5. Description of the Approved Bond Charges

SB 772 authorizes PG&E to recover Bond principal, interest, associated federal income taxes and State franchise taxes, and other Bond-related costs via new, nonbypassable rates that SB 772 calls the Fixed Recovery Amounts (FRAs) and the Fixed Recovery Tax Amounts (FRTAs). This Financing Order authorizes PG&E to implement two new surcharges called the Dedicated Rate Component (DRC) and the Energy Recovery Bond Balancing Account (ERBBA) charge. The DRC and ERBBA charge collectively encompass the FRAs and FRTAs.

We next describe the DRC and ERBBA charge. These new surcharges, referred to collectively as Bond Charges, are identical to those described in A.04-07-032 and consistent with SB 772 and D.03-12-035. Where appropriate, we adopt additional conditions and restrictions applicable to the Bond Charges.

A. Summary of the DRC

The purpose of the DRC authorized by this Financing Order is to recover the following costs associated with the Energy Recovery Bonds⁵¹:

1. Bond principal and interest.

2. Payments related to interest-rate swaps.

3. Credit enhancements.

4. Servicing fees for billing and collecting of the DRC.

5. Bond Trustee fees and other Bond-related administrative costs incurred by the Bond Trustee and the SPE.

6. Approved Bond issuance costs not funded with Bond proceeds.

Each series of Energy Recovery Bonds will have its own DRC. All of the revenues from each DRC will be transferred to the Bond Trustee for the benefit of the SPE, to be applied against the repayment for that series of Bonds.

The DRC will be paid by electric consumers in PG&E's historic service territory. Pursuant to SB 772, the DRC will be both irrevocable and nonbypassable, which assures Bond investors that the DRC will not be interrupted, eliminated, or avoided by consumers in PG&E's service territory.

To implement the DRC for each series of Energy Recovery Bonds, PG&E shall file an Issuance Advice Letter no later than four days after the Bonds are priced. The Issuance Advice Letter will include the final issuance details and a request that the DRC be set based on the actual amount and price of the Energy Recovery Bonds. To determine the DRC, the Issuance Advice Letter will use the cash flow model described in Appendix A of A.04-07-032, applied to that series of Energy Recovery Bonds, along with the most recent PG&E sales forecast for the relevant time period. The Issuance Advice Letters filed by PG&E should be based on the pro forma example contained in Appendix D of A.04-07-032, as modified by this Financing Order.

The Recovery Property established by an Issuance Advice Letter will come into being upon the filing of the Advice Letter. The DRC established by an Issuance Advice Letter will be effective automatically after 10 days, unless PG&E requests a later date that may be up to 60 days after the issuance of the associated Bonds. PG&E shall file the DRC tariff based on the pro forma tariff in Appendix C of A.04-07-032 no later than 10 days after this Financing Order is mailed. The tariff shall be effective simultaneously with the first DRC.

SB 772 requires the Commission to adjust the DRC at least annually, and more often if necessary, to ensure timely recovery of Bond principal, interest, and related costs.⁵² To satisfy this statutory requirement, this Financing Order modifies and adopts the True-up Mechanism proposed by PG&E in A.04-07-032 that will allow the DRC to be adjusted annually, and quarterly if necessary, to ensure that the DRC provides sufficient funds to timely pay Bond principal, interest, and related costs.

PG&E shall file annual Routine True-Up Mechanism Advice Letters at least 15 days before the end of the calendar year until all principal, interest, and other related costs have been paid in full. These annual Routine True-Up Mechanism Advice Letters should be based on the pro forma example in Appendix E of A.04-07-032, as modified by this Financing Order. These filings are meant to ensure that the actual DRC revenues are neither more nor less than required to repay Bond principal, interest, and related costs. Because these Advice Letters should be ministerial, the revised DRC in the annual Routine True-Up Mechanism Advice Letters shall go into effect automatically on January 1^st of the following calendar year.

