II. Implementing Direct Access Suspension under Water Code section 80110

The duty of the Commission in construing the statutory suspension of direct transactions is not in doubt. "The goal of statutory interpretation is to ascertain and effectuate the intent of the Legislature." Pacific Gas and Electric v. County of Stanislaus, (1997), 16 Cal. 4^th 1143, 1152. The Commission "'...has no power to rewrite the statute so as to make it conform to a presumed intention which is not expressed.'" Stop Youth Addiction Inc. v. Lucky Stores Inc., (1998), 17 Cal. 4^th 553, 578 (, quoting California Teachers Association v. Governing Board of Rialto School District, (1997), 14 Cal. 4^th 627, 633. The "switching exemption" proposed by some parties constitutes a significant departure from the Commission's prior decisions and utility tariffs. If it is to be sustained, it must be on the basis of the statutory language imposing the suspension.

A. Parties' Positions

TURN asserts that the "switching exemption" is contrary to law, and cites § 80110 of the Water Code which provides in relevant part:

The department shall retain title to all power sold by it to the retail end use customers. The department shall be entitled to recover, as a revenue requirement, amounts and at the times necessary to enable it to comply with Section 80134, and shall advise the commission as the department determines to be appropriate.... After passage of such period of time after the effective date of this section as shall be determined by the commission, the right of retail end use customers pursuant to Article 6 (commencing with § 360) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code to acquire service from other providers shall be suspended until the department no longer supplies power hereunder. (Emphasis added.)

TURN contends that by allowing a customer that has returned to bundled service subsequent to the September 20, 2001 suspension date to thereafter select a new ESP and resume DA service, the Commission violates the plain language of § 80110. TURN interprets the statute as directing the Commission to forbid any bundled service customer from selecting a new ESP after the suspension. TURN maintains that such an action constitutes acquiring service from another provider, and is precisely what the statute forbids. TURN argues that the law does not provide for a "standstill" in the amount of load on DA as of the suspension date, but absolutely bars a customer from acquiring service from another provider after the suspension date.

SCE agrees that DA customer migration in and out of bundled service should be curtailed and specifically advocates elimination of the switching exemption and/or a requirement that returning customers remain on bundled service for a full five years.¹⁸ PG&E and ORA similarly propose restrictions on switching to protect bundled customers from cost shifting and to preserve DA customer choice, "assuming for the sake of discussion" that switching may be permitted. SDG&E believes it would be consistent with the Commission's "standstill" principle to approve the switching exemption. SDG&E offers a proposal to permit the switching exemption in a manner designed both to protect bundled service customers and maintain the viability of DA.

Other parties dispute the contention that acquiring service from a provider other than DWR after September 20, 2001, violates AB 1X. AREM argues that the prohibition on acquiring service from an ESP only applies to a new arrangement or agreement for DA. AREM contends that customers with a valid DA contract in place on or before September 20, 2001, had already "acquired" DA before the suspension took effect, and maintains that the renewal or assignment of such contracts under the switching exemption only involves the continuation of an existing contract right, rather than a new arrangement or agreement. Other parties representing DA interests also oppose the elimination of the switching exemption, particularly if applied on a retroactive basis. Various DA parties argue that existing DA customers that have previously used the switching exemption should be grandfathered and entitled to retain DA service, or propose various methods to clarify how the exemption should be administered.

These parties argue that DA is an entitlement that a customer may enjoy at its election, so long as there is no increase in over-all DA load, notwithstanding the Legislature's directive that such "rights" be suspended by the Commission. Hence, a customer that was engaging in direct transactions or receiving service from an ESP on or after September 20, 2001 enjoys a "vested" right that cannot be affected by subsequent behavior, such as terminating DA and returning to bundled service. The basis for this contention is the logic, if not the law, of the "standstill" principle articulated in D.02-03-055.

B. Discussion

1. Introduction - The Issue

The "switching exemption" issue before us was precisely framed in D.02-04-067, our decision granting rehearing to TURN:

...

