ALJ/TRP/avs Mailed 1/9/2004

Decision 04-01-013 January 8, 2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding the Implementation of the Suspension of Direct Access Pursuant to Assembly Bill 1X and Decision 01-09-060.

Rulemaking 02-01-011 (Filed January 9, 2002)

OPINION ADOPTING SHORT-TERM PRICE PROXY

I. Introduction

By this decision, we adopt a proxy for pricing of short-term power procured to serve Direct Access (DA) customers returning to bundled service on a temporary basis. Decision (D.) 03-05-034 required that DA customers returning on a temporary bundled service (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" (pg. 19). The Commission further ordered that the remaining bundled customers should not be burdened with these added costs and that these customers should be left indifferent to whether DA customers use the utility as temporary "safe harbor." (D.03-05-034, pp. 19 - 20.) As explained below, we adopt the California Independent System Operator (CAISO) 10-minute Ex Post Incremental (INC) price as the applicable proxy.