PG&E may also implement, if it deems necessary, a quarterly Routine True-Up Mechanism. The quarterly adjustment shall be used if Bond principal balances fluctuate more than a specified threshold percent from the scheduled principal balance,⁵³ so that the DRC can be adjusted to better match the scheduled principal payments. If upon quarterly review the threshold is reached, PG&E may file a quarterly Routine True-Up Mechanism Advice Letter at least 15 days before the end of the next quarter to adjust the DRC. The revised DRC will be effective automatically on the 1^st day of the following calendar quarter.

PG&E may also file quarterly Routine True-Up Mechanism Advice Letters at such other times as PG&E deems necessary. For example, if required by the rating agencies, PG&E may file a quarterly True-Up Mechanism Advice Letter after a specified trigger is met instead of waiting until the next normally scheduled date for filing such Advice Letters. The revised DRC will be effective automatically on the 1^st day of the following calendar quarter. The quarterly Routine True-Up Mechanism Advice Letters should be based on the pro forma example in Appendix E of A.04-07-032, as modified by this Financing Order.

PG&E may file annual and quarterly Routine True-Up Mechanism Advice Letters until the Bonds are paid off. All true-up adjustments to the DRC shall guarantee that the DRC generates sufficient revenues to timely pay all scheduled (or legally due) payments of principal, interest, and other amounts authorized to be paid with DRC revenues. Such amounts are referred to as the "Periodic Payment Requirement." True-up filings shall be based upon the cumulative differences, regardless of the reason, between the Periodic Payment Requirement and the actual amount of DRC remittances to the Bond Trustee for the series of Energy Recovery Bonds. This will result in adjustments to the DRC to correct for over-collections or under-collections. In the case of any adjustments occurring after the final scheduled maturity date for a series of Bonds, there will be quarterly adjustments to the DRC to correct for over-collections or under-collections by the earlier of the end of the then current calendar year or the legal final maturity date for the series.

The True-Up Mechanism Advice Letters shall calculate a revised DRC for each series of Energy Recovery Bonds using the cash flow model specified in Appendix A of A.04-05-041, modified as described above, except that:

1. The amount of the debt service and related expenses for the next year will be increased or decreased by the amount by which actual remittances of DRC revenues to the Bond Trustee collection account through the end of the month preceding the month of calculation was less than or exceeded the aggregate actual debt service and related expenses for the transaction period, less any amount held in the reserve subaccount at the beginning of the transaction period.

2. Forecasted sales for the remaining years of the transaction will be revised to reflect PG&E's latest forecast.

3. Estimated administrative fees and expenses will be modified to reflect changed circumstances.

4. Assumed uncollectibles will be modified to equal the percentage of losses actually experienced during the most recent 12-month billing period for which such information is available.

5. An adjustment will be made to reflect collections that will be received at the existing tariff rate from the end of the month preceding the date of calculation through the end of the month in which the calculation is done.

PG&E may also submit Non-Routine True-Up Mechanism Advice Letters to propose revisions to the logic, structure, and components of the cash flow model in Appendix A of A.04-07-032,⁵⁴ as modified by this Financing Order. Non-Routine True-Up Mechanism Advice Letters will be filed at least 90 days before the end of a calendar quarter, with the resulting changes effective on the first day of the next calendar quarter. The Energy Division should prepare for the Commission's consideration a resolution that adopts, modifies, or rejects PG&E's proposed revisions to the cash flow model. Absent a Commission resolution, PG&E or a successor servicer may implement DRC adjustments proposed in a Non-Routine True-Up Mechanism Advice Letter on the first day of the next calendar quarter.

PG&E notes that SB 772, Section 848.1(i), requires the Commission to determine on each anniversary of this Finance Order whether the DRC needs to be adjusted and to implement any needed adjustment within 90 days of the

anniversary. PG&E expects to comply with this statute by filing a True-Up Mechanism Advice Letter 15 days before each Finance Order anniversary, but expects to state that these true-ups are unnecessary given the annual and quarterly Routine True-Up Mechanism.

