Brown Attachment A
Brown Attachment B Adopting PG&E, SCE and SDG&E LTPP
Brown Attachment C

STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

November 16, 2004 Agenda ID #4073

Ratesetting

TO: PARTIES OF RECORD IN RULEMAKING 04-04-003

RE: NOTICE OF AVAILABILITY OF PROPOSED DECISION ADOPTS WITH MODIFICATIONS, PG&E, SCE AND SDG&E LONG-TERM PROCUREMENT PLANS FOR 2004-2014

Consistent with Rule 2.3(b) of the Commission's Rules of Practice and Procedure, I am issuing this Notice of Availability of the above-referenced proposed decision. The proposed decision was issued by Administrative Law Judge (ALJ) Brown on November 16, 2004. An Internet link to this document was sent via e-mail to all the parties on the service list who provided an e-mail address to the Commission. An electronic copy of this document can be viewed and downloaded at the Commission's Website ( www.cpuc.ca.gov).

Any recipient of this Notice of Availability who is not receiving service by electronic mail in this proceeding may request a paper copy of this documents from the Commission's Central Files Office, at (415) 703-2045; e-mail cen@cpuc.ca.gov.

This is the proposed decision of ALJ Brown, previously designated as the principal hearing officer in this proceeding. It will not appear on the Commission's agenda for at least 30 days after the date it is mailed. This matter was categorized as ratesetting and is subject to Pub. Util. Code § 1701.3(c). Pursuant to Resolution ALJ-180, a Ratesetting Deliberative Meeting (RDM) to consider this matter may be held upon the request of any Commissioner. If that occurs, the Commission will prepare and mail an agenda for the RDM 10 days before hand. When an RDM is held, there is a related ex parte communications prohibition period.

When the Commission acts on the proposed 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.

Parties to the proceeding may file comments on the propose decision as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages.

Consistent with the service procedures in this proceeding, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Brown at cab@cpuc.ca.gov. Service by U.S. mail is optional, except that hard copies should be served separately on ALJ Brown, and for that purpose I suggest hand delivery, overnight mail or other expeditious methods of service. In addition, if there is no electronic address available, the electronic mail is returned to the sender, or the recipient informs the sender of an inability to open the document, the sender shall immediately arrange for alternate service (regular U.S. mail shall be the default, unless another means - such as overnight delivery is mutually agreed upon). The current service list for this proceeding is available on the Commission's Web page, www.cpuc.ca.gov.

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:jva

Attachment

ALJ/CAB/jva DRAFT Agenda ID #4073

Ratesetting

Decision PROPOSED DECISION OF ALJ BROWN (Mailed 11/16/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning.

Rulemaking 04-04-003

(Filed April 1, 2004)

OPINION ADOPTING PACIFIC GAS AND ELECTRIC COMPANY,
SOUTHERN CALIFORNIA EDISON COMPANY
AND SAN DIEGO GAS & ELECTRIC COMPANY'S
LONG TERM PROCUREMENT PLANS

Table of Contents

Title Page

OPINION ADOPTING PACIFIC GAS AND ELECTRIC COMPANY, SOUTHERN CALIFORNIA EDISON COMPANY AND SAN DIEGO GAS & ELECTRIC COMPANY'S LONG TERM PROCUREMENT PLANS 2 2

I. Summary 2 2

II. Background 3 3

A. Background To R.04-04-003 3 3

B. Procedural History 8 8

C. Motions 10 10

D. Summary of Parties' Positions 11 11

E. IOUs 11 11

F. Consumer/Ratepayer Advocates 12 12

G. Environmental Groups 13 13

H. Potential CCA/Municipalization/Direct Access 15 15

I. Co-Generation Facilities 16 16

J. Energy Marketers and Independent Energy Producers 17 17

K. The California ISO 19 19

L. Other Intervenors 20 20

III. Analysis Of Long Term Procurement Plans 20 20

A. Do The LTPPS Integrate The Commission's Direction
From Other Related Proceedings And Meet The Criteria
Established In The ACR/Scoping Memo? 20 20

