V. Ratemaking

SDG&E states that the rent from the lease extension is already built into the miscellaneous revenues that were forecast by the Commission in adopting a Test Year 2004 revenue requirement for SDG&E. Pursuant to D.04-12-015, SDG&E's next general rate case will have a 2008 test year. Under a settlement approved in D.05-03-023, SDG&E's base margin will escalate by a minimum of 3.2%, 3.5%, and 3.8% in 2005, 2006, and 2007, over the Commission adopted level for 2004. SDG&E states that, as a result, the credit to rates for the rent paid by ADP in 2004 will escalate in 2005, 2006 and 2007 at a rate that is the same as the actual rent increase during this period. Therefore, at all times during the lease extension approved in this decision, ratepayers will be receiving full credit for the rent form the lease extension.

SDG&E should credit the rent received from ADP to its
Account 454 - Rents from Property.