel and purchased power forecasts and true up 2002 fuel and purchased costs.
August 1 SDG&E October 1 Edison December 1 PG&E#	Review of balancing accounts, contract administration, URG expenses and least-cost dispatch.

We deny PG&E's and SDG&E's proposals to change forecast of procurement costs monthly and adjust rates to reflect the difference in the forecast and prior month's balancing account balance by advice letter process similar to monthly changes to gas core procurement charge because we establish an update process. Edison has not proposed monthly rate changes but would propose a rate change if at any month the balance in its Rate Change Tracking Account reaches a certain threshold. Edison's request is also denied.

We agree with ORA and TURN that we must balance the utilities' need for timely procurement cost recovery with the consequences of frequent rate adjustments on consumer behavior. We recognize PG&E's, SDG&E's and Edison's concern that they can no longer finance a large under-collection for a period of time longer than a month or two and recognize the importance of timely recovery of over-or-under collections of balancing accounts to their financial health and stability. We must, however, balance these concerns with customer interests. Monthly energy rate changes may significantly impact the bills of combined gas and electric customers since gas procurement charges are already being changed monthly. Gas usage is seasonal. The impact of pricing electricity monthly may not be the same as gas and therefore customer reaction may be totally different from prior experience. We have no analysis or information in this proceeding to allay our concerns.

14. Balancing Account Trigger Mechanism

We adopt ORA's balancing account trigger proposal with the following modifications. PG&E, SDG&E and Edison are to file applications in 2003 to establish fuel and purchase power rates based on their 2003 fuel and purchase power forecasted costs and these should be done semiannually thereafter. The ERRA proceeding should benefit from the quarterly updated information of the procurement plan. The forecast phase would establish forecast fuel and PP revenue requirements for the three utilities. We recognize that PG&E proposes that 2003 fuel and purchased power revenue requirements be established and approved in its GRCs. That matter is now to be decided in the forecast phase of this proceeding. PG&E's GRC applications should be correspondingly amended. The 2003 filings should include a true -up of actual recorded costs to adopted 2002 revenue requirements.

Prior to these filings, PG&E, SDG&E and Edison are to track the difference between recently approved fuel and purchased power revenue requirements³⁷ by the Commission³⁸ and actual recorded costs in their ERRA. We recognize that the ERRA will capture additional costs incurred for RNS procurement.

We will also establish a "minimum balance" approach for rate adjustments. Instead of changing rates when the recorded balance in the ERRA exceeds or reaches five percent of prior year recorded generation revenues excluding revenues collected for DWR, we direct PG&E, SDG&E and Edison to file expedited applications for approval in 60 days from the filing date when the new ERRA balance reaches four percent.³⁹ The application will include a projected account balance in 60 days or more from the date of filing depending on when the balance will reach the five percent threshold. The application will also propose an amortization period for the five percent of not less than 90 days to ensure timely recovery of the projected ERRA balance. It should also include allocation of the over-and-under collection among customers for rate adjustment based on existing allocation methodology recognized by the Commission. Customer notice should be sent as soon as the application is filed for a rate increase or decrease.

We do not expect our four percent threshold trigger filing to require immediate revenue requirement adjustment in 2003 because gas prices have stabilized in 2002 compared to 2001 and we expect this trend to continue in 2003. Since revenue collected for DWR is excluded from the calculation of AB 57 trigger mechanism, we are also excluding it for the purpose of determining the trigger filing discussed above.

We will use the semiannual applications filed in mid-2003 to review the reasonableness of URG expenses, contract administration, and least-cost dispatch operations and to verify the entries in the ERRA.⁴⁰

Comments on the Proposed Decision

This proceeding is assigned to Commissioner Lynch and ALJ Walwyn. The proposed decision of ALJ Walwyn in this matter was mailed to the parties in accordance with Public Utilities Code § 311(d) and Rule 77.1 of the Rules and Practice and Procedure.

The major changes to this decision are that it: incorporates Sections IV-X of Commissioner Peevey's alternate decision that was mailed on October 10, 2003; adopts the utilities' procurement plans filed on May 1, 2002 as modified by later utility filings and this decision; revises the proposed decision's standards of conduct; sets a procedural schedule for the long-term planning phase; adopts more streamlined regulatory processes; states our preference to adopt an incentive mechanism; and makes other changes in response to parties' comments.

Findings of Fact

1. Edison, PG&E, and SDG&E are the respondent utilities in this proceeding.

2. Both the Commission and the Legislature have clearly expressed the intent to return the respondent utilities to full procurement on January 1, 2003.

3. This decision adopts the regulatory framework under which Edison, PG&E, and SD&GE shall resume full procurement responsibilities on January 1, 2003.

4. Today, in excess of 90% of bundled service energy requirements are provided by existing DWR and utility contracts as well as utility retained generation.

5. In D.02-08-071, the Commission recently granted PG&E and Edison authority to enter contracts through DWR to cover their projected procurement needs in 2003-2007.

6. While we share the goal of Edison and PG&E regaining an investment grade rating, this is not a necessary precondition to their resumption of their procurement responsibilities. SDG&E was and always has been an investment grade utility.

7. Many companies in the energy industry today do not have an investment grade credit rating and are able to conduct business.

8. Several companies state they would enter contracts with Edison and PG&E.

9. Both Edison and PG&E have strong cash positions and cash flow, arising from current rates being above current operating costs. Edison and PG&E will be operating in a regulated environment with ratemaking mechanisms that ensure timely and stable cost recovery.

10. Edison currently meets the rating agencies' criteria for an investment grade utility and is on the verge of regaining its investment grade rating. The ratemaking treatment adopted here supports that effort.

11. PG&E is presently in bankruptcy but under the Commission's proposed Plan of Reorganization, PG&E will be able to quickly emerge from bankruptcy as a creditworthy entity, because it will meet the rating criteria for investment grade.

12. Aglet provides convincing evidence that Edison's and PG&E's recent recorded earnings, cash positions, and anticipated cash flows compare favorably with the collateral and procurement amounts required, even using the high estimates of Exhibits 139C and 140C.

13. We find Edison's and PG&E's procurement needs in 2003 are well within their ability to finance.

14. The remaining residual net short requirements of Edison and PG&E for 2003 can be met through a combination of directly contracting with wholesale energy suppliers, purchases in the energy markets administered by the ISO, and purchases of demand-side resources, including distributed and self-generation.

15. Collateral, in the form of bank letters of credit or other financial instruments are currently available to both companies.

16. The Legislature has passed, and Governor Davis has signed, two pieces of legislation with significant implications for renewable generation procurement by the utilities. These measures are SB 1078 and SB 1038.

17. We should direct the utilities to submit, with their short-term procurement plan on November 12, 2002, a report on the status of their procurement under the renewable generation mandate of our previous order. Utilities should document their plan for meeting the 1% procurement required in D.02-08-071, including what has been accomplished and what remains to be done. Commission staff is available to facilitate compliance with this direction.

18. Interested parties should address in comments on January 6, 2003 and reply comments on January 13, 2003, their recommendations on the procedural process and schedule for implementing SB 1078.

19. It is reasonable to require the utilities to meet a reserve requirement, as part and parcel of their obligation to serve.

20. Though we state a preference for the adoption of an incentive mechanism to allow utilities to balance procurement risks and rewards, we do not have enough information to adopt such a mechanism at this time.

