Discussion

D.05-01-009 adopted a settlement between Cerritos and SCE that would require the application of the CCA CRS to Cerritos. In the Commission's first policy order in this proceeding, D.04-12-046, the Commission found that the CCA CRS must be set so that a utility's ratepayers would be indifferent to the CCA's service to its customers. It also recognized that the development of the CCA CRS should follow "the lessons learned and the policies adopted" in proceedings that developed calculations and models for the CRS that applies to departing load customers. Those calculations and models are currently subjects of R.02-01-011 and we recently addressed modifications to the CRS methodology in that docket. D.06-07-030 issued in R.02-01-011 modified the CRS methodology for municipal departing load. Subsequently, D.07-01-025 affirmed that those modifications would apply to the CCA CRS.

As a general matter, it is always been our intention that the CCA - or in this case, Cerritos - pay the utility for all liabilities incurred on behalf of CCA customers and not more. We have also found that in the context of CRS liabilities, a CCA and its customers may not be "paid" for leaving the utility's procurement services. That is, when the CRS would be negative as a result of market conditions, CCA customers' liability would be zero. They would not receive a refund or credit as a result of the CRS being negative. We address the dispute here with this in mind.

There is no question that SCE owes Cerritos some amount for Cerritos' overpayments of the CRS in 2005 when Cerritos paid $.02 kilowatt-hour (kWh) for a 2005 CRS liability that Cerritos suggests is about $.006 kWh. However, SCE and Cerritos dispute whether that 2005 liability should be offset because the 2006 CRS fell below zero. We first address the matter of whether negative balances should be carried forward in the calculation of the CRS applicable to Cerritos, as it proposes. D.06-07-030 is the subject of petitions to modify. However, as we stated in D.07-01-025, even an interpretation of D.06-07-030 that is favorable to Cerritos would not cause a negative balance to be carried forward at this time where there is no current undercollection. SCE states it has collected too much from Cerritos rather than too little.

Moreover, as SCE states, the CRS adopted in D.06-07-030 was relevant for the period 2003 and 2004, not the periods during which Cerritos has so far operated. D.04-12-046, issued in this docket, found that Section 366.2 requires that CCA CRS liabilities must be equal to the actual costs the utility incurred on behalf of the CCA's customers. Accordingly, the 2003-2004 CRS set for departing load cannot be a "proxy" for Cerritos' 2005-2006 CRS, as Cerritos suggests. SCE has not yet calculated the CRS for the period during which Cerritos operated and Cerritos' liabilities during that period therefore cannot be calculated.

For these reasons, we direct SCE to develop a final methodology for calculating the CCA CRS applicable to Cerritos consistent with our decisions in this docket. Because Cerritos is owed a refund, we expect SCE to complete this exercise within 30 days of the issuance of this order and to provide credits or refunds to Cerritos or its customers within 30 days thereafter. Consistent with D.07-01-025, SCE shall calculate the 2005-2006 CRS for Cerritos according to the principles adopted in D.06-07-030 and any modifications to that order.