We concur with PG&E that prompt implementation of the Routine True-Up Mechanism Advice Letters is critical to the rating agencies' determination of (1) the reliability and adequacy of debt service payments, and (2) how much overcollateralization and other credit enhancements will be required to obtain the highest credit ratings. Since it is important that the Bonds have the highest possible credit rating, the DRC adjustments proposed in Routine True-Up Mechanism Advice Letters will be implemented automatically as described previously. However, as described later in this Financing Order, parties will have notice and opportunity to protest these Advice Letters, and the Energy Division will review these Routine True-Up Advice Letters. Therefore, even though this Financing Order establishes a mechanism to implement revisions to the DRC automatically, all DRC-related Routine True-Up Mechanism Advice Letters will be subject to protest, review, correction, and refund to the extent allowed by Section 848.1(g).⁵⁵

B. Summary of the ERBBA

There are numerous costs and benefits associated with the Energy Recovery Bonds that will be flowed through to consumers of electricity via the Energy Recovery Bond Balancing Account (ERBBA). The specific costs and benefits that will be subject to the ERBBA are as follows:

(1) The cost of federal income taxes and State franchise taxes. This is the Fixed Recovery Tax Amount (FRTA) set forth in Section 848(e), and includes all federal income taxes and State franchise taxes imposed in connection with the issuance of the Bonds and/or the establishment of the Regulatory Asset. Most of these taxes will be paid with (i) the proceeds from the second series of Bonds, and (ii) energy supplier refunds received between the issuance of the first and second series of Bonds. However, the federal income taxes and State franchise taxes that accrue on DRC revenues for the first series of Energy Recovery Bonds for the period of time prior to the issuance of the second series of Bonds will not be paid with the proceeds from the second series of Bonds or energy supplier refunds; these taxes will be recorded in the ERBBA and recovered via the ERBBA charge. In addition, to the extent the actual taxes accrued after the issuance of the second series of Bonds differs from the proceeds from the second series and the associated energy supplier refunds, the difference will be recorded in the ERBBA and recovered via the ERBBA charge.

(2) Costs incurred if the Bond transaction is deemed presently taxable. PG&E anticipates that federal income and State franchise taxes will accrue as DRC revenues are received, and PG&E/SPE will pay taxes accordingly. However, if taxes are deemed to be payable upon the issuance of the Bonds or the establishment of the Regulatory Asset, there will be costs for (i) the time-value of money during the period between payment of the taxes and the recovery of such taxes from consumers, and (ii) interest charged by the tax authorities on past-due taxes.

(3) The cost of franchise fees assessed by the cities and counties. The Bond Charges will be subject to franchise fees levied by cities and counties. These franchise fees will be recorded in, and recovered through, the ERBBA.

(4) Carrying cost on the difference, if any, between the after-tax unamortized portion of the Regulatory Asset and the net proceeds from the first series of Energy Recovery Bonds. This could be either a cost or benefit to consumers. To the extent there is any difference between the proceeds from the first series of Energy Recovery Bonds (less issuance expenses) and the actual after-tax unamortized portion of the Regulatory Asset at the time of issuance, that difference will be used to increase or decrease the proceeds needed from the second series of Energy Recovery Bonds. This amount will accrue interest at the short-term (commercial paper) rate in the ERBBA, and the interest will be charged or credited to consumers via the ERBBA.

(5) The benefit of interest earnings on DRC revenues. DRC revenues held by PG&E prior to their transfer to the Bond Trustee will earn interest at PG&E's short-term (balancing account) interest rate. This interest will be returned to consumers through the ERBBA.

(6) The benefit of servicing fees paid to PG&E. PG&E will service the Energy Recovery Bonds. That means that PG&E will bill consumers, collect the revenues, and remit the DRC revenues to the Bond Trustee. The Bond Trustee will pay PG&E for this service. To the extent PG&E's incremental costs to provide this service are less than the servicing fee revenue from the Bond Trustee, PG&E will return that excess revenue to consumers through the ERBBA.