21. It is reasonable to place a moratorium on Edison, PG&E, or SDG&E dealing with their own affiliates in procurement transactions, beginning January 1, 2003, to allow for completion for a careful reexamination and appropriate modification of our affiliate rules. This moratorium will continue until we complete our rulemaking to modify affiliate rules, or for two years, whichever date is first. Utilities may propose to include specific affiliate transactions in their procurement plans but these proposals cannot be implemented until the end of moratorium. Based on comments, we are persuaded that transactions through the ISO that can be demonstrated to include multiple and anonymous bidders are permissible.

22. We will not adopt a process to establish procurement rates by January 2003 as there are many factors that must first be considered and not all of these are determined at this time. Until the Commission determines whether existing rates and surcharges contain enough "headroom," as the Commission has used this term, to absorb the expected RNS costs, the DWR charges, and any other provisions established by the Commission, we cannot determine the current allocated specific components of present rates for fuel and purchased power rates for Edison, PG&E, and SDG&E.

23. We should establish a balancing account for Edison, PG&E, and SDG&E to track energy costs, excluding existing DWR contracts, that includes URG fuels, QF contracts, inter-utility contracts, ISO charges less reliability must-run revenues, irrigation district contracts, bilateral or forward market purchases, credit and collateral for procurement purchases, and ancillary services. For the sake of clarity and uniformity each utility should refer to this balancing account as the ERRA.

24. We find that a semiannual schedule for procurement rate adjustments and a 4% balancing account trigger mechanism properly balance the utilities need for timely cost recovery and the consequences of frequent rate adjustments on consumer behavior.

25. We should adopt an annual update process for fuel and purchased power forecasts and another proceeding to again review balancing accounts and rewrite review URG expenses, contract administration and least-cost dispatch. Each utility should file applications on a semiannual basis, as specified in Section XII.

26. Beginning January 1, 2003, the utilities should track 2002 URG fuel and purchased power authorized revenue requirements against actual recorded costs in the ERRA. In their first billings, utilities should file applications that true-up 2002 actual URG fuel and purchased power costs with authorized revenue requirements.

27. The PRG process is an interim one-year measure while the Commission augments its staff and hires an independent consultant or advisory service, pursuant to the contracting authority and $600,000 appropriated to the Commission for the purposes of implementing AB 57.

28. Participation in the procurement review group makes a significant contribution to effective implementation of this decision and parties eligible to receive intervenor compensation awards in this proceeding should be eligible to seek compensation for their work in these groups and in the on-going review of procurement advice letters and expedited applications.

29. No other price benchmark generated by a utility for its own internal use alters in any way the per se reasonableness of the 5.37 cents per kWh price adopted in D.02-08-071.

Conclusions of Law

1. We hereby adopt the utilities' May 1, 2002 procurement plans, as modified by later utility filings and this decision. The utilities shall resume procurement no later than January 1, 2003 pursuant to those plans and the provisions of this decision, subject to the modifications ordered by this decision and subject to any prospective modifications pursuant to Pub. Util. Code Section 454.5(e).

2. Consistent with Pub. Util. Code Sections 451, 761, 762, 768, 770 and proposed 454.5(a), the utilities have an obligation to serve.

3. Electricity procurement is a necessary and normal part of utility operations, conducted in the ordinary course of an electric utility's business. However, if PG&E believes it requires approval of the U.S. Bankruptcy Court to resume its procurement obligations, it should petition the court for approval immediately.

4. Edison and PG&E shall take whatever steps are necessary to post the required ISO collateral in order to resume Scheduling Coordination or procurement of the residual net-short no later than January 1, 2003. The utilities should also post the contract and procurement related collateral required to secure resources to meet their load.

5. Edison and PG&E should update their collateral requirement estimations, specifically accounting for ISO security requirements and other contract and procurement related collateral costs in their short-term procurement plans to be filed on November 12, 2002.

6. We should adopt a reserve requirement of 15% for each utility.

7. The Commission has authority under Section 701.3 to order procurement in 2003 of any unmet amount of renewable energy ordered in D.02-08-071.

8. The utilities should file each quarter's procurement transactions that conform to the approved plan by advice letter. The advice letter should contain all information in the adopted master data request at Appendix B. The Commission's Energy Division should review the transactions to ensure the prices, terms, types of products, and quantities of each product conform to the approved plan. Consistent with AB 57, any transaction submitted by advice letter that is found to not comport with the adopted procurement plan may be subject to further review.

9. The utilities should by expedited application file transactions that do not conform to the adopted procurement plan. The procedures for expedited applications are set forth in Appendix C.

10. 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.

11. The advice letter and expedited application processes adopted here meet the standards of Section 454.5(b)(7).

12. The utilities shall comply with the following minimum standards of conduct:

1. Each utility must conduct all procurement through a competitive process with only arms-length transactions. Transactions involving any self -dealing to the benefit of the utility or an affiliate, directly or indirectly, including transactions involving an unaffiliated third party, are prohibited.

2. Each utility must adopt, actively monitor, and enforce compliance with a comprehensive code of conduct for all employees engaged in the procurement process and ensure all employees with knowledge of its procurement strategies sign and later abide by a noncompetitive agreement covering a one year period after leaving utility's employment.

3. In filing transactions for approval, the utilities shall make no misrepresentation or omission of material facts of which they are, or should be aware.

4. The utilities shall prudently administer all contracts and generation resources and dispatch the energy in a least-cost manner. Our definitions of prudent contract administration and least cost dispatch are the same as our existing standard.

5. The utilities shall not engage in fraud, abuse, negligence, or gross incompetence in negotiating procurement transactions or administering contracts and generation resources.

6. All contracts must contain substantially the following language: "in the event of extraordinary circumstances, this contract shall be subject to such changes or modifications by the CPUC as the CPUC may direct."

7. In order to exercise effective regulatory oversight of the behavior discussed above, all parties to a procurement contract must agree to give the Commission and its staff reasonable access to information within seven working days, unless otherwise practical, regarding compliance with these standards.

13. We should review contract administration and economic dispatch issues on a timely and regular basis. There is no time limitation on our investigation of the violation of any other standard above; the Commission retains full authority to investigate when a violation is discovered and to effect any and all remedies available to the Commission. These standards are consistent with proposed Section 454.5(h).

14. Customer-side distributed generation that utilizes the technologies listed in Section V.B of the decision is eligible for RPS participation. Including renewable DG as part of our definition will serve to encourage its installation, regardless of whether the utility purchases the output or whether it serves to meet on-site load.

15. The full output of renewable DG should be credited to meeting the RPS or D.02-08-071 requirements, but only new renewable DG installations are to be credited (existing renewable DG does not count toward the utility's RPS baseline calculation).

16. Utilities should file by expedited application for approval in 60 days to adjust rates under an AB57 trigger mechanism if the ERRA balance reaches 4% in excess of prior year's annual fuel and purchased power costs. The application should include (1) a projected account balance in 60 days or more from the date of filing depending on when the balance will reach AB 57's five percent threshhold and (2) propose an amortization period for the five percent of not less than 90 days. The application should also include a proposed allocation of the over collection among customers based on our adopted rate design methodology during cost of service regulation.

17. We should not adopt Edison's proposal to adjust Settlement Rates here as the accounts affected are beyond the scope of this proceeding.

18. The ERRA balancing account and the forecast proceedings adopted in this decision comply with the requirements of proposed Section 454.5(d)(3).

19. The AB 57 trigger mechanism application should not be used to refund overcollections until it has been in operation for a full 12 months. Customer notice should be mailed in customers' bills as soon as the application is filed.

