ALJ/JCM/sid Mailed 4/26/2004

Decision 04-04-042 April 22, 2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of San Diego Gas & Electric Company for Authority to Make Various Electric Rate Design Changes, Close Certain Rates, and Revise Cost Allocation Among Customer Classes Effective, January 1, 2004. (U 902-E)

Application 03-03-029 (Filed March 17, 2003)

Vicki L. Thompson, Attorney at Law, for San Diego Gas & Electric Company, applicant.

Gregory Heiden, Attorney at Law, for the Commission's Office of Ratepayer Advocates, protestant.

Douglas K. Kerner, Attorney at Law, for Duke Energy North America; Brian Cragg, Attorney at Law, for West Coast Power; Norman J. Furuta, Attorney at Law, for Federal Executive Agencies; Beth C. Tenney, Attorney at Law, for California City-County Streetlight Association; Peter Hanschen, Attorney at Law, for Agricultural Energy Consumers Association; and Ron Liebert, Attorney at Law, for California Farm Bureau Federation, interested parties.

OPINION APPROVING RATE DESIGN SETTLEMENT

Summary

This decision approves a contested settlement agreement resolving most of the disputed issues among San Diego Gas & Electric Company (SDG&E) and all but one of the other active parties in SDG&E's 2003 Rate Design Window proceeding. When a decision is issued in its Test Year 2004 Cost of Service proceeding, SDG&E is directed to allocate its 2004 electric distribution revenue requirement based on an equal percentage of marginal cost methodology, using caps and floors designed to moderate increases that would otherwise disproportionately impact residential and street lighting customers. SDG&E must accommodate the provisions of Assembly Bill 1X by applying the residential class revenue requirement allocation in a manner consistent with the Commission's determination in Decision 04-02-057, its Final Opinion on Phase 2 Issues in Order Instituting Rulemaking 01-05-047.