II. Evidentiary Support for Modifications Ordered in D.02-02-028

Edison asserts that the modifications to D.01-03-067 ordered in Ordering Paragraph 1 of the Rehearing Decision are not supported by record evidence. (Edison App., at p. 6.) First, it asserts that there is no evidence to support the statement "However, we decline to adopt [Edison's proposed alternative of using an index consisting of a 10/90 average of (1) the simple average of the three Topock border indices currently used in Edison's SRAC formula and (2) SoCalGas' monthly published Schedule G-CS Cost of Gas (WACOG)] as there is no evidence in the record to demonstrate that [it] is sufficiently accurate or robust as required by D.96-12-028." (Edison App., at p. 7.) Edison devotes substantial time in its rehearing application to explain why there is substantial evidence in the record supporting a finding that WACOG is "sufficiently accurate or robust as required by D.96-12-028." However, our conclusion was not with respect to WACOG alone, but rather to Edison's proposed index consisting of 10% Topock and 90% WACOG. In its prior filings, Edison failed to provide any arguments why such an index would meet the requirements of D.96-12-028. It still provides no rationale in its rehearing application.

It would be unreasonable to conclude that Edison's proposed alternative could be considered sufficiently robust and accurate when it is based on an index (Topock) that we had determined was no longer robust. Indeed, Edison itself had reached this same conclusion. (Emergency Motion of Southern California Edison Company, filed Nov. 28, 2000, at pp. 10-13; Comments of Southern California Edison Company Concerning Joint Assigned Commissioners and Administrative Law Judges Ruling Dated December 1, 2000, filed Dec. 15, 2000, at pp. 3, 6.) Either the Topock index meets the requirements of D.96-12-028 or it doesn't. If it doesn't, then it should not be used in the SRAC Formula. There is no evidence to support a conclusion that while an index comprised of 100% Topock does not meet the requirement of D.96-12-028, an index which is comprised of some lesser percentage of the Topock index, such as the 10% proposed by Edison, does meet that requirement. Accordingly, we properly concluded that there was no evidence in the record to demonstrate that Edison's proposed alternate index was sufficiently accurate or robust as required by D.96-12-028.

Edison also appears to believe that the Commission must state more than one reason for not adopting its proposed index. (Edison App., at p. 9, fn. 6.) Specifically, it states that the Commission must expressly state whether the proposed index was rejected because it failed to comply with the requirements of section 390(b). However, there is no requirement that the Commission state more than one reason for reaching a certain conclusion, and Edison cites no authority to support its assertion. Since we determined that Edison's proposed index did not meet the robustness requirements of D.96-12-028, we did not need to consider whether the proposed index complied with the requirements of section 390(b).

Edison next disputes the Commission's statement in Ordering Paragraph 1 that the Malin index was sufficiently robust and that the Commission had not been presented with any evidence to conclude that this was no longer the case.⁴ (Edison App., at p. 9.) Edison relies on two declarations made by its witness Mr. Fillmore as demonstrating that the Malin index was no longer robust. However, the purpose of the November 28 Fillmore Declaration is to discuss Edison's prior fuel procurement policy and the gas portfolio price Edison would pay for long-term gas contracts. (Fillmore Decl., Nov. 28, 2000, ¶2.) One of the purposes of the December 15 Fillmore declaration was to "discuss the reason the recent Topock border postings are not bona fide market prices." (Fillmore Decl., Dec. 15, 2000, ¶ 2.) Neither of these declarations made any statements regarding the robustness of the Malin index, but rather made general references to the "California border." It is unreasonable to interpret such general statements as evidence that the Malin index is no longer robust. Additionally, while Edison asserts that the Malin index's "unprecedented levels" in November 2000 could not be attributed solely to the rise in gas prices in the producing basins, it has not provided any basis to lead the Commission to question the index's robustness. (Emergency Motion of Southern California Edison, filed Nov. 28, 2000, at p. 11.) Moreover, the September 1, 2000 ALJ ruling specifically asked parties to comment "on the reliability and validity of the current border indices for the Transition Formula for SCE, Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E) given the pricing issues identified in ORA's response." (Administrative Law Judge's Ruling Establishing Schedule to Reply to Responses on Petition to Modify Decision 96-12-028 of Southern California Edison Company and to Address the Validity of Border Indices, Sept. 1, 2000, at p. 1.) No parties raised comments questioning PG&E's continued use of the Malin index in its transition formula. Accordingly, Edison's assertions are without merit.

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Therefore IT IS ORDERED that rehearing of D.02-02-028 is denied.

This order is effective today.

Dated April 22, 2002 at San Francisco, California.

LORETTA M. LYNCH

President

HENRY M. DUQUE

CARL W. WOOD

GEOFFREY F. BROWN

MICHAEL R. PEEVEY

Commissioners