(7) The benefit of the interest and the Carrying Cost Credit on energy supplier refunds received between the issuance of the first and second series of Energy Recovery Bonds. Energy supplier refunds received by PG&E during this period will be recorded in the ERBBA and used to reduce the second series of Energy Recovery Bonds issued. Prior to the issuance of the second series, these funds will earn interest at PG&E's short-term interest rate. The interest will be credited to consumers through the ERBBA. After the second series is issued, these energy supplier refunds will be treated as a reduction to PG&E's rate base. PG&E will credit to consumers an amount equal to PG&E's authorized rate of return, grossed up for taxes, on the unamortized sum of (1) the after-tax amount of these energy supplier refunds,⁵⁶ plus (2) the proceeds from the second series of Bonds. This benefit, which PG&E calls the "Carrying Cost Credit," will be flowed through to consumers via the ERBBA.

(8) The benefit of any surplus funds held by the Bond Trustee. The Bond Trustee will hold any overcollateralization revenues collected via the DRC as a credit enhancement. After the Energy Recovery Bonds are repaid, the increase in value of PG&E's equity interest in the SPE related to the balance in the overcollateralization subaccount or any other subaccount maintained by the SPE will be returned to consumers via the ERBBA. The Bond Trustee will also hold the DRC revenues used to repay the Energy Recovery Bonds. To the extent the Bond Trustee earns interest in excess of its obligations under the financing agreements, that interest will be held in the reserve subaccount and used to reduce future DRC requirements. Upon repayment of the Energy Recovery Bonds, if a balance remains in the reserve subaccount, that balance will increase PG&E's equity in the SPE, which will be returned to consumers via the ERBBA.

(9) The benefit of any energy supplier refunds received by PG&E after the issuance of the second series of Energy Recovery Bonds. These energy supplier refunds will be credited to the ERBBA, earn short-term interest while in the ERBBA, and be refunded to consumers via the next annual adjustment to the ERBBA charge.

PG&E shall file a separate advice letter at the same time as the first Issuance Advice Letter to establish an ERBBA tariff and the initial ERBBA charge. The ERBBA tariff shall be based on the pro forma tariff in Appendix C of A.04-07-032. This advice letter shall be processed in accordance with normal Commission procedures. Costs and revenues will be recorded monthly in the ERBBA. After the initial advice letter filing, the ERBBA charge will be adjusted annually in a proceeding designated by the Commission.⁵⁷ If no proceeding has been designated, PG&E shall file an annual advice letter in time to adjust the ERBBA charge on January 1^st of the following calendar year.

C. Termination of the RARAM

The Regulatory Asset Revenue Adjustment Mechanism (RARAM) allows PG&E to track and recover the revenue requirement for the bankruptcy Regulatory Asset established by D.03-12-035. After the Regulatory Asset is refinanced with the proceeds from the first series of Energy Recovery Bonds, the RARAM will no longer be necessary. Therefore, once the first series of Bonds is issued, PG&E shall eliminate the RARAM and transfer any balances in the RARAM to the ERBBA for amortization in future ERBBA charges. The RARAM should be eliminated by the same advice letter that establishes the ERBBA and sets the initial ERBBA charge.

D. Customer Responsibility for Bond Charges

As required by SB 772, Sections 848(d), 848(e), and 848.1(b), the DRC shall be nonbypassable and recovered from all existing and future consumers in PG&E's service territory as of December 19, 2003, except for the exemptions from the DRC provided for in Sections 848.1(b) and (c). This Financing Order adopts PG&E's unopposed request to require consumers to pay the ERBBA charge to the same extent they pay the DRC.⁵⁸ As required by D.04-02-062, the DRC and ERBBA charge (collectively, Bond Charges) will be set on an equal cents per kWh basis.⁵⁹ The Bond Charges will replace the surcharge for the Regulatory Asset that currently appears on consumers' bills.