1. General Assessment 20 20

2. Load Forecast 21 21

B. Position of Parties on Load Forecasts 24 24

C. Discussion of Load Forecasts 25 25

1. Resource Scenarios 28 28

D. Implementing the Energy Action Plan 28 28

1. Discussion on Compliance 29 29

E. Net Open Position 29 29

1. Position of IOUs on Net Open Positions 29 29

F. Discussion on Net Open 30 30

G. Implications of the Three Resource Scenarios 31 31

H. Position of Parties on Implications of Resource Scenarios 37 37

I. Natural Gas Price Forecasts 41 41

1. Regulatory Background 41 41

Table of Contents

Title Page

J. Utilities And Party Positions 42 42

K. How the Utilities' Long-Term Plans Reflect Policies, Goals, And
Outcomes From Other Umbrella Proceedings and Comport
with the Energy Action Plan 46 46

1. Umbrella Proceedings 46 46

2. Resource Adequacy 47 47

IV. Community Choice Aggregation (CCA) 47 47

A. Potential Stranded Costs Due To Customer Load Uncertainty 50 50

V. Demand Response (DR) 55 55

VI. Distributed Generation (DG) 60 60

VII. Energy Efficiency (EE) 63 63

VIII. Qualifying Facilities: Long-Term Policy For Expiring QF Contracts 65 65

IX. Renewable Portfolio Standards (RPS) 67 67

X. IOU Positions on Renewable Energy in the LTPPs 68 68

A. Parties' Positions 71 71

XI. Transmission Assessment Process 74 74

XII. Transmission Planning under I.00.11.001 75 75

XIII. Phase 5, Generic Economic Methodology for the Evaluation
of Transmission Projects 75 75

XIV. Phase 6, Transmission needs in the Tehachapi Wind Resource Area 76 76

XV. Phase 8, Transmission Costs for Renewable Portfolio Standard Bid 77 77

XVI. Integrated Generation and Transmission System Planning,
Timing, Planning, Flexibility 78 78

XVII. Transmission Upgrades and Expansion 79 79

XVIII. Implementing the EAP Loading Order 82 82

XIX. Energy Efficiency 83 83

A. Cost Recovery for IOUs to Meet EE Savings Goals 83 83

B. Energy Efficiency Data in Future LTPPs 85 85

C. Distributed Generation 86 86

D. Procurement contracting authority: AB 57, upfront standards,
cost recovery and ratemaking 88 88

1. Contracting Authority 88 88

E. Parties' Positions 89 89

F. Cost Recovery 91 91

1. Parties' Positions 91 91

G. Cost recovery for Turnkey Projects: 93 93

1. Discussion: 95 95

Table of Contents

Title Page

H. ERRA Trigger Mechanism 96 96

1. Background 96 96

2. ERRA Disallowance Cap 97 97

3. Upfront Standards for Utility Procurement Products and Transactions 100 100

XX. Background 100 100

A. SCE'S AB 57 Plan 103 103

B. Policy Issues Related To Long-Term Plans 105 105

C. Proposals Regarding Open And Transparent Competitive
Bidding Process 106 106

1. Parties Positions 106 106

2. Discussion and Determinations 110 110

D. Requirements for an All-Source Solicitations 111 111

E. Affiliate Transactions 113 113

F. Procedures, Rules And Protocols, Including Independent
Third-Party Evaluators 115 115

G. Parties' Positions 122 122

1. Debt Equivalency (DE) 125 125

2. Debt Equivalence Mechanism and use in Bid Evaluation 128 128

3. Climate Change in LTPP 128 128

H. Background 130 130

I. Range of values for the GHG Adder 133 133

J. DWR contract allocation and reallocation (Sunrise) 135 135

1. Repowering: 136 136

K. Long-Term Planning in the Next Procurement Cycle 137 137

L. Other Procurement Issues 141 141

1. Resource Adequacy Issues Not Addressed in the Resource
Adequacy Decision 141 141

2. Local Reliability as Part of the Procurement Process 142 142

3. Bottom-up Planning 143 143

4. Long-Term Planning in the Next Procurement Cycle 146 146

5. Utility filings demonstrating compliance 149 149

A. Collateral Requirements 152 152

1. New Accounting Rules 154 154

XXII. Confidentiality 155 155

A. Standard Offer Service 159 159

Findings of Fact 160 160

Conclusions of Law 188 188

ORDER 196 196

OPINION ADOPTING PACIFIC GAS AND ELECTRIC COMPANY,
SOUTHERN CALIFORNIA EDISON COMPANY
AND SAN DIEGO GAS & ELECTRIC COMPANY'S
LONG TERM PROCUREMENT PLANS