In D.02-03-055, the Commission creates an exemption to D.01-09-060 by permitting direct access customers to choose a new ESP and continue on direct access even if they had returned to bundled service after September 20, 2001, but subject to some restrictions. (D.02-03-055, p. 21.) We will call this exemption the "switching exemption".

In its rehearing application, TURN argues that the "switching exemption" is unlawful and challenges the basis for this exemption. (TURN's Application for Rehearing, pp. 6-7.) After some consideration of TURN's arguments, we believe that a rehearing on this issue is warranted.

We address this issue seeking consistency with the statute and our prior decisions implementing the statute.

2. The Statutory Language

...After passage of such period of time after the effective date of this section as shall be determined by the commission, the right of retail end use customers pursuant to Article 6 (commencing with § 360) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code to acquire service from other providers shall be suspended until the department no longer supplies power hereunder....

In construing this language, the Commission is concerned primarily to ascertain the Legislature's intent, using the words of the statute themselves. "[The] first step [in determining the Legislature's intent] is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning." Mercer v. Department of Motor Vehicles, (1991), 53 Cal. 3d 753, 763. The language of Water Code section 80110 clearly and unambiguously directs the Commission to set a date after which "the right of retail end-use customers pursuant to [statute] to acquire service from other providers" is "suspended" until DWR is no longer supplying power. By the express terms of the statute, the suspension is self-executing once the Commission sets the date. The statute does not authorize or require the Commission to suspend the right, nor does it authorize the Commission to qualify or limit the suspension. All that the Commission may do is determine a date after the enactment of AB 1X for the Legislature's suspension to take effect.

What the Legislature "suspended" is the "right" to "acquire service from other providers...." It is not the "right to acquire direct access service," or more accurately the right to engage in "direct transactions" as that term is defined by AB 1890.¹⁹ It is the "right" to avoid DWR service. This language appears in a statutory section that deals specifically with the power supply costs and power sale revenues of the Department of Water Resources. The "right" that is suspended is the right of customers to avoid acquiring DWR electric energy through a direct transaction relationship with an ESP. TURN has read the statute correctly.

In construing the statute we must give effect to the legislature's intent in enacting the statute. In so doing, we may consider the "wider historical circumstances of its enactment." Pacific Gas and Electric v. County of Stanislaus, supra, 16 Cal. 4^th at 1152. AB 1X was an emergency measure enacted rapidly in response to the Electricity Emergency of 2000-1.²⁰ It placed the State of California in the unfamiliar role of purchasing power for sale directly to retail customers. The findings section of AB 1X, Water Code section 80000, provides in pertinent part:

80000. The Legislature hereby finds and declares all of the

following:

(a) The furnishing of reliable reasonably priced electric service is essential for the safety, health, and well-being of the people of

California. A number of factors have resulted in a rapid, unforeseen shortage of electric power and energy available in the state and rapid and substantial increases in wholesale energy costs and retail energy rates, with statewide impact, to such a degree that it constitutes an immediate peril to the health, safety, life and property of the inhabitants of the state, and the public interest, welfare, convenience and necessity require the state to participate in markets for the purchase and sale of power and energy.

The Legislature considered DWR's role to be temporary, and terminated power purchase and sale authority on December 31, 2002. See, Water Code Section 80260. The Legislature was concerned to assure recovery of DWR's costs, and to prevent end use customers, including DA customers, from avoiding paying for those costs except as it directed. Water Code section 80104 provides:

80104. Upon the delivery of power to them, the retail end use customers shall be deemed to have purchased that power from the department. Payment for any sale shall be a direct obligation of the retail end use customer to the department.

Moneys paid by retail customers for DWR customers is property of DWR, Water Code section 80112, and is dedicated exclusively to payment of DWR power purchase and sale obligations. Water Code section 80200(b).