The precise effect that the Bond Charges will have on consumers' bills will not be known until both series of Energy Recovery Bonds are issued. Appendix A of A.04-07-032 shows an illustrative DRC of $0.00336 per kWh for 2005, and an illustrative ERRBA charge of $0.00165 per kWh. The sum of these two surcharges, or $0.00501 per kWh, will displace the current Regulatory Asset charge of $0.00597 per kWh, yielding an illustrative overall bundled service reduction in 2005 of $0.00096 per kWh. For 2006, PG&E estimates that the sum of the Bond Charges will be equal to $0.00407 per kWh.

Most direct access (DA) consumers will not see an overall reduction in their bills because the DA Cost Responsibility Surcharge (CRS) component, which will include the Bond Charges, is capped at $0.02700 per kWh.⁶⁰ In these cases, the rate reduction from the Energy Recovery Bonds is offset by an increase to DWR power charges. However, continuous DA, CARE DA, and medical DA consumers that are subject to SB 772 and who never purchased DWR power (because they stayed on DA) pay only the Competition Transition Charge and Regulatory Asset portions of the DA CRS. These continuous DA consumers will see a rate reduction due to the replacement of the Regulatory Asset by the Energy Recovery Bonds.

E. Bill Presentation

PG&E may combine all Bond Charges into a single line item on consumers' bills. In accordance with PG&E's proposal, the line item on consumers' bills shall be titled "Energy Cost Recovery Amount," and the back of consumers' bills shall have a definition of the "Energy Cost Recovery Amount" that states as follows:




Energy Cost Recovery Amount: These charges are approved by the CPUC and authorized by California Public Utilities Code Section 848 et seq. The purpose of these charges is to pay the principal, interest, and other costs associated with Energy Recovery Bonds (Bonds) that were issued by a Special Purpose Entity (SPE). One of these charges is the Dedicated Rate Component (DRC), which is $0.00XXX per kWh. The right to receive DRC revenues has been transferred to the SPE and does not belong to PG&E. This right is called Recovery Property. PG&E collects the DRC on behalf of the SPE, which uses these funds to pay Bond principal, interest, and other Bond-related costs. The SPE transferred the net Bond proceeds to PG&E to purchase Recovery Property from PG&E. PG&E used the proceeds from the sale of Recovery Property to refinance its bankruptcy Regulatory Asset, which was established by the Commission to help finance PG&E's emergence from bankruptcy.

F. Revenue Accounting

PG&E shall separate the revenues from the Bond Charges into three components for accounting purposes. The DRC revenue for each of the two series of Energy Recovery Bonds will be determined in accordance with Preliminary Statement Part I, Rate Summary, of PG&E's electric tariffs. The ERBBA revenue will be determined residually by subtracting the DRC revenues from the total billed "Energy Cost Recovery Amount."

G. Billing, Collecting, and Remitting the DRC

As contemplated by SB 772,⁶¹ PG&E will act as the servicer for the DRC. As servicer, PG&E will be responsible for reading customer meters and for billing and collecting the DRC. To the extent consumers of electricity in PG&E's historic service territory are billed by Electric Service Providers (ESPs), PG&E will bill these ESPs for the DRC, and the ESPs will be obligated to remit DRC revenues to PG&E.

PG&E will remit estimated DRC revenues, on behalf of the SPE, to the Bond Trustee.⁶² The Bond Trustee will be responsible for making principal and interest payments to Bond investors and paying other Bond-related costs. These other costs include deposits into an overcollateralization subaccount held by the Bond Trustee, servicing fees, Trustee fees, and other administrative costs. PG&E expects the administrative costs (excluding servicing fees) to be approximately $200,000 per year. The following diagram illustrates the servicing cash flows:

SERVICING CASH FLOWS



As servicer, PG&E will keep DRC revenues until the funds are remitted to the Bond Trustee. The interest that accrues on DRC revenues between remittance dates will be credited to electric consumers via the ERBBA.

