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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION E-3833

RESOLUTION

Resolution E-3833. Southern California Edison Company (SCE) requests approval of its proposed Gas Supply Plan for the State of California Department of Water Resources (DWR) Tolling Agreements. SCE's request is approved with modifications.

By Advice Letter 1701-E filed on April 18, 2003.

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SUMMARY

This resolution approves with modifications Southern California Edison Company's (SCE) Gas Supply Plan filed with Advice Letter (AL) 1701-E.

SCE filed AL 1701-E on April 18, 2003, requesting Commission approval of a Gas Supply Plan (GSP) for its DWR Tolling Agreements Pursuant to Decision (D.) 03-04-029 and D.02-12-069. The proposed Gas Supply Plan1 was confidentially filed as Appendix A to AL 1701-E because it contains Confidential Protected Material subject to the protections in the May 1, 2002, Protective Order issued in Order Instituting Rulemaking (OIR) 01-10-024, and pursuant to Public Utilities Code Section 583 and General Order 66C.

On May 21, 2003, SCE filed additional "Substitute Sheets for 1701-E" which amounted to a revised copy of the Gas Supply Plan from that submitted on April 18th and 21st. The May 21, 2003 version of the Gas Supply Plan includes certain "editorial corrections to the original Appendix A" which are itemized in the transmittal letter.

SCE requested that its Gas Supply Plan become effective upon filing (April 18, 2003), subject to review and approval by the Commission's Energy Division. SCE's Gas Supply Plan is effective today.

AL 1701-E was protested on April 28, 2003 by the Office of Ratepayer Advocates (ORA), the Cogeneration Association of California (CAC), and DWR,2 although DWR requested more review time. On May 2, 2003, SCE filed both a public and a confidential response to the three protests. Also on May 2, 2003, DWR submitted both a redacted and a confidential memo in which DWR set forth its "initial concerns" (DWR Supplemental Protest) with SCE's proposed Gas Supply Plan. On May 9, 2003, SCE filed both a redacted and a confidential response to DWR's May 2, 2003 memo.

Issues raised by ORA include disagreement over proposed gas transaction term limits, terms over which portfolio risk is calculated, and criteria used to evaluate individual contracts. CAC would have the Commission reject SCE's entire Gas Supply Plan because it was filed under seal. The redacted version of DWR's Supplemental Protest did not present any specific issues. However, DWR's confidential Supplemental Protest sets forth a number of specific concerns. DWR states its intent to develop and implement the "DWR Fuels Protocols in the form of instructions from principal to agent."3 DWR considers SCE's proposed transaction strategy too vague and overly broad."4 In addition, DWR lists some concerns with SCE's market assessment, and requests a consultation finding from the Commission per the Rate Agreement.5

SCE's proposed Gas Supply Plan is modified with language proposed by DWR, as accepted by SCE, as set forth in SCE's May 9, 2003 public response to DWR's Supplemental Protest at pages 17-18.

The protests of CAC and ORA are denied.

We would like the utilities managing DWR contracts to file their proposed gas supply plans 45 days prior to the requested effective date. The next filing date will be August 15, 2003.

D.03-04-029 recommended that SCE circulate a proposed Gas Supply Plan to its Procurement Review Group (PRG) for review and comment. SCE circulated unredacted copies of its proposed Gas Supply Plan, and subsequent submittals, to its PRG concurrently with its filings to the Commission.

1 SCE's proposed Gas Supply Plan was slightly revised and resubmitted on both April 21, 2003 as a "Substitute Sheet for 1701-E" and on May 21, 2003 as additional "Substitute Sheets for 1701-E." The latter version represents SCE's most current proposed Gas Supply Plan. 2 DWR's April 28, 2003 protest addressed both the San Diego Gas & Electric Company & SCE Gas Supply Plans respectively submitted in SDG&E AL 1489-E and SCE AL 1701-E. 3 DWR Supplemental Protest, Comment Item 1, page 1. 4 Id., Comment Item 23, page 7. 5 D.02-02-051 adopted a Rate Agreement between the Commission and DWR to facilitate DWR's issuance of the bonds to repay more than $10 billion of debt that DWR incurred to finance power purchases during the electricity crisis, including more than $6 billion owed to the State's General Fund. The Rate Agreement terminates when the bonds and associated financial obligations have been paid or otherwise provided for.

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