Payment by consumers for DWR energy is covered by section 80110, which has been previously quoted. This section requires the Commission to establish just and reasonable retail rates for DWR power that are sufficient to recover DWR's revenue requirement, which is in turn the security for bonds that DWR is authorized to issue to cover power costs.²¹

Our obligation in construing a statute is, again, to "...ascertain the intent of the Legislature so as to effectuate the purpose of the law." Dyna-Med, Inc. v. Fair Employment and Housing Commission, 43 Cal. 3d 1379, 1386 (1987); California Teachers Association v. Governing Board, supra, at 632. The location of the direct access suspension in Water Code section 80110 must be considered in determining the Legislature's intent when it suspends the right of customers to avoid purchasing DWR power. Our orders must be consistent with this intent. Permitting some customers to avoid paying DWR's costs after the Commission has established the date for the mandated suspension plainly runs contrary to the Legislature's intent.

3. Proponents of a Switching Exemption Ignore the Statutory Language

The plain and unambiguous language of section 80110 - the "right"... "shall be suspended" -- should be compared with schemes proposed by proponents of the "switching exemption." These schemes involve virtually toggling between utility/DWR service and "other providers."

CMTA proposes that DA customers be given a "safe harbor" for 90 days in order to find a new ESP and to have DASRs submitted to the utilities. As long as DASRs are submitted within the 90-day period, the customers would be free to return to DA service. Under CMTA's proposal, DA customers would pay the prevailing spot market price during the "safe harbor" period, plus all applicable generation-related surcharges that apply to DA customers. If the DA customer had no DASR submitted on its behalf within the 90-day period, CMTA proposes that the customer would be required to remain on bundled service for the next 12 months, and to pay the average generation rate for bundled service. The customer would remain responsible for its share of past surcharges that exceeded the rate cap.²² Because the customer is not given unlimited access to the IOU portfolio at a favorable rate, CMTA argues that its proposal eliminates the possibility of customers "gaming" the market by switching from bundled service to DA service whenever spot prices are expected to be low, or vice versa, although apparently the customer could, under this view.

CLECA believes that DA customers returned involuntarily to the utility by the ESP, presumably through the ESP's exercise of its contractual rights, should retain the ability to return to DA service within a "reasonable" period of time, perhaps 60 days. Similarly, if a DA customer is in the midst of changing DA suppliers, and there is a minor delay in processing the DASR change, CLECA believes the customer should be able to use utility power for the interim and pay utility tariffed rates. CLECA believes these instances are highly unlikely to occur all at one time and contends that the very diversity of the occurrences will work to mitigate, if not virtually eliminate, any adverse impacts on the utility and bundled customers. CLECA argues that the ability of current DA customers to switch suppliers should not be constrained by imposing restrictive coming and going rules that would merely give current ESPs inordinate and inappropriate leverage in the pricing of DA power. CLECA does not explain how "the ability of customers to switch suppliers" comports with the Legislature's determination to suspend the right to acquire service form other suppliers.

None of this is consistent with the legislature's simple termination of the right to acquire service from other providers while DWR is in the power supply role. It is not consistent with the simple regime established by our prior orders for utilities' handling of DA and DASRs, either.

4. The Commission's Prior Orders Implementing the Legislative Suspension - A Reasonable regime for Continuation

In its implementation of the Legislature's suspension the Commission has, nevertheless, preserved a reasonable degree of flexibility for customers to continue DA by its treatment of DA contracts, as will be explained below. To the extent that it creates an entitlement to engage in direct transactions pursuant to a new contract or arrangement after the suspension and after termination of DA service, the "switching exemption" and its progeny goes further than even a flexible approach to the statute permits.

The literal application of the statutory language would have terminated all direct transactions and the contracts and relationships on which they are based. The Commission was concerned, however, to provide for continuation of direct transactions if a customer had reasonable, realistic expectations based on a firm existing contract. The Commission has given effect to the reasonable expectations of parties to valid DA contracts existing as of September 20, 2001. The Commission has been quite consistent in its approach, as is apparent from a thorough reading of our decisions implementing the suspension.