The SPE will own legal title to the DRC revenues and PG&E will be legally obligated to remit all DRC revenues to the Bond Trustee. Because PG&E does not currently have a high credit rating, PG&E expects the rating agencies to require PG&E to remit the estimated DRC revenues to the Bond Trustee on a daily basis to avoid an adverse impact on the Energy Recovery Bond credit ratings. When all three of PG&E's short-term credit ratings rise to "A- 1," "P- 1" and "F- 1" (the minimum level set by the rating agencies for monthly remittances), PG&E expects to remit estimated DRC revenues to the Bond Trustee once a month.

PG&E will prepare a monthly report for the Bond Trustee that shows the estimated DRC revenues by month over the life of the Energy Recovery Bonds. Estimated DRC collections will be based on historic customer payment patterns. Six months after each monthly billing period, PG&E will compare actual DRC revenues to the estimated DRC revenues that have been remitted to the Bond Trustee for that month during the intervening six-month period. The six-month lag between the first remittance of estimated DRC revenues and the final determination of actual DRC cash collections allows for the collection process to take its course and is consistent with PG&E's practice of waiting six months after the initial billing before writing off unpaid customer bills.

The Bond Trustee (acting on behalf of the SPE) will have a legal right to only the amount of actual DRC cash collections. Variance (positive or negative) between the amounts previously remitted based on estimated collections and actual cash collections based on final write-offs will be netted against the following month's remittance to the Bond Trustee. Amounts collected that represent partial payments of a consumer's bill will be allocated between the Bond Trustee and PG&E based on the ratio of the billed amount for the DRC to the total billed amount. PG&E states that this allocation is an important bankruptcy consideration in determining the true-sale nature of the transaction.

The Bond Trustee will hold all DRC collections received from PG&E in a collection account and distribute these funds to make scheduled principal and interest payments and to pay servicing fees and other ongoing expenses. PG&E anticipates that the collection account will have three subaccounts: (1) the equity subaccount to hold equity contributed by PG&E; (2) the overcollateralization subaccount to hold funds collected from the DRC over the life of the Energy Recovery Bonds to provide credit enhancements; and (3) the reserve subaccount to hold funds in excess of amounts necessary to pay debt service and Bond costs. However, the final account structure will not be determined until the Bond transaction is finalized and approved by the Commission's Financing Team.

The Bond Trustee will invest all funds in investment grade short-term securities. Investment earnings will be retained in the collection account to pay debt service or other Bond costs. If funds, other than investment earnings from capital held in the equity subaccount, remain in the collection account after distributions are made, they will be credited to the reserve subaccount of the collection account. All reserve subaccount funds will be available to pay debt service or other Bond costs as they come due. At the time of the next scheduled true-up filing, the reserve subaccount balance will be used to offset the revenue requirement for the DRC true-up calculation. Investment earnings in the equity subaccount will be paid by the Bond Trustee to the SPE on the distribution date, except in the unlikely event that these funds are needed to pay Energy Recovery Bond principal, interest, and other Bond-related costs.

We accept at face value PG&E's representation that in order to obtain the bankruptcy opinions, the Bond Trustee must pay a servicing fee to PG&E that is set at a level sufficient to induce another entity to take over the servicing function from PG&E should this become necessary. PG&E represents that annual servicing fees for utility asset backed securitization transactions range from 0.050 percent to 0.125 percent of the initial principal amount of the Bonds.⁶³ Therefore, we authorize PG&E to charge an annual servicing fee within this range as required by the rating agencies for the highest possible Bond credit ratings. PG&E shall credit to electric consumers the amount of this servicing fee in excess of any recorded incremental servicing costs.

