COM/SK1/BWM/jva DRAFT Agenda ID # 2815
Quasi-legislative

10/30/03 Item 34

Decision DRAFT DECISION OF ALJ MATTSON (Mailed 9/30/2003)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Adopting Rules To Account For The Consideration Received By Regulated California Electric And Natural Gas Utilities Under A Settlement With El Paso Natural Gas Company, et al.

Rulemaking 03-07-008

(Filed July 10, 2003)

OPINION
REGARDING TREATMENT OF CONSIDERATION
RECEIVED PURSUANT TO EL PASO SETTLEMENT

TABLE CONTENTS

Title Page

1. Summary 2 2

2. Background 2 2

2.1. Litigation and Settlement 2 2

2.2. OIR and Scoping Memo 6 6

3. Discussion 7 7

3.1. CDWR Revenue Requirement 7 7

3.2. Electric Utility Issues 11 11

3.2.1. ERRA for SCE and SDG&E 11 11

3.2.2. PG&E 14 14

3.2.3. Direct Access Customers 17 17

3.2.3.1. Background and Proposal 17 17

3.2.3.2. Factual Issues 19 19

3.2.3.3. Allocation Based On First Receipt 19 19

3.3. Gas Utility Issues 20 20

3.3.1. PGA 20 20

3.3.2. Core-Elect and Core-Subscription Customers 22 22

3.3.2.1. Background and Proposal 22 22

3.3.2.2. Refund Plan 24 24

3.3.3. Core Aggregation Customers 26 26

3.3.3.1. Background and Proposal 26 26

3.3.3.2. EPSMA 27 27

3.3.4. Limited Additional Wholesale Transportation Customers 30 30

3.4. Incentive Mechanisms 32 32

3.5. Income Taxes 33 33

3.6. Other Issues 35 35

3.6.1. Allocation Percentages 35 35

3.6.2. Southwest $2.7 Million Penalty 35 35

3.6.3. Payment to Southwest 36 36

3.6.4. Timing of Rate Adjustments and Appeals 36 36

4. Comments on Draft Decision 37 37

5. Assignment of Proceeding 37 37

Findings of Fact 37 37

Conclusions of Law 43 43

ORDER 46 46

Attachment A Adopted Accounting and Ratemaking Treatment
Attachment B Parties & Acronyms

OPINION
REGARDING TREATMENT OF CONSIDERATION
RECEIVED PURSUANT TO EL PASO SETTLEMENT

1. Summary

Energy customers in California and three western states will receive an estimated $1.5 billion (nominal value) as a result of settling litigation with El Paso Natural Gas Company. The litigation involves high natural gas and electricity prices during the period March 1, 2000 through May 31, 2001. This proceeding addresses the accounting and ratemaking treatment of the portion of the settlement proceeds that will be paid to entities, utilities and ratepayers subject to the jurisdiction of this Commission. The adopted accounting treatment and rules are stated in Attachment A. This proceeding is closed.