Conclusions of Law

1. The Joint Application should be granted providing an order exempting the Joint Utilities from the ATRs as set forth in the Ordering Paragraphs 2 and 3 below.

2. The ATRs set forth in D.06-12-029 govern the relationship between Commission-jurisdictional energy utilities and their affiliates, and are designed to ensure that key utility and holding company officers understand their obligations to ratepayers, to provide greater security against the sharing within the corporate family, through improper conduits, of competitively-significant, confidential information, and to ensure a utility's financial integrity is protected from the riskier market ventures of its unregulated affiliates and holding company parent.

3. Granting the limited exemptions from the ATRs in accordance with the Ordering Paragraphs below will not compromise the protections provided to ratepayers under the existing rules.

4. The limited exemptions from ATRs granted below should be conditioned on compliance with the requirements set forth in Ordering Paragraph 3 of this decision. These conditions are necessary to provide assurance that customers receive all cost savings resulting from the activities of the Joint Utilities in connection with their participation and ownership interests in the STARS Alliance, LLC.

5. Potentially interested parties in this application have received reasonable notice and opportunity to participate or to be heard.

6. No evidentiary hearings are necessary, and the written record provides a sufficient basis to resolve this application.

7. Because the Joint Utilities have addressed DRA's Concerns, this application is now unopposed.

ORDER

IT IS ORDERED that:

1. The Joint Application 11-11-019 is hereby granted in accordance with the conditions specified in Ordering Paragraphs 2 and 3 below.

2. The Joint Applicants, Southern California Edison Company (SCE) and Pacific Gas and Electric Company (PG&E) are hereby granted a limited exemption from the Affiliate Transaction Rules as set forth in Decision 06-12-029, to the limited extent specified as follows:

a. Rule III.A., to the extent that the services provided by SCE or PG&E to the STARS Alliance are considered preferential treatment

b. Rules III.B.2. and III.B.6., to the extent they limit or condition the information, supplies, and services that SCE or PG&E may make available to the STARS Alliance;

c. Rules III.E., IV.B., and IV.D., to the extent they further restrict or condition information sharing between SCE or PG&E and the STARS Alliance;

d. Rules V.C., V.D. and V.E., to the extent they restrict the sharing of plant, facilities, cost, equipment, personnel, and information as well as restrict joint purchases;

e. Rule V.F., to the extent it restricts the STARS Alliance from referring to either SCE or PG&E in materials it distributes in California;

f. Rule V.G., to the extent it restricts the sharing of employees; and

g. Rule V.H.5. and V.H.6., to the extent they apply to the pricing of goods and services between SCE or PG&E and the STARS Alliance.

3. The limited exemptions from the Affiliate Transaction Rules specified in Ordering Paragraph 2 shall be effective only on the condition that Pacific Gas and Electric Company and Southern California Edison Company (the Joint Utilities) comply with the following conditions:

a. The Joint Utilities shall report in their respective annual Energy Resource Recovery Account applications the respective activities and operating costs associated with the interaction between them and the STARS Alliance. The reporting shall follow the template format set forth in Appendix A of this decision;

b. The Joint Utilities' respective customers shall receive 100% of any net cost savings generated by the STARS Alliance for the Joint Utilities;

c. The Joint Utilities' respective customers shall receive the Joint Utilities' share of any net proceeds on the sale or dissolution of the STARS Alliance, except to the extent that the Joint Utilities had infused capital for which they had not sought recovery (if any);

d. Upon issuance by the U.S. Department of Justice of its Business Review Letter, the Joint Utilities shall provide the Commission a copy of any anti-trust safe harbor ruling for the STARS Alliance; and

e. Using the reporting form in Appendix A, the Joint Utilities shall include information on any activities undertaken outside the scope of the STARS Alliance's general purposes so that the Commission can monitor the full impact on customers of the Joint Utilities' participation in the STARS Alliance.

4. Application 11-11-019 is closed.

This order is effective today.

Dated May 10, 2012, at Fresno, California.

MICHAEL R. PEEVEY

President

TIMOTHY ALAN SIMON

MICHEL PETER FLORIO

CATHERINE J.K. SANDOVAL

MARK J. FERRON

Commissioners

Appendix A

APPENDIX A

ANNUAL REPORT OF UTILITY ON THE ACTIVITIES OF
STARS ALLIANCE, LLC
RECORDED YEAR 20XX AND BUDGET YEAR 20XX

(All Data in $000s)

	Recorded Year 20XX	Budget Year 20XX
Total Common Costs (1)
Labor, Benefits, & Bonus
Contractor Support
Vendor Services
Travel Expenses
Non-travel Meals
Membership Dues
Office Supplies & Expenses
Building Lease/Utilities
Communications
Insurance
Office Furniture & Equip.
Computer Equipment
Total STARS Alliance
Utility Share (%)
Utility Share ($)
Project Costs (2)
License Renewal
Risk Management
Utility % (3)
Utility $ (3)
Total Utility Share

(1) Currently expensed on STARS Alliance books.

(2) Large common projects tracked on STARS Alliance books.

(3) Reflects composite participation in one or more projects. Allocations may be estimated if final participation in a special project is subject to change.

Allocations may reflect participation of non-members.

UTILITY SAVINGS / AVOIDED COSTS BY STARS TEAM / PROJECT

(All Data in $000s)

Team /Project (1)	Estimated Savings /Avoided Costs
Plant Aging Management
Regulatory Affairs Center of Business
Tools & Equipment Sharing
Supply Chain
Labor Sharing
Cyber Security
Total Estimated Savings / Avoided Costs

Teams/Projects are identified as examples only and may change annually based upon the needs of the Utility and STARS Alliance.

(END OF APPENDIX A)