INTERIM ORDER

IT IS ORDERED that:

1. Southern California Edison Company (Edison), Pacific Gas and Electric Company (PG&E) and San Diego Gas & Electric Company (SDG&E) shall resume full procurement on January 1, 2003 under their continuing obligation to serve. The utilities shall take all necessary actions to prepare to do this in a timely and an efficient manner.

2. If PG&E believes that it requires approval of the U.S. Bankruptcy Court to resume full procurement, it should immediately petition the court for its approval.

3. The respondent utilities shall submit modifications to their short-term procurement plans on November 12, 2002 as set forth in the body of this decision, and further update the short-term procurement plans in 2003, when they find it necessary by expedited application filing. Before a filing, each utility shall meet and confer with its procurement review group.

4. All interested parties shall file comments on the November 12, 2002 updated plans on December 2, 2002 and all interested parties shall file reply comments on December 6, 2002.

5. The respondent utilities shall file a report on the status of their procurement under the renewable generation mandate of Decision 02-08-071 with their modified short-term procurement plan on November 12, 2002.

6. All interested parties shall file a proposed procedural process and schedule to implement Senate Bill 1078 on January 6, 2002 and reply comments on January 13, 2003.

7. SDG&E shall sponsor, in coordination with the other utilities, an all-party workshop to develop an incentive mechanism proposal. If consensus is reached, the proposal should be filed in each utilities' long-term procurement plan. If consensus is not reached, SDG&E should file a workshop report containing areas of agreement and disagreement by February 15, 2003 for our further consideration.

8. The respondent utilities shall file each quarter's procurement transactions that conform to their adopted procurement plan by Advice Letter within 15 days of the end of the quarter.

9. The respondent utilities shall file long-term procurement plans on April 1, 2003. Those long-term procurement plans should include a mix of all resources contained in Section V of this decision, or explain why reliance on procurement of a particular resource is not appropriate or cost-effective.

10. 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 shall be submitted November 12^th as immediately necessary modifications to address short-term procurement and what shall be submitted subsequently to address long-term procurement plans. Anything required for the short-term plan shall also be in the long-term plan.

11. The respondent utilities shall file an outline of long-term procurement plan, as detailed in this decision, on February 3, 2002. All interested parties may file written comments on February 10, 2003. A prehearing conference shall be held February 17, 2003.

12. The respondent utilities shall file nonconforming transactions by expedited application.

13. 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.

14. The respondent utilities shall comply with the procedure set forth in this decision for the establishment of the Energy Resource Recovery Account balancing account, and the trigger mechanism and forecast filings.

15. The respondent utilities shall comply with the minimum standards of conduct and restrictions on affiliate transactions set forth in this decisions.

16. Edison and PG&E should take whatever steps are necessary to post the required ISO collateral in order to resume Scheduling Coordination or procurement of the residual net-short no later than January 1, 2003. The utilities shall also post the contract and procurement related collateral required to secure resources to meet their load.

17. Edison and PG&E should update their collateral requirement estimations, specifically accounting for ISO security requirements and other contract and procurement related collateral costs in their short-term procurement plans to be filed on November 12, 2002.

This order is effective today.

Dated , at San Francisco, California.