The consistent, unwavering approach of the Commission for over 20 months reiterated in four separate orders places all customers and utilities on notice that the right to avoid DWR service through direct transaction has been suspended, subject only to execution of the express provisions of a pre-existing contract. No contrary rights or expectations have been acquired.

a. D.02-04-067

The "switching exemption" issue before us was first articulated in Rehearing Order on D.02-03-055, [D.02-04-067], supra, our decision granting rehearing to TURN:

...In D.02-03-055, the Commission creates an exemption to D.01-09-060 by permitting direct access customers to choose a new ESP and continue on direct access even if they had returned to bundled service after September 20, 2001, but subject to some restrictions. (D.02-03-055, p. 21.) We will call this exemption the "switching exemption".

In its rehearing application, TURN argues that the "switching exemption" is unlawful and challenges the basis for this exemption. (TURN's Application for Rehearing, pp. 6-7.) After some consideration of TURN's arguments, we believe that a rehearing on this issue is warranted.

The bald description of the "switching exemption" as an ability to acquire service from other providers after the suspension - notwithstanding the statutory language -- may have reflected the hopes of some parties. However, in D.02-04-067 the Commission restated its intention to permit continuation of DA only under limited and defined circumstances:

...[R]enewals and assignments, if they were provisions in contracts entered into or agreements made prior to September 21, 2001, are not new contracts, agreements or arrangements, and thus, are permissible under the interpretation of AB 1X that we set forth in D.01-09-060.

(Rehearing Order on D.02-03-055 [D.02-04-067], supra, at p. 7 (slip op.).)

In footnote 3, the Commission refined this statement:

Fn. 3. [W]e note that if a renewal or assignment changes any material terms (e.g., load) in an existing contract or agreement that was entered into before the suspension date, then the renewal or assignment would constitute a new contract or agreement that would be prohibited. Accordingly, in D.02-03-055, we limited the assignment to "the same load at the same location." (D.02-03-055, p. 23.) We intend that this same limitation apply to renewals. We will modify to D.02-03-055 to state that this limitation applies to a renewal. Id. at page 7, fn.3, emphasis added)

The Commission's note that any change in the material terms goes beyond the permissible continuation gives effect to the Legislature's intention to limit avoidance of DWR electricity service. Permissible continuation of an existing contract does not include changes to material terms of the contract.

The legislative suspension of the right to avoid DWR costs has been understood by the Commission to permit continuation of DA where a pre-September 20, 2001 contract is in effect. A change in DA service that effects a change in material terms violates the suspension; a change that is authorized by the express terms of the contract can be made. A general right to switch ESPs and sign new contracts with new material terms does not comport with the statute.

The effect of the granting the rehearing is to render the underlying order non-final. City of Los Angeles v. PUC, 15 C. 3d 680, 707 (1975). No rights or obligations were created with respect to the "switching exemption" discussion in D.02-03-055. The Commission's approach to suspension and continuation prior to D.02-03-055 was consistent with D.02-04-067. In fact a careful reading of D.02-03-055 demonstrates that it is consistent with its predecessor orders and the rehearing order in limiting the manner in which DA is continued following the suspension. The grant of rehearing on the "switching exemption" has the effect of leaving in place the orders of the Commission implementing the suspension, D.01-09-060 and D.01-10-036. City of Los Angeles, supra; Coast truck Line v. Asbury Truck Co., 218 C. 337, 340 (1933). No customer has acquired any rights or expectations in derogation of the statute or the Commission's prior orders.

b. D.01-09-60 and D.01-10-036

Our approach to implementing AB 1X has been embodied in a series of orders. In D. 01-09-060 we suspended direct access as of September 20, 2001. Our Ordering Paragraphs stated in pertinent part:

...

4. The execution of any new contracts, or the entering into, or the verification of any new arrangements for direct access service pursuant to Public Utilities Code Sections 366 or 366.5, after September 20, 2001, is prohibited.

5. PG&E, SDG&E and SCE shall notify their customers that the right of retail end users to acquire direct access service from other providers, except the Department of Water Resources, is suspended effective as September 20, 2001.

