7. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner, and John S. Wong is the assigned ALJ in this proceeding.

This proceeding will remain open for possible changes to the operating and servicing order and agreements as a result of the California Independent System Operator's implementation of the Market Redesign and Technology Upgrade (MRTU), and to resolve future revenue requirement determinations if they are submitted within 18 months of the date the scoping memo was issued. If the MRTU changes or DWR's new revenue requirement determination is not submitted to us before the expiration of the 18 months, we may close this proceeding and initiate a new rulemaking to address these items.

Findings of Fact

1. DWR submitted its 2010 revenue requirement determination to the Commission on August 6, 2009.

2. A PHC was held on September 9, 2009 to discuss the processing of DWR's 2010 revenue requirement determination.

3. DWR's revised 2010 revenue requirement determination was submitted to the Commission on October 27, 2009.

4. No protests or objections to the allocation of DWR's revised 2010 revenue requirement determination were filed.

5. The main differences between the August 6, 2009 determination of $3.185 billion and the October 27, 2009 revised 2010 revenue requirement determination of $3.022 billion are due to a decrease in contract costs as a result of the decrease in the gas price forecast for 2009, and a decrease in the Bond Charge costs due to the net effect of a decrease in the projected interest rates for the unhedged variable rate portion of DWR's bond portfolio and a higher than projected beginning 2010 balance in the Bond Charge account.

6. DWR's revised 2010 revenue requirement determination contains the information needed to recover the revenue requirement from the utilities' customers for calendar year 2010.

7. The Bond Charge is designed to recover DWR's costs associated with its bond financing activities from the utilities' customers.

8. DWR's revised 2010 revenue requirement for bond-related costs is $896 million, which results in a Bond Charge of $0.00515 per kWh.

9. The Power Charges are designed to provide the funds necessary to satisfy DWR's revised 2010 revenue requirement for the cost of electric power sold to the utilities' customers.

10. DWR's revised 2010 revenue requirement for the Power Charge is $2.126 billion, which results in the allocated Power Charges to the customers of the three electric utilities as shown in Appendix A.

11. Following an informal workshop of how DWR's operating reserves work, the joint parties agreed to a stipulation as to how reductions in the operating reserves should be returned to utility customers.

12. SB 695 allows limited direct access of electricity by nonresidential end-use customers, and requires the Commission to implement a plan by April 11, 2010 to carry out Pub. Util. Code § 365.1.

Conclusions of Law

1. There are no contested issues concerning DWR's request to allocate the revised 2010 revenue requirement determination.

2. The Commission's obligation is to calculate, revise, and impose the Bond Charge and Power Charges on the customers of the three electric utilities.

3. DWR's requested 2010 Bond Charge and Power Charges should be adopted and allocated to the customers of PG&E, SDG&E, and SCE.

4. The joint parties' motion for official notice of their stipulation as to the allocation of reductions to DWR's operating reserves for 2010 and beyond should be granted.

5. The ESP deposit and reentry fee requirement should be addressed in the Commission proceeding which implements Pub. Util. Code § 365.1, and should not be addressed in this proceeding.

6. This decision construes, applies, implements, and interprets the provisions of AB1X, and relates to the implementation of DWR's revenue requirement and the establishment and implementation of the Bond Charge and Power Charges necessary to recover that revenue requirement.

ORDER

IT IS ORDERED that:

1. The allocation to the customers of Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE), as shown in Appendix A of this decision, of the California Department of Water Resources' 2010 revenue requirement determination as revised on October 27, 2009, is adopted.

a. As shown in Appendix A of this decision, the 2010 Power Charges allocated to the electric customers of PG&E, SDG&E, and SCE are set at $0.23139, $0.06112, and $0.03763 per kilowatt hour (kWh), respectively, and shall go into effect on January 1, 2010.

b. The 2010 Bond Charge allocated to the electric customers of PG&E, SDG&E, and SCE is set at $0.00515 per kWh, and shall go into effect on January 1, 2010.

1. Within 10 days of today's date, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company shall file Tier 1 advice letters, as provided for in General Order 96-B, with revised tariffs that reflect the adopted Bond Charge and Power Charges. These new tariffs shall be effective beginning January 1, 2010.

2. The October 19, 2009 motion for official notice of the joint parties' stipulation as to how the allocation of reductions to the California Department of Water Resources' operating reserves for 2010 and beyond should be treated is granted.

3. The issue of the deposit and reentry fee requirement for electric service providers shall be addressed in the Commission proceeding which implements Pub. Util. Code § 365.1.

4. Pub. Util. Code § 1731(c) (applications for rehearing are due within 10 days after the date of issuance of the order or decision) and Pub. Util. Code § 1768 (procedures applicable to judicial review) are applicable to this decision.

5. Rulemaking 09-06-018 remains open.

This order is effective today.

Dated December 3, 2009, at San Francisco, California.

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