10. Implementation Filings
As discussed in this decision, the Servicing Arrangements between DWR and the utilities will need to be altered to reflect the new operational arrangements we adopt today. DWR should negotiate with SCE and SDG&E appropriate modifications to their respective Servicing Agreements and DWR should request of us appropriate modifications to the Servicing Order governing PG&E. The modifications should be submitted in Application (A.) 01-06-044, A.01-06-039 and A.00-11-038 et al. by October 1, 2002.
The parties indicate in their comments on the proposed decision that separate operational agreements between DWR and the utilities will also be needed to address operating functions associated with contract allocation that are beyond the current scope of the Servicing Arrangements. The utilities and DWR have been working informally on developing these implementation arrangements. Accordingly, they should jointly file a proposal for operational agreements in this proceeding no later than October 1, 2002.
As discussed in Section 9 above, we will address the applicable standards of reasonableness for the utility administration of DWR contracts by subsequent Commission decision. The joint filing on operating agreements should include a separate proposal for these standards for our consideration. If there remain specific issues with respect to either the operating agreements or standard of review where agreement cannot be reached by the filing date, the utilities and DWR should highlight those differences in a companion comparison exhibit.
Today's decision concerning the operating responsibilities of the utilities with respect to DWR contracts, and which functions we expect to remain with DWR, will have an impact on the division of costs and associated revenue requirements between them. DWR's revenue requirement should decrease as it relinquishes its administration of the contracts and that, conversely, the utilities will incur costs concurrent with assuming the administrative functions associated with these contracts. However, we do not believe that operating or servicing agreements between DWR and the utilities represent the appropriate forum for addressing the details of the amount and recovery of the administrative costs to the utilities, as SDG&E suggests.82 Rather, these issues should be addressed in each utility's general rate case, where we also consider the administrative costs associated with non-DWR procurement contracts. In this way, we can review the administrative costs related to the DWR contracts in the context of total administrative cost levels to determine the need for any base rates increases.
As discussed in Section 7, the utilities should work with DWR to develop specific accounting and reporting procedures consistent with the pro rata approach to accounting for surplus sales revenues that we adopt today. This information should be submitted in the 2003 Revenue Requirements proceeding within 10 days of the effective date of this decision.
Finally, we direct each utility to file updated tables reflecting revised estimates of its residual net short position based on the allocation of DWR contracts we adopt today. This compliance filing should be filed in this proceeding within 10 days from the effective date of this decision.
The electronic service protocols established in this proceeding by Assigned Commissioner's Ruling Establishing Category and Providing Scoping Memo, dated April 2, 2002, shall be used for all filings required by this decision.
