9. Assignment of Proceeding

Timothy Alan Simon is the assigned Commissioner and Douglas M. Long is the assigned Administrative Law Judge in this proceeding.

1. Applicant, Bear Valley, is a public utility subject to the jurisdiction of this Commission.

2. Bear Valley prepared an integrated resource plan to serve retail customers.

3. Bear Valley issued a request for proposals for energy and it reviewed and analyzed the various proposals from potential suppliers.

4. Bear Valley negotiated a contract with Shell for four energy products identified in the integrated resource plan.

5. Bear Valley executed final contract terms with Shell without pre-approval by the Commission.

6. Bear Valley is subject to a settlement agreement which caps energy cost recovery through August 31, 2011.

7. The Shell contract is based on market-based price negotiations.

8. The Shell contract is priced below the market price referent values adopted in Resolution E-4214.

9. SFAS No. 133 requires Bear Valley to recognize unrealized gains or losses on the contract when the contract is marked to market for financial reporting.

10. A non-interest bearing memorandum account would recognize refunds or under collections offsetting the unrealized gains or losses for financial reporting purposes.

11. A non-interest bearing memorandum account would offset unrealized gains or losses to stabilize financial reporting.

1. Bear Valley did not need Commission approval before it negotiated and executed the Shell agreement.

2. Before August 31, 2011, Bear Valley may only recover the incurred costs of the Shell Agreement for energy delivered to retail customers subject to the settlement agreement as adopted in D.02-10-054.

3. The settlement adopted in D.02-12-054 is not modified or altered by this decision.

4. After August 31, 2011, Bear Valley may recover in retail rates the reasonably incurred costs of the Shell agreement for energy delivered to retail customers subject to prudent contract administration.

5. A non-interest bearing memorandum account reasonably offsets unrealized gains or losses created by the financial reporting impacts of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities."

6. The revised public document versions of confidential amended documents were reasonably redacted to protect confidential market-price data.

7. This proceeding should be closed.

ORDER

IT IS ORDERED that:

1. For energy delivered to retail customers, Golden State Water Company's Bear Valley Electric Service Division (Bear Valley) may recover the actual costs of the Power Purchase Agreement (agreement), with Shell Energy North America (US) L.P. (Shell) incurred before August 31, 2011, subject to the existing settlement agreement adopted in Decision 02-10-054.

2. Golden State Water Company's Bear Valley Electric Service Division may recover the actual costs of energy delivered to retail customers after August 31, 2011, pursuant to the Shell agreement and subject to prudent contract administration.

3. Golden State Water Company's Bear Valley Electric Service Division shall establish a non-interest bearing memorandum account to record refunds or under-collections to offset the unrealized gains or losses of the Shell agreement created by the financial reporting impacts of the Financial Account Standards Board's Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." Golden State Water Company's Bear Valley Electric Service Division shall file a Tier 3 advice letter, pursuant to General Order 96 B § 5.3(2)

4. Application 08-08-021 is closed.

This order is effective today.

Dated May 21, 2009, at San Francisco, California.

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