7. Comments on Draft Decision

PG&E, SDG&E, SCE, NRDC, CCC, and CAC/EPUC filed opening comments on the draft decision on March 30, 2005. Reply comments were filed by PG&E, SDG&E, SCE, and NRDC on April 4, 2005. We have carefully considered the comments received and made changes to the decision where appropriate. In particular, we clarify that the E3 methodology is adopted for purposes of evaluating energy efficiency programs in R.01-08-028 and related energy efficiency proceedings on an interim basis, subject to further review in Phase 3 of this rulemaking. We also clarify that, consistent with the February 18, 2005 ACR consolidating R.04-04-003 with this proceeding for purposes of QF issues, all QF issues will be addressed in Phase 2 of R.04-04-025. Phase 3 will continue to focus on the development of a common methodology, consistent input assumptions, and updating procedures to quantify all elements of long-run avoided costs,³⁵ and will necessarily take into account any determination made by the Commission in Phase 2 regarding long-run avoided cost pricing for QFs.

Finally, in response to CCC's statement that its comments on the E3 report were limited to the possible future use in setting LRAC prices paid to QFs, we remove references to the CCC's positions on the use of electric futures prices and the extent to which capacity value is included in the current market prices.

³⁵ To the extent parties recommend use or modification of the E3 Methodology and Forecast for purposes of QF pricing, additional review of the E3 methodology may also occur in Phase 2 of R.04-04-025.