In the event that PG&E fails to perform its servicing functions satisfactorily, as set forth in the Servicing Agreement, or is required to discontinue its billing and collecting functions, an alternate servicer nominated by the Bond Trustee and approved by the Commission will replace PG&E. The fees paid to the new servicer shall be approved by the Commission. We accept PG&E's representation that the annual fees paid the new servicer would be in the range of 0.60 percent to 1.25 percent of the initial principal amount of the Bonds.⁶⁴

The credit quality and expertise in performing servicing functions will be important considerations when appointing an alternate servicer to ensure the credit ratings for the Energy Recovery Bonds are maintained. Therefore, we do not intend to appoint a new servicer without first determining that the appointment of the selected servicer will not cause the then-current rating of any then outstanding Energy Recovery Bonds to be withdrawn or downgraded. This will provide assurance to the credit rating agencies that the Bonds' rating will not be undermined in the future because of a third-party servicer.

Although PG&E will act as servicer, it is possible that ESPs will bill and collect the DRC from some consumers. These ESPs should meet minimum billing and collection experience standards and creditworthiness criteria. Otherwise, the rating agencies might impose additional credit enhancement requirements or assign lower credit ratings to the Bonds. Therefore, ESPs that bill and collect the DRC will have to satisfy the creditworthiness and other requirements applicable to ESPs that meter and bill electric consumers as set forth in PG&E's Electric Rule 22.P., "Credit Requirements."

⁵¹ The DRC encompasses the FRAs that are defined in Section 848(d).

⁵² Sections 848.1(g) and (i).

⁵³ The Issuance Advice Letter should specify the threshold percent.

⁵⁴ Revisions to assumptions used by the cash flow model, such as sales forecasts, estimated uncollectibles, etc., will be addressed in Routine True-up Mechanism Advice Letters.

⁵⁵ Any adjustments to the DRC, other than the correction of mathematical errors, will be implemented via the ERBBA.

⁵⁶ It is necessary to use the after-tax portion of the refunds because the taxes due on these refunds are expected to be currently payable and, therefore, not available to provide a Carrying Cost Credit to ratepayers.

⁵⁷ PG&E proposed that the ERBBA charge be adjusted annually in a hypothetical "Electric Annual True-up Proceeding." (PG&E email submitted on September 14, 2004.) Section 3 of PG&E's pro forma ERBBA tariff in Appendix C of A.04-07-032 states that the disposition of the balance in the ERBBA "shall be determined in the Electric Annual True-up Proceeding, or any other proceeding as authorized by the Commission."

⁵⁸ Consumers that are exempt from the DRC pursuant to SB 772 shall likewise be exempt from the ERBBA charge.

⁵⁹ D.04-02-062, mimeo., pp. 3 - 4.

⁶⁰ D.04-02-062, Attachment A: Rate Design Settlement Agreement, para. 8, p. 4. See also, D.03-07-030, mimeo., pp. 103-104. The 2.7- cent cap is subject to possible future adjustment, as deemed necessary to pay off the DA CRS undercollection within the time frame previously mandated by the Commission. (D.03-07-030, mimeo., pp. 103-104 and 106-107.) We note that because the DRC and ERBBA obligations are imposed on DA consumers while maintaining the existing overall cap of $0.027/kWh, there will likely be an increase in the overall undercollection of CRS from those consumers. Currently, bundled consumers are making up the shortfall, but will receive reimbursement in subsequent years, with interest. (D.03-07-030, mimeo., p. 24.) D.03-07-030 incorporated a process for periodic reevaluation of the adequacy of the $0.027 cap to pay off the DA CRS undercollection as part of the DWR revenue requirement redetermination.

⁶¹ Sections 848.1(b), 848.1(g), and 848.2.

⁶² PG&E is not a servicer for the ERBBA charge, but collects that on its own behalf.

⁶³ Based on a Bond principal amount of $3.0 billion, the servicing fee would be in the range of $1.5 million per year to $3.75 million per year.

⁶⁴ Based on a total initial Bond principal amount of $3.0 billion, the servicing fee would be in the range of $18 million to $37.5 million per year.