6. PG&E, SDG&E and SCE shall modify any information disseminated to customers that describes direct access service, subject to review by the Public Advisor's office and Energy Division, to explain that the right to acquire direct access service has been suspended.[²³]

7. PG&E, SCE and SDG&E shall not accept any direct access service requests for any contracts executed or agreements entered into after September 20, 2001.

8. Within 14 days of the effective date of this order, PG&E, SDG&E and SCE, by letter, shall inform the Director of the Energy Division of the steps they have taken to ensure that no direct access service requests are accepted for any contracts executed or agreements entered into after September 20, 2001.

...

(See generally, DA Suspension Decision [D.01-09-060], supra.

These orders are clear and unambiguous. They prohibit new contracts or arrangements and they prohibit the utilities from accepting or processing direct access service requests (DASRs) for new contracts or arrangements. Commissioners Duque and Bilas argued in dissent that "We are not convinced that the Department of Water Resources (DWR) bond ratings depend on killing direct access. This notion is a scare tactic and a smoke screen." They understood that the Commission majority meant what it said in ordering that "The execution of any new contracts, or the entering into ... of any new arrangements for direct access service ... is prohibited." The Commission ended the creation of any new DA relationships after the suspension date.

The Commission reiterated this conclusion three weeks later in D.01-10-036.

In Decision (D.) 01-09-060, we issued an interim order, effective as of September 20, 2001, in which we suspended the right to enter into new contracts or agreements for direct access after that date, and reserved for subsequent consideration and decision matters related to the effect to be given to all contracts executed or agreements entered into on or before the effective date, including renewals of such contracts....

(Order Modifying Decision (D.) 01-09-060 and Denying Rehearing, As Modified [D.01-10-036], supra, at p. 1 (slip op.).)

The Commission explained that it was merely implementing the Legislature's suspension of direct transactions.

...

In D.01-09-060, we explained our reasoning and determinations for suspending direct access after September 20, 2001. Suspension was mandated by the Legislature, and it was enacted in response to the emergency declared by the Governor's Proclamation of January 17, 2001. (D.01-09-060, p. 3.) The Legislature left the determination of when direct access should be suspended to the Commission. (Water Code §80110.) Ibid.

The Commission did not purport to abrogate any valid existing contracts. In D. 01-09-060 the Commission reserved the question of whether the effective date of the suspension would remain September 20, 2001, or be revised to take effect on July 1, 2001, the date proposed by the Proposed Decision that had been the basis for D. 01-09-060. D.01-10-36 confirmed this. The basis for this was that consideration of retroactivity issues was unripeId. at pp. 7-9 (slip op.).

However, the Commission also reiterated that going forward, only pre-existing contracts and arrangements would be continued.

...we note that our clarifications today regarding the requirements for accepting DASRs should not be interpreted in any way to diminish or restrict the utilities' obligations, that we ordered in D.01-09-060, to take appropriate measures to ensure that any DASRs they do accept are for contracts executed or agreements entered into on or before September 20, 2001. We expect ESPs and other entities to cooperate with the utilities in their verification activities.

Id., Subdivision F at page 21, (slip op.)

c. R.02-01-011 and D.02-03-055

On January 9, 2002 the Commission issued the instant rulemaking, R.02-01-011. In the Rulemaking, the Commission placed the public on notice that "By opening this rulemaking notice is provided that the Commission may modify or alter previous Commission decisions or rulings regarding direct access, including, but not limited to D.01-09-060, as modified by D.01-10-036."

In Implementation of the Direct Access Suspension Decision [D.02-03-055], (2002), ___ CPUC 2d ___ the Commission addressed that issue. We discussed the principles underlying our approach to implementation of DA suspension as follows:

Generally, we favor a balanced approach which allows existing direct access customers to continue in the direct access market, but limits additional load moving to direct access to load changes associated with normal usage variations on direct access accounts in effect as of September 20, 2001. This standstill concept is consistent with the provisions of AB 1X and D.01-09-060 that direct access be suspended and there be no new arrangements.

