COM/CXW/mzr/mnt * * ALTERNATE DRAFT

H-10a

11/7/02

Agenda ID #1151

(Alt. To Agenda ID #1147)

Decision ALTERNATE DRAFT DECISION OF COMMISSIONER WOOD

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

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 11

A. DWR-Related Costs 11

B. Non-DWR Related Costs 12

VI. Standard for Determining Customer Indifference 18

A. Parties' Positions 18

B. Discussion 22

VII. Modeling of DA Cost Responsibility Surcharges for DWR Costs 26

A. Role of Modeling in Analyzing DA Cost Shifting 26

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 33

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 45

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

A. Parties' Positions 52

B. Discussion 54

XI. Criteria for Determining Cut-Off Date for Applicability of Ongoing DWR Power Charges 59

A. Introduction 59

B. Discussion 62

XII. Ongoing DWR Operating and Portfolio Costs 65

A. Overview 65

XIII. Modeling of Ongoing DWR "Indifference" Costs 68

A. Areas of Dispute Relating to Forecasts 70

1. Assumptions Regarding New Generation Additions 71

2. Assumptions Regarding Market Price for Surplus Power Sales 72

B. Categories of Costs to be Excluded to Measure "Bundled Customer Indifference" 77

1. Exclusion of 130% of Baseline Quantities 77

2. Long-Term Contract Only Versus Incremental Short-Term Costs 79

3. Administrative & General Costs 81

C. Utility-Specific versus Statewide Surcharges 82

1. Parties' Positions 82

2. Discussion 84

XIV. Proposals for DA CRS Covering Costs Other than DWR Procurement 85

A. Introduction 85

B. Parties' Positions 86

1. PG&E Proposal 86

2. SCE Proposal 88

3. SDG&E Proposal 91

4. ORA 95

5. CMTA 96

6. CLECA 97

C. Discussion 98

XV. CRS Mitigation: Capping or Levelizing CRS 100

XVI. Other Issues 100

A. Implementation of DA CRS in Coordination with Companion Proceedings 123

1. Remittance of Funds to DWR 126

2. Revenue Allocation and Rate Design of Non-DWR Costs 127

B. Process for Updating the DA CRS/ True ups and Balancing Account Treatment 130

C. Billing and Tariff Implementation 136

D. TURN's Proposal to Include the Costs of the Interruptible Program in the Distribution Component of Rates 136

E. Negative CTC 137

F. Issues Surrounding the Applicability of the One Cent Surcharge from D.01-01-018 on Direct Access Customers 139

G. PG&E's WAPA Contract 141

H. Additions to DA List 144

I. Adjustment for Voltage Differentials 145

J. Adjustment for 80 MW of U.S. Navy Load 145

XVII. Rehearing and Judicial Review 146

XVIII. Comments on the ALJ Proposed Decision 146

XIX. Assignment of Proceeding 146

Findings of Fact 146

Conclusions of Law 152

ORDER 159

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.