APPENDIX A

************ APPEARANCES ************ Kate Poole Attorney At Law ADAMS BROADWELL JOSEPH & CARDOZO 651 GATEWAY BOULEVARD, SUITE 900 SOUTH SAN FRANCISCO CA 94080 (650) 589-1660 kpoole@adamsbroadwell.com For: Coalition of California Utility Employees James Weil AGLET CONSUMER ALLIANCE PO BOX 1599 FORESTHILL CA 95631 (530) 367-3300 jweil@aglet.org For: Aglet Consumer Alliance Donald Brookhyser Attorney At Law ALCANTAR & KAHL LLP 1300 S.W. 5TH AVENUE, SUITE 1750 PORTLAND OR 97201 (503) 402-8702 deb@a-klaw.com For: Cogeneration Association of California Chris King Executive Director AMERICAN ENERGY INSTITUTE 842 OXFORD ST. BERKELEY CA 94707 (510) 435-5189 ckingaei@yahoo.com For: American Energy Institute Reed V. Schmidt BARTLE WELLS ASSOCIATES 1889 ALCATRAZ AVENUE BERKELEY CA 94703 (510) 653-3399 rschmidt@bartlewells.com For: California City-County Street Light Association Roger A. Berliner BERLINER, CANDON & JIMISON 1225 NINETEENTH ST. N.W. SUITE 800 WASHINGTON DC 20036 (202) 955-6067 rogerberliner@bcjlaw.com For: County of Los Angeles	Ronald Liebert Attorney At Law CALIFORNIA FARM BUREAU FEDERATION 2300 RIVER PLAZA DRIVE SACRAMENTO CA 95833 (916) 561-5657 rliebert@cfbf.com For: California Farm Bureau Federation Emilio E. Varanini Iii General Counsel CALIFORNIA POWER AUTHORITY 901 P STREET, SUITE 142A SACRAMENTO CA 95814 (916) 651-9750 cpacounsel@dgs.ca.gov For: California Consumer Power & Conserv. Authority Frederick M. Ortlieb CITY OF SAN DIEGO 1200 THIRD AVENUE, 11TH FLOOR SAN DIEGO CA 92101-4100 (619) 236-6318 fmo@sdcity.sannet.gov For: City of San Diego William Ahern Senior Policy Analyst CONSUMERS UNION 1535 MISSION STREET SAN FRANCISCO CA 94103 (415) 431-6747 aherbi@consumer.org For: Consumers Union Patrick G. Mcguire CROSSBORDER ENERGY 2560 NINTH STREET, SUITE 316 BERKELEY CA 94710 (510) 649-9790 patrickm@crossborderenergy.com For: Watson Cogeneration Company Steven F. Greenwald Attorney At Law DAVIS WRIGHT TREMAINE, LLP ONE EMBARCADERO CENTER, SUITE 600 SAN FRANCISCO CA 94111 (415) 276-6500 stevegreenwald@dwt.com For: Calpine Corporation
Dan L. Carroll Attorney At Law DOWNEY BRAND SEYMOUR & ROHWER, LLP 555 CAPITOL MALL, 10TH FLOOR SACRAMENTO CA 95814 (916) 441-0131 dcarroll@dbsr.com For: California Industrial Users Andrew B. Brown Attorney At Law ELLISON, SCHNEIDER & HARRIS 2015 H STREET SACRAMENTO CA 95814 (916) 447-2166 abb@eslawfirm.com For: Independent Energy Producers Assoc. Lynn M. Haug Attorney At Law ELLISON, SCHNEIDER & HARRIS, LLP 2015 H STREET SACRAMENTO CA 95814-3109 (916) 447-2166 lmh@eslawfirm.com For: Department of General Services Andrew J. Skaff Attorney At Law ENERGY LAW GROUP, LLP 1999 HARRISON STREET, 27TH FLOOR OAKLAND CA 94612 (510) 874-4370 askaff@energy-law-group.com For: Dynegy Marketing & Trade Daniel Kirshner ENVIRONMENTAL DEFENSE FUND 5655 COLLEGE AVENUE, SUITE 304 OAKLAND CA 94618 (510) 658-8008 dkirshner@environmentaldefense.org For: Environmental Defense Steve Ponder FPL ENERGY, INC., LLC 980 NINTH STREET, 16TH FLOOR SACRAMENTO CA 95814-2736 (916) 449-9596 steve_ponder@fpl.com For: FPL Energy, Inc.LLC.	Brian T. Cragg Attorney At Law GOODIN, MACBRIDE, SQUERI, RITCHIE & DAY 505 SANSOME STREET, NINTH FLOOR SAN FRANCISCO CA 94111 (415) 392-7900 bcragg@gmssr.com For: Caithness Energy, LLC Anne Selting GRUENEICH RESOURCE ADVOCATES 582 MARKET STREET, SUITE 1020 SAN FRANCISCO CA 94104 (415) 834-2300 aselting@gralegal.com For: California/California State University Jody London GRUENEICH RESOURCE ADVOCATES 582 MARKET STREET, SUITE 1020 SAN FRANCISCO CA 94104 (415) 834-2300 jlondon@gralegal.com Michael Mc Cormick GRUENEICH RESOURCE ADVOCATES 582 MARKET STREET, SUITE 1020 SAN FRANCISCO CA 94104 (415) 834-2300 mmccormick@gralegal.com Norman A. Pedersen Attorney At Law HANNA & MORTON 444 FLOWER STREET, SUITE 2050 LOS ANGELES CA 90071 (213) 430-2510 npedersen@hanmor.com Daniel W. Douglass Attorney At Law LAW OFFICES OF DANIEL W. DOUGLASS 5959 TOPANGA CANYON BLVD., SUITE 244 WOODLAND HILLS CA 91367-7313 (818) 596-2201 douglass@energyattorney.com For: Alliance for Retail Energy Markets and Western Power Trading Forum Gregory Klatt Attorney At Law LAW OFFICES OF DANIEL W. DOUGLASS 411 E. HUNTINGTON DRIVE, SUITE 107-356 ARCADIA CA 91007 (626) 294-9421 klatt@energyattorney.com For: Alliance for Energy Markets and Western Power Trading Forum
William H. Booth Attorney At Law LAW OFFICES OF WILLIAM H. BOOTH 1500 NEWELL AVENUE, 5TH FLOOR WALNUT CREEK CA 94596 (925) 296-2460 wbooth@booth-law.com For: California Large Energy Consumers Assoc. Seth Hilton Attorney At Law MORRISON & FOERSTER LLP 101 YGNACIO VALLEY ROAD, SUITE 450 WALNUT CREEK CA 94596-8130 (925) 295-3371 shilton@mofo.com For: El Paso Merchant Energy Sara Steck Myers Attorney At Law 122 28TH AVENUE SAN FRANCISCO CA 94121-1036 (415) 387-1904 ssmyers@att.net For: Energy Efficiency and Renewable Technologies Sheryl Carter NATURAL RESOURCES DEFENSE COUNCIL 71 STEVENSON STREET, STE 1825 SAN FRANCISCO CA 94105 (415) 777-0220 scarter@nrdc.org For: NRDC Jack F. Fallin Chief Counsel PACIFIC GAS AND ELECTRIC COMPANY B30A PO BOX 770000 SAN FRANCISCO CA 94177 (415) 973-2883 jff1@pge.com Shirley Woo Attorney At Law PACIFIC GAS AND ELECTRIC COMPANY PO BOX 7442 SAN FRANCISCO CA 94120 (415) 973-2248 saw0@pge.com For: Pacific Gas and Electric Company	John J. Prevost PACIFIC LUMBER COMPANY 125 MAIN STREET SCOTIA CA 95565 (707) 764-4280 plenv01@northcoast.com For: The Pacific Lumber Company Peter Weiner PAUL HASTINGS LLP 55 SECOND STREET, 24TH FLOOR SAN FRANCISCO CA 94105 peterweiner@paulhastings.com Nancy Rader Consultant 1198 KEITH AVENUE BERKELEY CA 94708 (510) 845-5077 nrader@igc.org For: California Wind Energy Association Daniel V. Gulino Senior Vice President & General Counsel RIDGEWOOD POWER, LLC 947 LINWOOD AVENUE RIDGEWOOD NJ 07450 (201) 447-9000 dgulino@ridgewoodpower.com For: RIDGEWOOD POWER, LLC Glen Sullivan Attorney At Law SEMPRA ENERGY 101 ASH STREET SAN DIEGO CA 92101-3017 (619) 699-5027 gsullivan@sempra.com For: San Diego Gas & Electric Co. Lisa Urick Attorney At Law SEMPRA ENERGY 555 W. FIFTH STREET, SUITE 1400 LOS ANGELES CA 90013-1011 (213) 244-2955 lurick@sempra.com For: San Diego Gas & Electric Company Beth A. Fox Attorney At Law SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVENUE, RM. 535 ROSEMEAD CA 91770 (626) 302-6897 beth.fox@sce.com For: SCE
