COM/MP1/KPC/acb ALTERNATE DRAFT Agenda ID #1230

(Alternate to ID#1147)

Decision ALTERNATE PROPOSED DECISION OF COMR. PEEVEY

(Mailed 10/10/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding the Implementation of the Suspension of Direct Access Pursuant to Assembly Bill 1X and Decision 01-09-060.

Rulemaking 02-01-011 (Filed January 9, 2002)

O P I N I O N

(Appendixes similar to find in ALJ Pulsifer's PD)

TABLE OF CONTENTS

Title Page

O P I N I O N 1

I. Introduction 2

II. Background 5

III. Procedural Summary 7

IV. Scope of Costs Subject to CRS 8

V. Legal Authority for Imposing Cost Responsibility Surcharges 10

A. DWR-Related Costs 11

B. Non-DWR Related Costs 12

VI. Standard for Determining Ratepayer Indifference 17

A. Parties' Positions 17

B. Discussion 22

VII. Modeling of DA Cost Responsibility Surcharges for DWR Costs 25

A. Role of Modeling in Analyzing DA Cost Shifting 25

B. Summary of Proposed CRS Based on Modeled Results 28

C. Merits of Multi-Year Modeling Versus Annual Forecasting 31

1. Parties' Positions 31

2. Discussion 34

VIII. Structure of Costs Comprising DA CRS 36

IX. "Historic Costs" 37

A. Parties' Positions 37

1. Separate Levelized Charge or Bond Charge 37

2. Claimed Double-Counting of Bond Charge 43

3. Discussion 46

X. DA Customers Cut-Off Date for Applicablility of the Bond Charge 52

A. Parties' Positions 52

B. Discussion 54

XI. Criteria for Determining July 1 Cut-off Date for Applicability of DA-CRS 57

A. Parties' Positions 57

B. Discussion 59

XII. Ongoing DWR Operating and Portfolio Costs 62

A. Overview 62

XIII. Modeling of Ongoing DWR "Indifference" Costs 64

A. Areas of Dispute Relating to Forecasts 66

1. Assumptions Regarding New Generation Additions 67

2. Assumptions Regarding Market Price for Surplus Power Sales 68

B. Categories of Costs to be Excluded to Measure "Bundled Ratepayer Indifference 71

1. Exclusion of 130% of Baseline Quantities 71

2. Long-Term Contract Only Versus Incremental Short-Term Costs 73

3. Administrative & General Costs 77

C. Utility-Specific versus Statewide Surcharges 78

1. Parties' Positions 78

2. Discussion 80

XIV. Proposals for DA CRS Covering Costs Other than DWR Procurement 80

A. Introduction 80

B. Parties' Positions 81

1. PG&E Proposal 81

2. SCE Proposal 84

3. SDG&E Proposal 87

4. ORA 92

5. CMTA 93

6. CLECA 95

C. Discussion 95

XV. CRS Mitigation: Capping or Levelizing CRS 98

XVI. Other Issues 109

A. Implementation of DA CRS in Coordination with Companion Proceedings 109

1. Remittance of Funds to DWR 111

2. Revenue Allocation and Rate Design of Non-DWR Costs 112

B. Process for Updating the DA CRS/ True ups and Balancing Account Treatment 115

C. Billing and Tariff Implementation 122

D. TURN's Proposal to Include the Costs of the Interruptible Program in the Distribution Component of Rates 122

E. Negative CTC 123

F. Rescission of the One Cent Surcharge from D.01-01-018 as Applicable to Direct Access Customers 125

G. PG&E's WAPA Contract 128

H. Additions to DA List 131

XVII. Rehearing and Judicial Review 131

Findings of Fact 132

Conclusions of Law 137

ORDER 142

APPENDIX A - Summary of Parties' Proposals Concerning Direct Access Cost Responsibility Surcharge Cost Elements for 2003

APPENDIX B - Modeling Scenarios Performed by Navigant Consulting, Inc.

APPENDIX C - PG&E Calculation of DA CRS (Using Navigant Model)

APPENDIX D - SDG&E Calculation of DA CRS (Using Navigant Model)

APPENDIX E - CLECA Calculation of DA CRS (Using Henwood Model)

Table 1- Total Utility Resource Versus DWR-Only Basis

Table 2- Total Utility Resource Basis by Individual Utility

APPENDIX F - List of Inputs and Calculations for Computing DA CRS

APPENDIX G - List of Appearances

I.