III. CONCLUSION

Based on our consideration of TURN/UCAN's arguments regarding the Otay Mesa PPA, we find that we erred in approving the PPA as the result of a competitive solicitation. The evidentiary record demonstrates that the Otay Mesa PPA was in fact a bilateral contract between SDG&E and Calpine. Accordingly, for the reasons discussed above, we grant limited rehearing for the sole purpose of determining whether the Otay Mesa PPA provides ratepayer benefits and is reasonable pursuant to Public Utilities Code section 454.5(c)(3). Rehearing of all issues raised by TURN/UCAN, AReM and City is denied.

IT IS ORDERED that:

1. Limited rehearing of D.04-06-011 is granted to determine whether the Otay Mesa PPA provides ratepayer benefits and is reasonable pursuant to Public Utilities Code section 454.5(c)(3).

2. Review of the Otay Mesa PPA for purposes of whether it should be approved or not as a matter still pending before us.

3. Rehearing of D.04-06-011 is denied in all other respects.


This order is effective today.

Dated June 30, 2005, San Francisco, California.

MICHAEL R. PEEVEY

President

GEOFFREY F. BROWN

SUSAN P. KENNEDY

DIAN M. GRUENEICH

Commissioner John A. Bohn, being necessarily absent, did not participate.