James Paine Attorney At Law STOEL RIVES, LLP 900 SW 5TH AVE STE. 2600 PORTLAND OR 97204-1268 (503) 294-9246 jcpaine@stoel.com For: PacifiCorp Keith R. Mccrea SUTHERLAND, ASBILL & BRENNAN LLP SUITE 800 1275 PENNSYLVANIA AVE., N.W. WASHINGTON DC 20004-2415 (202) 383-0100 kmccrea@sablaw.com For: California Manufacturers andTechnology Association Matthew Freedman MICHEL PETER FLORIO, RANDY WU Attorney At Law THE UTILITY REFORM NETWORK 711 VAN NESS AVENUE, SUITE 350 SAN FRANCISCO CA 94102 (415) 929-8876 EX314 freedman@turn.org For: TURN Paul C. Lacourciere Attorney At Law THELEN REID & PRIEST LLP 101 SECOND STREET SAN FRANCISCO CA 94105-3601 (415) 369-7601 placourciere@thelenreid.com For: Ridgewood Olinda LLC Julia Levin STEVEN HAMMOND UNION OF CONCERNED SCIENTISTS 2397 SHATTUCK AVENUE, SUITE 203 BERKELEY CA 94704 (510) 843-1872 jlevin@ucsusa.org For: Union of Concerned Scientists John E. Rosenbaum WHITE & CASE LLP THREE EMBARCADERO CENTER, SUITE 2200 SAN FRANCISCO CA 94111-3162 (415) 544-1110 jrosenbaum@whitecase.com For: California Cogeneration Council	Joseph M. Karp Attorney At Law WHITE & CASE LLP THREE EMBARCADERO CENTER, SUITE 2200 SAN FRANCISCO CA 94111 (415) 544-1103 jkarp@whitecase.com For: California Cogeneration Council Jason J. Zeller Legal Division RM. 5002 505 VAN NESS AVE San Francisco CA 94102 (415) 703-4673 jjz@cpuc.ca.gov ********** STATE EMPLOYEE *********** Dan Adler Division of Strategic Planning RM. 5119 505 VAN NESS AVE San Francisco CA 94102 (415) 355-5586 dpa@cpuc.ca.gov Peter Arth, Jr. Executive Division RM. 5132 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2576 paj@cpuc.ca.gov Diana Johnston CALIF DEPARTMENT OF WATER RESOURCES 3310 EL CAMINO AVENUE ROOM 120 SACRAMENTO CA 95821 (916) 574-0311 djohnsto@water.ca.gov Jeannie S. Lee California Energy Resources Scheduling CALIFORNIA DEPARTMENT OF WATER RESOURCES 3310 EL CAMINO AVENUE, ROOM 120 SACRAMENTO CA 95821 (916) 574-2220 jslee@water.ca.gov
John Pacheco California Energy Resources Scheduling CALIFORNIA DEPARTMENT OF WATER RESOURCES 3310 EL CAMINO AVENUE, ROOM 120 SACRAMENTO CA 95821 (916) 574-0311 jpacheco@water.ca.gov Jonathan M. Teague CALIFORNIA DEPT. OF GENERAL SERVICES 717 K STREET, SUITE 409 SACRAMENTO CA 95814-3406 (916) 323-8777 jonathan.teague@dgs.ca.gov Constance Leni CALIFORNIA ENERGY COMMISSION MS-20 1516 NINTH STREET SACRAMENTO CA 95814 (916) 654-4762 cleni@energy.state.ca.us David Hungerford CALIFORNIA ENERGY COMMISSION 1516 NINTH STREET, MS-22 SACRAMENTO CA 95814 (916) 654-4906 dhungerf@energy.state.ca.us Fernando De Leon Attorney At Law CALIFORNIA ENERGY COMMISSION 1516 9TH STREET, MS-14 SACRAMENTO CA 95814-5512 (916) 654-4873 fdeleon@energy.state.ca.us Heather Raitt CALIFORNIA ENERGY COMMISSION 1516 9TH STREET, MS 45 SACRAMENTO CA 95814 (916) 654-4735 hraitt@energy.state.ca.us Jennifer Tachera CALIFORNIA ENERGY COMMISSION 1516 NINTH STREET, MS-14 SACRAMENTO CA 95814-5504 (916) 654-3870 jtachera@energy.state.ca.us	Karen Griffin Manager, Electricity Analysis CALIFORNIA ENERGY COMMISSION MS-20 1516 9TH STREET SACRAMENTO CA 95184 (916) 654-4833 kgriffin@energy.state.ca.us Mike Jaske CALIFORNIA ENERGY COMMISSION 1516 NINTH STREET, MS-22 SACRAMENTO CA 95814 (916) 654-4777 mjaske@energy.state.ca.us Ruben Tavares Electricity Analysis Office CALIFORNIA ENERGY COMMISSION 1516 9TH STREET, MS 20 SACRAMENTO CA 95814 (916) 654-5171 rtavares@energy.state.ca.us For: California Energy Commission Kevin P. Coughlan Executive Division RM. 5221 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1175 kpc@cpuc.ca.gov Maryam Ebke Division of Strategic Planning RM. 5119 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1112 meb@cpuc.ca.gov Julie A Fitch Executive Division RM. 5203 505 VAN NESS AVE San Francisco CA 94102 (415) 355-5552 jf2@cpuc.ca.gov Faline Fua Office of Ratepayer Advocates RM. 4209 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2235 fua@cpuc.ca.gov
Meg Gottstein Administrative Law Judge 21496 NATIONAL STREET PO BOX 210 VOLCANO CA 95689 (209) 296-4979 gottstein@volcano.net David M. Gamson Executive Division RM. 5214 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1997 dmg@cpuc.ca.gov Farzad Ghazzagh Office of Ratepayer Advocates RM. 4209 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1694 fxg@cpuc.ca.gov Meg Gottstein Administrative Law Judge Division RM. 5044 505 VAN NESS AVE San Francisco CA 94102 (415) 703-4802 meg@cpuc.ca.gov Julie Halligan Division of Strategic Planning RM. 5119 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1062 jmh@cpuc.ca.gov Peter Hanson Executive Division RM. 4103 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1053 pgh@cpuc.ca.gov Trina Horner Executive Division RM. 5217 505 VAN NESS AVE San Francisco CA 94102 (415) 703-5132 tah@cpuc.ca.gov	Aaron J Johnson Executive Division RM. 5205 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2495 ajo@cpuc.ca.gov Robert Kinosian Executive Division RM. 4205 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1500 gig@cpuc.ca.gov Laura L. Krannawitter Executive Division RM. 5210 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2538 llk@cpuc.ca.gov James Loewen Energy Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1866 loe@cpuc.ca.gov Jay Luboff Energy Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 355-5531 jcl@cpuc.ca.gov Lynne McGhee Executive Division RM. 5306 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1721 lmc@cpuc.ca.gov A. Kirk McKenzie Administrative Law Judge Division RM. 5115 505 VAN NESS AVE San Francisco CA 94102 (415) 703-4622 mck@cpuc.ca.gov
Richard A. Myers Energy Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1228 ram@cpuc.ca.gov Wade Mccartney Regulatory Analyst Iv PUBLIC UTILITIES COMMISSION ENERGY DIVISION 770 L STREET, SUITE 1050 SACRAMENTO CA 95814 (916) 324-9010 wsm@cpuc.ca.gov Edwin Quan Information & Management Services Divisi RM. 3016 505 VAN NESS AVE San Francisco CA 94102 (415) 703-5765 eyq@cpuc.ca.gov Manuel Ramirez Executive Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 703-1826 mzr@cpuc.ca.gov David W. Tollen SIMPSON PARTNERS LLP 900 FRONT STREET, THIRD FLOOR SAN FRANCISCO CA 94111 (415) 773-1790 davidt@simpsonpartners.com For: DWR Maria E. Stevens Executive Division RM. 500 320 WEST 4TH STREET SUITE 500 Los Angeles CA 90013 (213) 576-7012 mer@cpuc.ca.gov Christine M. Walwyn Administrative Law Judge Division RM. 5005 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2301 cmw@cpuc.ca.gov	Steven A. Weissman Executive Division RM. 4103 505 VAN NESS AVE San Francisco CA 94102 (415) 703-5173 saw@cpuc.ca.gov ********* INFORMATION ONLY ********** Marc D. Joseph Attorney At Law ADAMS BROADWELL JOSEPH & CARDOZO 651 GATEWAY BOULEVARD, SUITE 900 SOUTH SAN FRANCISCO CA 94080 (650) 589-1660 mdjoseph@adamsbroadwell.com Michael Alcantar Attorney At Law ALCANTAR & KAHL LLP 1300 SW FIFTH AVENUE, SUITE 1750 PORTLAND OR 97201 (503) 402-9900 mpa@a-klaw.com For: Cogeneration Association of CA Evelyn Kahl Attorney At Law ALCANTAR & KAHL, LLP 120 MONTGOMERY STREET, SUITE 2200 SAN FRANCISCO CA 94104 (415) 421-4143 ek@a-klaw.com For: Energy Producers & Users Coalition James H. Caldwell Jr. Policy Director AMERICAN WIND ENERGY ASSOCIATION 122 C STREET NW. STE. 300 WASHINGTON DC 20001 (202) 383-2517 jcaldwell@awea.org Robert E. Anderson APS ENERGY SERVICES 1500 FIRST AVENUE ROCHESTER MN 55906 (507) 289-0800 bob_anderson@apses.com
