COMMENTS

Public Utilities Code section 311(g)(1) provides that this resolution must be served on all parties and subject to at least 30 days public review and comment prior to a vote of the Commission. Section 311(g)(3) provides that this 30-day period may be reduced/waived by Commission adopted rule.

The 30-day comment period has been reduced per the directive issued in D. 02-12-069 and D.03-04-029, wherein we stated that, "the Energy Division will prepare a resolution for Commission approval on an expedited basis." (pp. 23-24, mimeo)

Timely comments on the Draft Resolution were submitted on July 3, 2003 by CDWR and by SDG&E. CDWR's comments are generic and apply to the draft resolutions for each of the IOUs. CDWR is concerned about discrepancies between the various draft resolutions and would like to see common positions on five key issues.

First, CDWR asks that the resolutions include uniform language that recognizes that CDWR may impose additional requirements on the IOUs as CDWR's limited agents. CDWR is satisfied that the language included in this draft resolution (E-3838) accurately describes its position on this matter. As copied and edited from pages 14 and 15 of the draft resolution, here is CDWR's proposed language.

We have recognized in D.03-04-029 that "...in the event that DWR only authorizes a subset of what the Commission has approved, the utilities must operate within the limitations of DWR's approval. Similarly, if the Commission rejects portions of the Gas Supply Plans that DWR would otherwise authorize, we expect the utilities to operate within the limitations of the Commission's decision."... We recognize that the utility is bound by both the GSP as well as the approval of DWR... DWR is at liberty to impose additional restrictions and requirements outside the scope of the GSP.

Since this recommendation has been based on what already was included in the draft resolution, no further changes are required.

Second, CDWR seeks uniform treatment of its proposed Protocols as described in the following paragraph.

The Commission is not adopting DWR's Fuels Protocols as part of the utilities' Gas Supply Plan approval process. The Department has informed the Commission that it will provide the Commission a final copy of its Fuels Protocols once they are complete. To the extent that DWR's Fuels Protocols only authorize a subset of what the Commission has authorized, utilities must operate within the limitations of DWR's authorization.

Since it is not yet clear how the proposed Protocols will be handled, we have omitted the first sentence and added the last two in the discussion on Protocols in this final resolution.

Third, CDWR asks that the resolutions state that approval of the GSPs constitutes prior consultation between CDWR and the Commission for purposes of the Rate Agreement (included as an appendix to D.02-02-051). This draft resolution (E-3838) was silent on this issue. CDWR recommends the following language.

Commission approval of the utilities' GSPs constitutes "prior consultation" between DWR and the Commission for purposes of complying with D.02-02-051, Appendix C, the Rate Agreement, Article 1, Section 1.1, Definitions, "Priority Long-Term Power Contracts".

We agree with this assertion and have inserted the proposed language into the final resolution.

Fourth, CDWR asks that an erroneous statement regarding responsibility for paying invoices be corrected. We appreciate CDWR's observation and have corrected this error in the final resolution.

Fifth, CDWR reiterates its request to include language in the GSPs requiring that the utilities provide invoices at least five days prior to the payment due date. Recognizing the exigencies of both the utility and CDWR, we will order that the GSP be modified to include a statement that the utility shall make a good faith effort to provide CDWR with invoices as early as possible and, whenever feasible, no later than five days before the payment due date.

In general SDG&E supports the draft resolution, but recommends certain revisions. First, [Redacted]

Second, SDG&E asks for clarification of the discussion of the Williams Gas Supply Contract. This has been done in the final resolution.

Third, SDG&E asks that the final resolution reconsider the prohibition against affiliate dealings proposed in the draft resolution. In D.02-10-062 (p.50), the Commission had placed a two-year moratorium on dealings with affiliates. The draft resolution had interpreted this to include a prohibition of SDG&E dealings with its affiliate SoCalGas, while noting that such dealings were necessary for gas storage and transportation. As a way out of this dilemma, the draft resolution proposed that SDG&E request a special waiver of the affiliate rules for purposes of the GSP. In its comments, SDG&E requests that the final resolution reinterpret the prohibition to be against unregulated affiliates, noting again its belief that it is essential to deal with SoCalGas in procuring gas storage and transportation. SDG&E notes that the currently-in-place affiliate transaction rules provide an appropriate and workable framework. In the event that the Commission were to continue to require a waiver, SDG&E asks that its comments be considered a formal request for a waiver. We agree with SDG&E that a reasonable interpretation of the prohibition in D.02-10-062 is against dealings with affiliates not regulated by the CPUC, and have reflected this in the final resolution.