I. SUMMARY

Decision (D.) 02-11-074 was issued in response to several applications for rehearing of D.02-10-063. D.02-10-063 adopted a methodology for setting a bond charge to recover the Department of Water Resource's (DWR) bond-related costs. That methodology applies a per kilowatt-hour (kWh) charge on all consumption that is not specifically excluded from the surcharge. The Commission excluded from the bond charge residential sales up to 130% of baseline in SDG&E's service territory, and all medical baseline and California Alternate Rates Energy (CARE) eligible customer usage statewide. On rehearing, the Commission issued D.02-11-074, which modified D.02-10-063 in order to exempt from the bond charge residential sales up to 130% of baseline in all three service territories.

The California Manufacturers & Technology Association, the California Industrial Users and the California Large Energy Consumers Association (Applicants) filed a timely application for rehearing of D.02-11-074 (Application). The Application essentially raises two allegations of legal error. First, the Application alleges that the decision to exempt all 130% of baseline usage from the bond charge shifts costs from residential usage to other principally non-residential usage and discriminates against non-exempt customers. Second, the Application argues that D.02-11-074 is arbitrary and capricious in that it was issued without explanation, and without further hearing and opportunity to brief the issues.

PG&E and the Office of Ratepayer Advocates (ORA) filed timely Responses to the Application for Rehearing.

After reviewing the Application for Rehearing we are of the opinion that the application for rehearing should be granted in order to impose the bond charge on residential sales up to 130% of baseline in all three service territories.