Richard D. Ely ASSOCIATES, INC. 3239 RAMOS CIRCLE SACRAMENTO CA 95827-2501 (916) 363-8383 dick@adm-energy.com Lon W. House Energy Advisor ASSOCIATION OF CALIFORNIA WATER AGENCIES 4901 FLYING C ROAD CAMERON PARK CA 95682-9615 (530) 676-8956 lwhouse@innercite.com Carolyn A. Baker Attorney At Law 7456 DELTAWIND DRIVE SACRAMENTO CA 95831 (916) 399-8611 cabaker906@aol.com Catherine E. Yap BARKOVICH & YAP, INC. PO BOX 11031 OAKLAND CA 94611 (510) 450-1270 ceyap@earthlink.net Barbara R. Barkovich BARKOVICH AND YAP, INC. 31 EUCALYPTUS LANE SAN RAFAEL CA 94901 (415) 457-5537 brbarkovich@earthlink.net For: Barkovich and Yap, Inc. Terry J. Houlihan Attorney At Law BINGHAM MCCUTCHEN LLP 3 EMBARCADERO CENTER, 18TH FLOOR SAN FRANCISCO CA 94111 (415) 393-2000 thoulihan@mdbe.com Thomas S. Hixson BINGHAM MCCUTCHEN LLP THREE EMBARCADERO CENTER SAN FRANCISCO CA 94111 (415) 393-2000 thixson@mdbe.com	Scott Blaising Attorney At Law BRAUN & ASSOCIATES, P.C. 8980 MOONEY ROAD ELK GROVE CA 95624 (916) 682-9702 blaising@braunlegal.com Maurice Brubaker BRUBAKER & ASSOCIATES, INC. 1215 FERN RIDGE PARKWAY, SUITE 208 ST. LOUIS MO 63141 (314) 275-7007 mbrubaker@consultbai.com Lulu Weinzimer CALIFORNIA ENERGY MARKETS 517B POTRERO AVENUE SAN FRANCISCO CA 94110 (415) 552-1764 luluw@newsdata.com Karen Norene Mills Attorney At Law CALIFORNIA FARM BUREAU FEDERATION 2300 RIVER PLAZA DRIVE SACRAMENTO CA 95833 (916) 561-5655 kmills@cfbf.com Steven S. Schleimer CALPINE CORPORATION 4160 DUBLIN BLVD. DUBLIN CA 94568 (415) 276-6553 sschleimer@calpine.com For: CALPINE CORPORATION S. Douglas Levitt CALWIND RESOURCES, INC. 2659 TOWNSGATE ROAD, SUITE 122 WESTLAKE VILLAGE CA 91361 (805) 496-4337 sdl@calwind.com Karen Cann 3100 ZINFANDEL DRIVE, SUITE 600 RANCHO CORDOVA CA 95670-6026 (916) 631-4055 kcann@navigantconsulting.com
CASE ADMINISTRARION 2244 WALNUT GROVE AVENUE, ROOM 321 ROSEMEAD CA 91770 (626) 302-1711 case.admin@sce.com For: Southern Californi Edison Company Rachel Mcmahon Policy Analyst CEERT 1031 LEAVENWORTH, 3 SAN FRANCISCO CA 94109 (415) 202-0866 rachel@ceert.org Joseph P. Como Deputy City Attorney CITY AND COUNTY OF SAN FRANCISCO CITY HALL 1 DR. CARLTON B. GOODLETT PLACE SAN FRANCISCO CA 94102-4682 (415) 554-4637 joe_como@ci.sf.ca.us Pamela M. Durgin CITY AND COUNTY OF SAN FRANCISCO PUC 1155 MARKET STREET, 4TH FLOOR SAN FRANCISCO CA 94102 (415) 554-2469 pdurgin@puc.sf.ca.us Janis Lehman Principal Integrated Resource Planner CITY OF ANAHEIM 201 S. ANAHEIM BLVD., SUITE 1101 ANAHEIM CA 92805 (714) 777-9006 Bruno Jeider CITY OF BURBANK 164 WEST MAGNOLIA BOULEVARD BURBANK CA 91502 (818) 238-3651 bjeider@ci.burbank.ca.us Steven G. Lins CITY OF GLENDALE OFFICE OF THE CITY ATTORNEY 613 EAST BROADWAY, SUITE 220 GLENDALE CA 91206-4394 (818) 548-2080 slins@ci.glendale.ca.us	Eric Klinkner CITY OF PASADENA 150 LOS ROBLES AVENUE, SUITE 200 PASADENA CA 91101-2437 (626) 744-4478 eklinkner@ci.pasadena.ca.us Jack Wood Trustee, Managing Company, Llc CLEARWOOD ELECTRIC COMPANY, LLC 21859 ANGELI PLACE GRASS VALLEY CA 95949 (530) 269-0828 jackwood@gv.net Virginia Jarrow HARVEY LARSEN CONSUMERS COALITION OF CALIFORNIA PO BOX 5276 TORRANCE CA 90510 (310) 316-3346 Maryanne Mccormick CSBRT/CSBA 954 CAROL LANE LAFAYETTE CA 94549 mmcsba@yahoo.com V. John White CTR FOR ENERGY EFFNCY & RENEWABLE TECH 1100 - 11TH STREET, SUITE 311 SACRAMENTO CA 95184 (916) 442-7785 vjw@cleanpower.org David Kates DAVID MARK & COMPANY 3510 UNOCAL PLACE, SUITE 200 SANTA ROSA CA 95403 (707) 570-1866 dkates@sonic.net Jeffrey P. Gray DAVIS WRIGHT TREMAINE LLP ONE EMBARCADERO STREET, SUITE 600 SAN FRANCISCO CA 94111 (415) 276-6599 jeffgray@dwt.com Norman J. Furuta Attorney At Law DEPARTMENT OF THE NAVY 2001 JUNIPERO SERRA BLVD., SUITE 600 DALY CITY CA 94014-3890 (650) 746-7312 FurutaNJ@efawest.navfac.navy.mil For: The Federal Executive Agencies
Melanie Gillette DUKE ENERGY NORTH AMERICA 980 NINTH STREET, SUITE 1540 SACRAMENTO CA 95814 (916) 319-4620 mlgillette@duke-energy.com Joseph M. Paul DYNEGY MARKETING & TRADE 5976 WEST LAS POSITAS BLVD., STE. 200 PLEASANTON CA 94588 (925) 469-2355 joe.paul@dynegy.com Gregory T. Blue Regulatory Affairs Manager DYNEGY MARKETING AND TRADE 5976 W. LAS POSITAS BOULEVARD PLEASANTON CA 94588 gtbl@dynegy.com Douglas K. Kerner Attorney At Law ELLISON, SCHNEIDER & HARRIS 2015 H STREET SACRAMENTO CA 95814 (916) 447-2166 dkk@eslawfirm.com For: Independent Energy Producers Association Diane I. Fellman Attorney At Law ENERGY LAW GROUP LLP 1999 HARRISON STREET, 27TH FLOOR OAKLAND CA 94612 (415) 703-6000 difellman@energy-law-group.com Regina M. Deangelis Attorney At Law ENERGY LAW GROUP LLP 1999 HARRISON STREET, SUITE 2700 OAKLAND CA 94612 (415) 874-4354 rdeangelis@energy-law-group.com Carolyn Kehrein ENERGY MANAGEMENT SERVICES 1505 DUNLAP COURT DIXON CA 95620-4208 (707) 678-9506 cmkehrein@ems-ca.com	Kevin Simonsen ENERGY MANAGEMENT SERVICES 646 EAST THIRD STREET DURANGO CO 81301 (970) 259-1748 kjsimonsen@ems-ca.com Janis C. Pepper ENERTRON CONSULTANTS 418 BENVENUE AVENUE LOS ALTOS CA 94024 (650) 949-5719 pepper@enertroncons.com For: ENERTRON CONSULTANTS Robert T. Boyd ENRON WIND CORP. 444 SOUTH FLOWER STREET, SUITE 4545 LOS ANGELES CA 94105 (213) 452-5103 hap.boyd@enron.com Jeffrey S. Ghilardi ENRON WIND CORPORATION 13000 JAMESON ROAD TEHACHAPI CA 93561 (661) 823-6813 jeff.ghilardi@enron.com Kelly Lloyd ENXCO INC. PO BOX 581043 N. PALM SPRINGS CA 92258 kellyl@enxco.com Steven Hammond FORESIGHT ENERGY COMPANY 692 HAIGHT STREET, STE. B SAN FRANCISCO CA 94117 (415) 522-1101 shammond@foresightenergy.com Renee Guild 2481 PORTERFIELD COURT MOUNTIAN VIEW CA 94040 GuildRenee@aol.com John Galloway Energy Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2565 jhg@cpuc.ca.gov
