D0307030 To Determine the Appropriate Level of the Direct Access Cost Responsibility Surcharge Cap Effective for the Period Subsequent to 7/1/03

II. Procedural Summary

An ALJ ruling was issued January 24, 2003, setting the schedule for this phase, and defining the scope of issues to be addressed. Consistent with its obligations under the Rate Agreement, the California Department of Water Resources (DWR) provided modeling support in this phase of the proceeding through Navigant Consulting, Inc. (Navigant) for use in evaluating the potential effects of alternative DA CRS caps in terms of undercollections and payback periods.

A technical workshop was held on February 6, 2003 for the purpose of discussing the DWR/Navigant model and appropriate modeling scenarios to be performed as a basis for analyzing the DA CRS cap issue. The modeling scenarios and parameters discussed at the workshop served as a basis for the subsequent modeling runs performed by DWR/Navigant.

DWR served opening testimony on February 24, 2003 presenting the Navigant modeling runs, and explaining the inputs and methodologies used in developing various DA CRS cost responsibility forecast scenarios. The three utilities (PG&E, SCE and San Diego Gas and Electric Company (SDG&E) served concurrent testimony explaining the URG modeling inputs provided to Navigant. All parties submitted testimony in response to the DWR/IOU modeling testimony on March 19, 2003, and rebuttal testimony on March 26, 2003. Evidentiary hearings were held between April 1 - 7, 2003.

Parties filed opening briefs on April 22, 2003, and, reply briefs on May 6, 2003 on issues relating to the capping of cost responsibility charges on DA customers. Active parties in this phase of the proceeding included the investor-owned utilities (IOUs), parties representing bundled customers (i.e., Office of Ratepayer Advocates (ORA), The Utility Reform Network (TURN), and the California Farm Bureau Federation (Farm Bureau);⁶ parties representing DA customers, either through industry associations or as individual customers.

Active parties representing DA interests that sponsored testimony included the California Large Energy Consumers Association (CLECA), and California Manufacturers & Technology Association (CMTA); the Alliance for Retail Energy Markets and the Western Power Trading Forum (AREM/WPTF); the City of Corona, Strategic Energy, LLC; and the University of California and the California State University (UC/CSU).

⁶ The Farm Bureau is a voluntary, non-profit corporation with more than 90,000 members in California that expect to pay more than $850 million for electric service in 2003. Farm Bureau members are overwhelmingly bundled agricultural customers.