Background

This is one of two proceedings by which the Commission establishes SDG&E's electric distribution rates for Test Year 2004 (TY2004). The other is SDG&E's Application (A.) 02-12-028 ¹ to determine its TY2004 gas and electric revenue requirement (cost of service, or COS). Today's decision on marginal costs and rate design is itself the culmination of a two-step filing process by SDG&E. The first step was SDG&E's February 3, 2003 marginal cost update filing in support of this Rate Design Window (RDW) application, and the second was the RDW application filed March 17, 2003.² This decision establishes updated marginal electric distribution costs, rate design criteria, and certain tariff modifications that will form the basis for revised electric distribution rates and tariffs to be ordered when SDG&E's 2004 electric revenue requirement is determined in our forthcoming COS decision.

The Commission preliminarily categorized this as a ratesetting proceeding expected to require hearing. The first prehearing conference was held May 21, 2003, followed by the Assigned Commissioner's June 5, 2003 scoping ruling confirming the category and need for hearing and determining the schedule and issues to be addressed. At a second prehearing conference on October 29, the participants announced they were hopeful of reaching a settlement agreement that would include most parties and issues. The first evidentiary hearing was convened on November 3 and by prior arrangement immediately continued to November 12. On November 12, all active parties³ but the Federal Executive Agencies (FEA) filed their settlement agreement resolving all issues among them except one that they had agreed to address through briefs, and presented a panel of witnesses to testify in support. The proceeding was submitted effective December 16, 2003, the day concurrent briefs were due, by the Administrative Law Judge's December 19 written ruling.