Craig Castagnoli HENWOOD ENERGY SERVICES 2379 GATEWAY OAK DRIVE, SUITE 100 SACRAMENTO CA 95833 (916) 569-0985 ccastagnoli@henwoodenergy.com Orlando Foote, Esq. HORTON, KNOX, CARTER & FOOTE 895 BROADWAY EL CENTRO CA 92243-2341 John Steffen IMPERIAL IRRIGATION DISTRICT 333 EAST BARIONI BOULEVARD IMPERIAL CA 92251 (760) 339-9224 jsteffen@iid.com Robin J. Walther INDEPENDENT CONSULTANT 160 FOREST LANE MENLO PARK CA 94025 (650) 330-0717 rwalther@pacbell.net Steven Kelly INDEPENDENT ENERGY PRODUCERS ASSN 1215 K STREET SUITE 900 SACRAMENTO CA 95814-3947 (916) 448-9499 iep@iepa.com Gayatri Schilberg JBS ENERGY 311 D STREET, SUITE A WEST SACRAMENTO CA 95605 (916) 372-0534 gayatri@jbsenergy.com Dan Peaco LA CAPRA ASSOCIATES INC. 333 WASHINGTON ST. STE. 855 BOSTON MA 02108 (617) 557-9100 dpeaco@lacapra.com For: LA CAPRA ASSOCIATES INC. Mark Bolinger LAWRENCE BERKELEY NATIONAL LABORATORY MS 90-4000 ONCE CYCLOTRON ROAD BERKELEY CA 94720 (510) 495-2881 MABolinger@lbl.gov	Karen Lindh LINDH & ASSOCIATES 7909 WALERGA ROAD, ROOM 112, PMB 119 ANTELOPE CA 95843 (916) 729-1562 karen@klindh.com For: California Manufactures & Technology Association Robert Pettinato LOS ANGELES DEPARTMENT OF POWER & WATER ENERGY CONTROL CENTER PO BOX 51111, ROOM 1148 LOS ANGELES CA 90051-0100 (818) 771-6715 rpetti@ladwp.com John W. Leslie Attorney At Law LUCE FORWARD HAMILTON & SCRIPPS, LLP 600 WEST BROADWAY, SUITE 2600 SAN DIEGO CA 92101-3391 (619) 699-2536 jleslie@luce.com Richard Mccann M.CUBED 2655 PORTAGE BAY ROAD, SUITE 3 DAVIS CA 95616 (530) 757-6363 rmccann@cal.net Jack Mcnamara Attorney At Law MACK ENERGY COMPANY PO BOX 1380 AGOURA HILLS CA 91376-1380 (818) 865-8515 jackmack@suesec.com Kevin R. Mcspadden Attorney At Law MILBANK TWEED HADLEY & MCCLOY 601 SOUTH FIGUEROA, 30TH FLOOR LOS ANGELES CA 90017 (213) 892-4563 kmcspadden@milbank.com Robert B. Weisenmiller Phd MRW & ASSOCIATES, INC. 1999 HARRISON STREET, STE 1440 OAKLAND CA 94612-3517 (510) 834-1999 mrw@mrwassoc.com
Stephen St. Marie NAVIGANT CONSULTING, INC. 3100 ZINFANDEL DRIVE, SUITE 600 RANCHO CORDOVA CA 95670-6026 (916) 631-3200 sstmarie@navigantconsulting.com Kay Davoodi NAVY RATE INTERVENTION OFFICE WASHINGTON NAVY YARD 1314 HARWOOD STREET SE WASHINGTON DC 20374-5018 (202) 685-0130 DavoodiKR@efaches.navfac.navy.mil Hal Romanowitz OAK CREEK ENERGY 14633 WILLOW SPRINGS ROAD MOJAVE CA 93501 (661) 822-6853 rwitz@compuserve.com Jonathan M. Jacobs PA CONSULTING SERVICES INC 75 NOVA DRIVE PIEDMONT CA 94610 jon.jacobs@paconsulting.com Valerie Winn PACIFIC GAS & ELECTRIC COMPANY PO BOX 770000, B9A SAN FRANCISCO CA 94177-0001 (415) 973-3839 vjw3@pge.com Cecilia Montana PACIFIC GAS AND ELECTRIC COMPANY 77 BEALE STREET SAN FRANCISCO CA 94105 (415) 973-1595 cfm3@pge.com Bruce H. Hellebuyck PACIFICORP LLOYD CENTER TOWER 825 NE MULTNOMAH, SUITE 800 PORTLAND OR 97232 (503) 813-6041 Bob Hoffman PAUL,HASTINGS,JANOFSKY AND WALKER 1127 11TH STREET, STE. 905 SACRAMENTO CA 95814 (916) 552-2881 bobhoffman@paulhastings.com	George A. Perrault PERRAULT CONSULTING 1723 FORD AVENUE REDONDO BEACH CA 90278 (310) 379-0901 perrault@perrcon.net Eric Eisenman PG&E NATIONAL ENERGY GROUP 345 CALIFORNIA STREET. SAN FRANCISCO CA 94104 (415) 288-5630 eric.eisenman@neg.pge.com Stanley I. Anderson POWER VALUE INCORPORATED 964 MOJAVE CT WALNUT CREEK CA 94598 (925) 938-8735 sia2@pwrval.com Hamid Hazerooni R. W. BECK, INC. 1851 HERITAGE LANE 200 SACRAMENTO CA 95815 (916) 614-8242 hkazerooni@rwbeck.com For: R.W. BECK, INC. Peter Bray RAY AND ASSOCIATES SUITE 2 3566 17TH STREET SAN FRANCISCO CA 94110-1093 (415) 437-1633 petertbray@yahoo.com Jean Pierre Batmale REALENERGY, INC. 5957 VARIEL AVE. WOODLAND HIILS CA 91367 (818) 610-2300 jpbatmale@realenergy.com Kirby Bosley RELIANT ENERGY 1050 17TH STREET, SUITE 1450 DENVER CO 80265-1450 (303) 620-9999 kbosley@reliantenergy.com
Kurt W. Bilas Senior Counsel RELIANT ENERGY POWER GENERATIONS, INC. 801 PENNSYLVANIA AVE., N.W. SUITE 620 WASHINGTON DC 20004 kbilas@reliant.com Rob Roth SACRAMENTO MUNICIPAL UTILITY DISTRICT 6201 S STREET MS 75 SACRAMENTO CA 95817 (916) 732-6131 rroth@smud.org Joseph R. Kloberdanz SAN DIEGO GAS & ELECTRIC COMPANY 8315 CENTURY PARK COURT SAN DIEGO CA 92123 (858) 654-1771 jkloberdanz@semprautilities.com Kurt Kammerer SAN DIEGO REGIONAL ENERGY OFFICE 401 B STREET, SUITE 800 SAN DIEGO CA 92101 (619) 595-5630 kkam@sdenergy.org Tracy Saville 300 CAPITOL MALL STE. 120 SACRAMENTO CA 95814 (916) 325-2500 Michael Rochman SCHOOL PROJECT UTILITY RATE REDUCTION 1430 WILLOW PASS ROAD, SUITE 240 CONCORD CA 94520 (925) 743-1292 rochmanm@spurr.org Bruce J. Williams Manager, Regulatory Affairs Case Mgmt SEMPRA ENERGY 101 ASH STREET, HQ14A SAN DIEGO CA 92101 (619) 696-4488 bwilliams@sempra.com Sharon L. Cohen Attorney At Law SEMPRA ENERGY 101 ASH STREET, HQ12 SAN DIEGO CA 92101 (619) 696-4355 scohen@sempra.com	Douglas Mitchell SEMPRA ENERGY GLOBAL ENTERPRISES 101 ASH STREET, HQ-15G SAN DIEGO CA 92101 dmitchell@sempraglobal.com Robert Ellery Director Of Energy Resources SIERRA PACIFIC INDUSTRIES 19794 RIVERSIDE AVE. ANDERSON CA 96007 (530) 378-8179 bellery@spi-ind.com Andrew Ulmer Attorney At Law SIMPSON PARTNERS LLP 900 FRONT STREET, THIRD FLOOR SAN FRANCISCO CA 94111 (415) 773-1791 andrew@simpsonpartners.com Leon Bass Attorney At Law SOUHTERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVENUE, SUITE 353 ROSEMEAD CA 91770 (626) 302-6897 leon.bass@sce.com Bruce Foster Regulatory Affairs SOUTHERN CALIFORNIA EDISON COMPANY 601 VAN NESS AVENUE, SUITE 2040 SAN FRANCISCO CA 94102 (415) 775-1856 fosterbc@sce.com For: SOUTHERN CALIFORNIA EDISON Bob Finklestein Staff Attorney THE UTILITY REFORM NETWORK 711 VAN NESS AVE., STE. 350 SAN FRANCISCO CA 94101 (415) 929-8876 bfinkelstein@turn.org Alex A. Goldberg, Esq. THE WILLIAMS COMPANIES, INC. ONE WILLIAMS CENTER SUITE 4100, MS41-3 TUSLA OK 74172 Alex.Goldberg@williams.com
Michael Shames Attorney At Law UTILITY CONSUMERS' ACTION NETWORK 3100 FIFTH AVENUE, SUITE B SAN DIEGO CA 92103 (619) 696-6966 mshames@ucan.org Patricia Vanmidde Consultant 22006 N 55TH ST. PHOENIX AZ 85054 (480) 515-2849 pvanmidde@earthlink.net Mark Albert VULCAN POWER COMPANY 1183 NW WALL STREET, STE. G BEND OR 97701 (541) 317-1984 malbert@vulcanpower.com Enoch H. Chang WHITE & CASE LLP THREE EMBARCADERO CENTER, SUITE 2200 SAN FRANCISCO CA 94111 (415) 544-1100 echang@whitecase.com For: California Cogeneration Council Roger T. Pelote WILLIAMS ENERGY SERVICES 12731 CALIFA STREET VALLEY VILLAGE CA 91602 (818) 761-5954 Roger.Pelote@williams.com Tim Muller Legal Department WILLIAMS ENERGY SERVICES ONE WILLIAMS CENTER, MD 41-3 TULSA OK 74172 (918) 573-1480 tim.muller@williams.com For: WILLIAMS ENERGY SERVICES Bradford Wetstone Energy Division AREA 4-A 505 VAN NESS AVE San Francisco CA 94102 (415) 703-2826 bxw@cpuc.ca.gov	Julie Blunden Vice President XENERGY INC. 492 9TH ST., STE. 220 OAKLAND CA 94607 (510) 891-0446 jblunden@xenergy.com

