I. INTRODUCTION

In this order, we dispose of applications filed by The Utility Reform Network. and Utility Consumers Action Network (jointly, "TURN/UCAN"), the Alliance for Retail Energy Markets ("AReM"), and the City of Chula Vista ("City") for rehearing Commission Decision (D.) 04-06-011 ("Decision").

On October 7, 2003, San Diego Gas and Electric Company ("SDG&E") filed a motion requesting Commission authorization to enter into new electric resource contracts with Comverge, Envirepel, Ramco, Palomar and Otay Mesa. (See, Motion of San Diego Gas & Electric Company for Approval to Enter into New Electric Resource Contracts Resulting from SDG&E's Grid Reliability Capacity RFP, and for Approval of the Cost Recovery and Ratemaking Mechanisms Associated Therewith ("SDG&E Motion"), filed October 7, 2003.) The SDG&E motion stated that the contracts were the result of a request for proposal ("RFP") issued by SDG&E to solicit bids to procure energy to meet its short- and long-term grid reliability needs.

On June 9, 2004, the Commission issued D.04-06-011, which granted SDG&E's motion, with modifications. As part of its approval, the Commission also authorized SDG&E to recover any stranded costs associated with the Ramco and Palomar contracts from all SDG&E bundled customers who are currently ineligible for direct access.

Applications for rehearing were filed by TURN/UCAN, AReM and City. SDG&E and Calpine Corporation ("Calpine") filed responses opposing the applications for rehearing.