II. Procedural Background.

To implement AB 117's energy efficiency program funding requirements, the Commission solicited comments from utilities and interested parties by way of an ALJ ruling dated April 28, 2003. The ruling proposed changes to the energy efficiency Policy Manual to recognize AB 117. By implication, it interpreted some of AB 117's provisions.

Subsequently, the Commission held a workshop on June 2 to address related issues. Parties filed supplemental comments on June 9. Active parties to this segment of this proceeding include Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (collectively, Sempra), Southern California Edison Company (SCE), the City and County of San Francisco on behalf of the Association of Bay Area Governments (CCSF), the City of San Jose and the City of Berkeley, Sustainable Novato, South Bay Cities Council of Government, the City of Santa Monica (Santa Monica), the Local Government Commission (LGC), the Office of Ratepayer Advocates (ORA), Proctor Engineering, Local Power, Women's Energy Matters (WEM), The Utility Reform Network (TURN) and the Natural Resources Defense Council (NRDC).

The scope of the April 28 ruling, the June 2 workshop and this order is limited to issues regarding energy efficiency program funding. AB 117 requires the Commission to conduct a broader inquiry in order to develop rules by which cities and counties may aggregate local load and purchase power as CCAs. The initiation of that broader inquiry is imminent. Today's order addressing energy efficiency program funding precedes our order adopting broader rules for cities and counties to become CCAs because the statute requires our attention to this narrower issue no later than July 15, 2003. In the meantime, we interpret the statute narrowly and adopt rules here that do not presume any particular outcome in the broader inquiry. We do so recognizing that the skeletal rules adopted here today may require modifications to make them consistent with the policy direction and rules the Commission ultimately adopts on the broader issues.