ALJ/DUG/tcg Mailed 12/2/2005

Decision 05-12-003 December 1, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SAN DIEGO GAS & ELECTRIC COMPANY (U 902-E) for Authority to Make Various Electric Rate Design Changes, Close Certain Rates, and Revise Cost Allocation Among Customer Classes Effective, January 1, 2006.

Application 05-02-019 (Filed February 18, 2005)

OPINION ADOPTING AN ALL-PARTY SETTLEMENT
FOR THE 2006 SAN DIEGO GAS &
ELECTRIC COMPANY ELECTRIC RATE DESIGN

(See Appendix A for List of Appearances.)

TABLE OF CONTENTS

Title Page

OPINION ADOPTING AN ALL-PARTY SETTLEMENT
FOR THE 2006 SAN DIEGO GAS & ELECTRIC COMPANY
ELECTRIC RATE DESIGN 11

1. Summary 22

2. Background 22

3. Procedural History 33

4. Scope and Issues 44

5. Standard of Review 66

6. The Burden of Proof 77

7. Settlement 77

a) Standard for Approval of a Settlement 1010

b) Reasonable in Light of the Whole Record 1010

c) Consistent with Law 1111

d) In the Public Interest 1111

e) Uncontested Settlement 1212

8. Settlement Provisions 1313

a) Total Rate Adjustment Component 1313

b) Marginal Costs 1515

c) Revenue Allocation 1616

d) Capping of Revenue Allocation 1717

e) Settlement Rates for Customer Classes 1717

f) Tariff Language Changes 1818

g) Future Study 1818

9. Assignment of Proceeding 1818

10. Comment on Proposed Decision 1919

Findings of Fact 2020

Conclusions of Law 2020

ORDER 2121

Appendix A - List of Appearances

1. Summary

This decision adopts the all-party settlement for the 2006 San Diego Gas & Electric Company (SDG&E) Rate Design Window Application and clarifies that only the settling parties' rate design is adopted and that no other ongoing ratemaking mechanisms are adopted. We find it is not necessary to adopt and include a Total Rate Adjustment Component (TRAC) mechanism in SDG&E's tariffs in order to adopt a reasonable rate design proposed by the settling parties. The settled rates include a reduction in the rate cross-subsidies of residential customers by other commercial and industrial customers, and other related allocations of costs among customer classes. The separate cost reallocation component is instead identified as the 2006 Rate Design Settlement Component. We otherwise find that the settlement rate design successfully moves rates towards cost-based rates lessening cross subsidies among rate classes.