VI. Assignment of Proceeding

Carl W. Wood and Geoffrey F. Brown are the Assigned Commissioners and Thomas Pulsifer is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. Decision 03-05-034 required that DA customers returning on a TBS basis must "pay for the incremental cost that will be imposed on the system due to additional short-term spot supplies procured to serve them."

2. In selecting a TBS price proxy, the following criteria reasonably define a suitable conceptual framework: 1) relationship of the proxy price to the actual costs of utility service; 2) price transparency; and 3) dependability and continuity of the source of the price.

3. The INC price better meets the criteria for a suitable TBS proxy than does the ICE index.

4. The use of the INC price will ensure that other bundled customers are not adversely affected by the return of DA customers to bundled service.

5. FERC has conditionally approved the ISO's proposed Real-Time economic dispatch methodology, which, among many other changes, would introduce the use of a single zonal Market Clearing Price (MCP) and eliminate the current dual pricing using separate INC and DEC MCPs.

6. To the extent that the INC is superseded by a revised pricing structure pursuant to FERC tariff, it makes sense to make provision for incorporating the successor pricing structure in the TBS price proxy as adopted herein.

7. The Status Report also addresses several undisputed "technical adjustments" regarding how to calculate the final price to be charged TBS customers.

8. The three utilities agree to clarify their tariff filings to explicitly state that the ISO Grid Management Charge (GMC) for Congestion (Charge Type 522 Interzonal Scheduling GMC) should not be included in the TBS rate.

9. The three utilities also agree to explicitly state the billing determinant for the GMC components included in the TBS rate.

10. The three utilities agree that the UFE modifier should be based on recent historical numbers available from the ISO, and that it should be adjusted no more than semi-annually if actual UFE departs from the historical rate.

Conclusions of Law

1. As directed in D.03-05-034, a price proxy should be adopted for TBS customers that best meets the criteria set forth in Finding of Fact 2 above.

2. The Commission should adopt the INC price as a TBS proxy since it better meets the criteria set forth in Finding of Fact 2 above.

3. In view of the expectation of FERC's imminent action adopting a revised pricing structure used to settle Imbalance Energy from non-participating load, the INC proxy should be adopted with the provision for it to be superseded by the "Zonal Settlement Interval Ex Post Price," as defined in the FERC Order on Proposed Tariff Amendment No. 54, as prescribed in the order below.

4. Nothing in this order is intended to foreclose parties' rights subsequently to raise concerns regarding the use of the FERC tariff to the extent they identify new issues not addressed in SDG&E's comments, but which they believe are relevant to the applicability of the FERC tariff changes as the successor to the INC.

5. The undisputed "technical adjustments" identified in the Status Report are reasonable and should be adopted.

ORDER

IT IS ORDERED that:

1. The California Independent System Operator 10-minute Ex Post Incremental price is hereby adopted as the applicable proxy for Temporary Bundled Service (TBS) provided to Direct Access customers under the "safe harbor" provisions as set forth in Decision 03-05-034.

2. The investor-owned utilities are hereby authorized to implement this pricing proxy provisions of this order effective immediately.

3. The utilities are authorized to file a TBS tariff amendment advice letter to incorporate use of the FERC tariff rate for the "Zonal Settlement Interval Ex Post Price," as defined in the FERC Order on Proposed Tariff Amendment No. 54 upon formal adoption of the revised rate structure by FERC. If, for some reason, the FERC tariff changes are not adopted as anticipated in SDG&E's comments, then the participants in the workshop should apprise the Commission of the changed circumstances so that appropriate action at that point could be determined.

4. The "technical adjustments" identified in the Status Report, page 8, that are not disputed by any party are hereby adopted. Pursuant to these technical adjustments, three utilities shall clarify their tariff filings to explicitly state that the ISO Grid Management Charge for Congestion (Charge Type 522 Interzonal Scheduling GMC) is not included in the TBS rate. The three utilities shall explicitly state the billing determinant for the GMC components included in the TBS rate. The UFE modifier shall be based on recent historical numbers available from the ISO, and that it should be adjusted no more than semi-annually if actual UFE departs from the historical rate.

This order is effective today.

Dated January 8, 2004, at San Francisco, California.

MICHAEL R. PEEVEY

CARL W. WOOD

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