Under the standstill approach described below, we will permit assignments and renewals, but not add-ons of new load. This approach is consistent with our policy reasons for imposing direct access cost responsibility surcharges or exits fees, in lieu of an earlier suspension date, as an appropriate way to alleviate the significant cost-shifting of DWR costs on to bundled service customers.

Implementation of the Direct Access Suspension Decision,[D.02-03-055], , pp. 17-18, (slip op.)

However, the Commission did not intimate that its policy preference would or could countermand either the statute or its prior decisions interpreting the statute. While generally expressing an intention to preserve a direct access option for customers already in the program as of the suspension date, the Commission majority reiterated the crucial Ordering Paragraphs of the prior decision:

2. The execution of any new contracts, or the entering into, or the verification of any new arrangements for direct access service pursuant to Public Utilities Code Sections 366 or 366.5, after September 20, 2001, is prohibited, unless specifically allowed on [sic] this decision.

....

4. SCE, PG&E, and SDG&E shall implement the conditions set forth in this decision which affect those direct access contracts not suspended.

5. SCE, PG&E, and SDG&E shall not accept any direct access service requests for any contracts executed or agreements entered into after September 20, 2001, unless specifically allowed by this decision

Id. at 31-32 (slip op.)

The Commission majority was completely clear about how the prohibition on "new arrangements" for direct access service would be carried out. In Finding of Fact 14 the decision stated with respect to pre-September 20 contracts:

14. It is reasonable to allow assignment or renewal of a direct access contract, if the assignment or renewal is permitted in the contract, and if [it] does not constitute a new contract or arrangement.

Id. at page 30 (slip op.) (emphasis added)

In Finding 15 the Commission majority also said:

15. Customers who signed a direct access contract as of September 20, 2001 may renew the contract, enter into a new contract with a different ESP for the same load, or may switch ESPs via assignment or other permissible mechanism. The filing of new DASRs to implement such changes is permissible.

Ibid.

It is not difficult to reconcile these two statements. Finding 14 permits assignment or renewal only if the action is "...permitted in the contract, and if [it] does not constitute a new contract or arrangement." The phrase in Finding 15 "...enter into a new contract with a different ESP for the same load..." recapitulates Finding 14 and permits renewal or assignment if permitted in the pre-existing contract. It cannot be read to permit new contracts or arrangements unrelated to the pre-existing contract, because Ordering Paragraph 2 is clearly a prohibition on "new contracts" and "new arrangements." Finding 15 is not mere surplusage because the final sentence, authorizes the filing of new DASRs where the continuation arrangement is consistent with Finding 14.

The Findings and Ordering Paragraphs thus recapitulate what the Commission said it was doing in its rehearing decision, D.01-10-036, at page 21.

...[w]e note that our clarifications today regarding the requirements for accepting DASRs should not be interpreted in any way to diminish or restrict the utilities' obligations, that we ordered in D.01-09-060, to take appropriate measures to ensure that any DASRs they do accept are for contracts executed or agreements entered into on or before September 20, 2001. We expect ESPs and other entities to cooperate with the utilities in their verification activities.

Some language in the text of D.02-03-055 does appear to diverge from both the Findings and the Ordering Paragraphs. Section 4 under the rubric "Implementation of Direct Access" provides:

5. Customers and accounts are allowed to switch from one ESP to another after September 20, 2001.

According to AReM allowing customers unlimited switching between ESPs is consistent with AB 1X since it doesn't increase direct access load. We agree. Changing ESPs would not be inappropriate under the standstill policy because no change in direct access load would occur, thus there would be no cost-shifting of DWR costs. While changing ESPs does require a new contract (absent assignment), prohibited by D.01-09-060 (Ordering Paragraph 7), an exception is appropriate for the reasons stated above. AB 1X can be read to allow ESP switches, and thus this exception, because it requires the suspension of the right to "acquire" direct access. A switch of ESPs is not an acquisition of direct access, but a continuation on direct access for the customer. See Water Code §80110. Customers can also choose a new ESP and continue on direct access if they returned to bundled service after September 20, 2001, except as indicated in Rule 12.

