VIII. Implementation of Rates

The scoping issues identified for this case include the following two questions:

In regard to the first question, the method to reflect authorized cost of capital in revenue requirement is set forth below for each utility. The second question is more troublesome given our finding that it is premature to incorporate an unbundling risk premium, up or down, at this time. We find that it is appropriate to revisit this question for all utilities no later than the 2002 cost of capital proceeding.

PG&E recommends that we coordinate this cost of capital proceeding with the results of operations and rate base adopted in its 1999 general rate case. It believes placing the 1999 GRC and the 1999 COC rate changes into effect together would be optimal because the rate changes could then be consolidated, and proliferation of different rates at different times with different costs of capital applied to different rate bases could be avoided. Therefore, PG&E maintains that the 1999 cost of capital should go into effect at the earlier of (a) the effective date of interim rate relief in its 1999 GRC or (b) the effective date of the rate change in its 1999 GRC final decision if no interim relief is granted. Interim relief was granted as of January 1, 1999 (D.98-12-078 in A.97-12-020).

In order to place PG&E's proposal in effect, we will issue an order which provides that PG&E's 1999 cost of capital will go into effect as of January 1, 1999.

SDG&E recommends that necessary rate changes should be made effective shortly after the final decision in this proceeding, allowing sufficient time for compliance filings. We agree.

Because we do not modify Edison's cost of capital, but instead retain its trigger mechanism, Edison's rates are not affected by this order.

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