(END OF APPENDIX A)

Appendix B

Adopted Master Data Request for Monthly Advice Letters

The utilities shall file each month's transactions that conform to the approved procurement plan by advice letter. The Advice Letters must contain the following information:

· Identification of the ultimate decision maker(s) up to the Board level, approving the transactions.

· The briefing package provided to the ultimate decision maker.

· Description of and justification for the procurement processes used to select the transactions (e.g., Request for Offers, Electronic Trading Exchanges, ISO Spot Markets)

o For competitive solicitations, describe the process used to rank offers and select winning bid(s).

o For other transactional methods, provide documentation supporting the selection of the chosen products.

· Explanation/justification for the timing of the transactions (i.e., product term and rate of procurement)

· Discussion of the system load requirements/conditions underlying the need for the month's transactions.

· Discussion of how the month's transactions meet the goals of the risk management strategy reflected in the Commission-approved procurement plan (e.g., achieving lowest stable rates)

· Copy of each contract

· The break-even spot price equivalent to the contract(s)

· An electronic copy of any data or forecasts used by the utility to analyze the transactions.

· Utilities should provide a reasonable number of analyses requested by the Commission or the Procurement Review Group and provide the resulting outputs. Utilities should also provide documentation on the model and how it operates.

· The Commission is not precluded from seeking any other information under the provisions of the Public Utilities Code.

(END OF APPENDIX B)

APPENDIX C

	Procurement Contract Review Process
Day	Days to Complete Task	Tasks
Days in advance of Application Filing Date	No Limit	Utility internally develops risk management plans for transitional procurement. Utility also meets with Procurement Review Group (PRG) recommended in the Joint Principles. This group would meet prior to the application being filed and should be convened early on to assess any proposed RFP process before it is implemented. The PRG would meet again to assess the resulting bids, the winning procurement contracts, and reasonableness criteria with each respondent utility. The group would be open to parties designated under our Protective Order to review confidential information and would include representatives of the Commission's Energy Division and ORA as ex officio members.
0	0	Edison, PG&E, or SDG&E file a complete application that conforms to the quantities, products, terms and conditions we discuss earlier for transitional procurement. The application should demonstrate it meets our standard for approval by a showing that entering into the contract(s) should result in favorable and stable rates for ratepayers relative to alternative options. An application may contain all winning contracts from a single RFP solicitation. The application shall include information responsive to the adopted master data request.
30	30	Protests due within 30 days of Application filing.
35	5	Replies to protests due within five business days of protest. (See rules of pp
40	1	A workshop will be held approximately 40 days after the application is filed.
41+	As required	After the workshop, the assigned administrative law judge (ALJ), in consultation with the assigned Commissioner, shall issue a ruling designating whether there are issues of substantial controversy or importance to require the scheduling of hearings. The ruling shall also state whether the ALJ intends to prepare a draft decision which meets the criteria set forth in Public Utilities Code Section 311(g)(2) of being an uncontested matter in which the decision grants the relief requested, a criteria that allows the 30 day public review period to be reduced or waived.
41-59	Less than 20	If the ruling states that the ALJ intends to prepare a draft decision which meets the requirements of Section 311(g)(2), the decision when drafted will be placed on the next Commission agenda.
60+	30+	If the ruling states that the application does not meet the criteria of Section 311(g)(2), a draft decision will be served on parties and subject to at least 30 days public review and comment prior to a PUC vote. If the ruling states that there are issues of substantial controversy or importance to require the scheduling of hearings, such hearings will be held and a proposed decision served on parties and subject to at least 30 days review and comment prior to a PUC vote.
Note: Approval of the contracts will also contain a decision on reasonableness, with prudency of contract administration being at issue over the life of the contract. During the transitional period, if the Commission rejects a proposed contract, it will not designate any alternative procurement choices.

(END OF APPENDIX C)

APPENDIX D

Page 1

APPENDIX D

Page 2

APPENDIX D

Page 3

END OF APPENDIX D