STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

November 20, 2002 Agenda ID #1411

TO: PARTIES OF RECORD IN APPLICATION 01-06-044

This is the draft decision of Administrative Law Judge (ALJ) Wong. It will be on the Commission's agenda at the December 17, 2002 meeting. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Rule 77.7(f)(9) provides for reduction or waiver of the 30-day period for public review and comment when public necessity requires such reduction. We must balance whether the public necessity of adopting an order outweighs the public interest in having the full 30-day review and comment. Those considerations have been weighed, and a shortened comment and reply comment period will be adopted. As a result, comments on the draft decision must be filed and served by Monday, December 9, 2002. Reply comments must be filed and served by Monday, December 16, 2002.

Pursuant to Rule 77.3 opening comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service.

/s/ ANGELA K. MINKIN for

Carol Brown, Interim Chief

Administrative Law Judge

CAB:sid

Attachment

ALJ/JSW/sid DRAFT Agenda ID #1411

Ratesetting

Decision DRAFT DECISION OF ALJ WONG (Mailed 11/20/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for Expedited Approval of Servicing Agreement between State of California Department of Water Resources and Southern California Edison Company Pursuant to Chapter 4 of the Statutes of 2001 (Assembly Bill 1 of the First 2000-2002 Extraordinary Session).

Application 01-06-044 (Filed June 25, 2001)

OPINION APPROVING THE 2003 SERVICING ORDER CONCERNING SOUTHERN CALIFORNIA EDISON COMPANY AND THE CALIFORNIA DEPARTMENT OF WATER RESOURCES

Summary

On October 8, 2002, the California Department of Water Resources (DWR) submitted to this Commission a memorandum and proposed modifications to the "First Amended and Restated Servicing Agreement" (Amended Servicing Agreement) between DWR and Southern California Edison Company (SCE).¹ DWR's submission was made in response to D.02-09-053 (the "Contract Allocation Decision"), which directed DWR and SCE to negotiate appropriate modifications to the Amended Servicing Agreement as a result of the allocation of energy from, and operational responsibility for, DWR's electricity contracts to SCE and the other two large electric utilities.

Today's decision approves a modified version of DWR's proposed modifications, which we have labeled as the "2003 Servicing Order Concerning State of California Department of Water Resources And Southern California Edison Company" (Servicing Order). Because the changes that DWR proposed, and that we here approve with modifications, were not agreed to by SCE, we are constrained to issue a Servicing Order rather than approve a Servicing Agreement. Appendix A of this decision contains a marked version of the revisions to the Servicing Order that we approve today. SCE is ordered to comply with the terms and conditions of the Servicing Order. The Servicing Order sets forth the terms and conditions under which SCE will provide the transmission and distribution of DWR-purchased electricity, as well as billing, collection, and related services on behalf of DWR. The Servicing Order also addresses DWR's compensation to SCE for providing those services.

Today's Servicing Order is needed because DWR and SCE have been unable to negotiate a mutually agreeable servicing arrangement. Due to the upcoming date when SCE is to assume operational control of the DWR contracts allocated to it, a Servicing Order needs to be put into place prior to year's end.