ALJ/BWM/sid Mailed 7/26/2005

Decision 05-07-041 July 21, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company To Revise Its Electric Marginal Costs, Revenue Allocation, and Rate Design. (U 39 M)

Application 04-06-024 (Filed June 17, 2004)

(See Appendix A for a list of appearances.)

INTERIM OPINION ON BART AND SIERRAPINE EXEMPTIONS

FROM ENERGY RECOVERY BOND CHARGES

1. Summary

Pacific Gas and Electric Company (PG&E or applicant) seeks to charge the San Francisco Bay Area Rapid Transit District (BART) and SierraPine Ltd. (SierraPine) certain costs associated with applicant's energy recovery bonds (ERBs). These bonds are used to reduce ratepayer costs related to applicant's bankruptcy reorganization. BART contends it is exempt from ERB-related charges, except to the extent that it may purchase supplemental power from PG&E. SierraPine asserts that it is fully exempt.

We agree with BART and SierraPine, and find that neither entity is subject to these charges to the extent specified herein. The issue of responsibility for ERB-related charges is the same, but the underlying legislation and backgrounds for the BART and SierraPine claims differ. Therefore, we describe each separately. The proceeding remains open to address marginal cost, revenue allocation and other rate design issues.