D.02-03-055, Decision at page 21.

The "standstill principle" is not contained in the statute. It represents a policy concept of the Commission that must be consistent with, and not subversive of, the Legislature's language and objectives as contained in AB 1X. As the Commission's orders have made clear, the "standstill principle" is consistent wit the statute because it continues only the direct transactions of customers who were parties to valid existing contracts as of the suspension date and does not change any material contract terms. The so-called "switching exemption" is not consistent with the "standstill principle as articulated by the Comission.

In any case, Ordering Paragraph 8 of D.02-03-055 adopts only the highlighted portion of this discussion. Findings and Conclusions have an authoritative legal effect which statements obiter dicta lack because Findings and Conclusions permit reviewing courts to determine the basis for the Commission's decision. California Manufacturers' Association v. PUC, 24 C.3d 251, 259-60 (1979); California Motor Transport v. PUC, 59 C. 2d 270 (1963). Further, as discussed above, the underlined assertion is not consistent with the statute. OPs 2 and 8 and Findings 14 and 15 are thus consistent in allowing a continuation of direct access in those arrangements where such a continuation by assignment or renewal was anticipated in the express language of a direct access contract in effect on September 20, 2001. The terms of the Decision did not allow for the unlimited "switching exemption" argued for by some parties. The express terms of Findings and Orders cannot be avoided by dictum in the text, even if the Findings, Conclusions and Ordering Paragraphs had not so clearly omitted it.

This conclusion - that the suspension of direct access did not permit to any "switch" in the provider identity that was not permitted under the pre-existing contract -- was confirmed on rehearing by D.02-04-067, at page 7:

...[R]enewals and assignments, if they were provisions in contracts entered into or agreements made prior to September 21, 2001, are not new contracts, agreements or arrangements, and thus, are permissible under the interpretation of AB 1X that we set forth in D.01-09-060. (emphasis added)

d. The Effect of Returning to Bundled Service

The provisions of AB 1X relating to DA suspension prohibit us from adopting an approach that revives direct transaction for customers who have terminated that service by agreeing to take bundled service from their utility and DWR.²⁴ The statute terminates the "right" to change providers, which occurred as of September 20, 2001, the date of suspension, until DWR no longer provides power to utility customers. It does not matter whether the abandonment of direct transactions occurs before or after the suspension date. Once a direct access customer returns to utility/DWR service, there is no longer any right to acquire service from "other providers' until DWR has accomplished its duties under the statute.

In contrast, customers taking DA service pursuant to a valid written and executed contract in place on or before September 20, 2001 were acquiring service from a provider other than DWR and the utility. It does not contravene the statute to give those contracts their effect according to their terms. Allowing DA customers with valid contracts in place or customers verified per § 366.5 on or before September 20, to switch ESPs does not frustrate the Legislature's suspension of the rights of customers to avoid DWR service, where the contract specifically contemplates such action. What is suspended by the statute is the statutory right of the customer to acquire service, not the rights of two parties to a previously existing contract. However, as we were careful to point out in D.01-09-060 and to reaffirm in D.01-10-036 and D.02-03-055, the contract must have specifically provided for it, and the contract must not have terminated through a resumption of bundled service.

Some parties argue that DA is an entitlement which a customer may enjoy at its election, so long as there is no increase in over-all DA load, notwithstanding the Legislature's directive that such "rights" be suspended by the Commission. We disagree. AB 1X suspends the "right" of customers to acquire service from another provider - the definition of direct access. It avails nothing to rename this an "entitlement." Right, entitlement, privilege or option - the Legislature suspended direct access as of the date specified by the Commission.

Some proponents of a switching exemption argue that because DA customers did not know what Commission policies or surcharges would be adopted with respect to these matters at the time that they returned to bundled service, that is appropriate to offer them an option to return to DA without penalty for a limited window of time. This limited window will provide time for these "grandfathered" customers to determine what course they wish to pursue in view of D.02-11-022 and today's order. Such a course would permit these customers to speculate on the course of Commission policy. There is no reason to encourage such speculation.