STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

April 3, 2001

TO: PARTIES OF RECORD IN APPLICATION 00-11-038 ET AL.

This is the proposed decision of Administrative Law Judge (ALJ) Walwyn, previously designated as the principal hearing officer in this proceeding. It will be on the Commission's agenda at the next regular meeting, which is scheduled for May 3, 2001. 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 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 Ratesetting Deliberative Meeting 10 days before hand, and will advise the parties of this fact, and of the related ex parte communications prohibition period.

The Commission may act at the regular meeting on May 3, 2001, or it may postpone action until later. If action is postponed, the Commission will announce whether and when there will be a further prohibition on communications.

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 proposed decision as provided in Article 19, attached, of the Commission's "Rules of Practice and Procedure." 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/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:t93

ALJ/CMW/t93 DRAFT ITEM 5

5/3/2001

Decision PROPOSED DECISION OF ALJ WALWYN (Mailed 4/3/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company for Authority to Institute a Rate Stabilization Plan With a Rate Increase and End of Rate Freeze Tariffs.	Application 00-11-038 (Filed November 16, 2000)
Emergency Application of Pacific Gas and Electric Company to Adopt a Rate Stabilization Plan.	Application 00-11-056 (Filed November 16, 2000)
Petition of the Utility Reform Network for Modification of Resolution E-3527.	Application 00-10-028 (Filed October 17, 2000)

INTERIM OPINION DISSOLVING THE TEMPORARY RESTRAINING ORDER IMPOSED BY DECISION (D.) 01-01-046

I. Summary

On January 19, 2001, in Decision (D.) 01-01-046, the Commission issued a temporary restraining order (TRO) preventing Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (Edison) from refusing to provide adequate service to all customers, including refusing to act as scheduling coordinators to serve all their bundled or non-direct access customers¹ with the California Independent System Operator (ISO). In that decision the Commission also affirmed that PG&E and Edison shall continue to provide full and adequate service to all their customers, and made clear that a bankruptcy filing or the threat of insolvency has no bearing on this aspect of state law. We took this action in response to statements made by the utilities that strongly suggested that if the Commission did not immediately grant a substantial rate increase the two utilities would be unwilling to purchase power to serve their customers beyond the generating capacity of the utilities' retained generation and the capacity generated from their contracts with qualifying facilities (QFs).

In today's decision, we dissolve the TRO imposed by D.01-01-046. We do this because both PG&E and Edison have acknowledged their continuing obligation to serve their customers. The utilities' obligation to serve requires that they act as scheduling coordinators or ensure that this function is being performed. Under ABX1 1, DWR is authorized to procure electricity on behalf of utility end-use customers. To the extent that the ISO procures imbalance energy in the real-time and out-of-market markets, the ISO will bill all scheduling coordinators. The scheduling coordinators will, in turn, bill their participants. Because a lack of clarity as to the utilities' obligation to serve led to the issuance of the TRO, we clarify that the utilities' obligation to serve requires that they have the ultimate financial responsibility to pay the ISO for those functions.