12. Assignment of Proceeding

Kevin P. Coughlan is the assigned Examiner in this proceeding.

Findings of Fact

1. Pursuant to Decision 05-05-047, dated May 26, 2005, SDG&E was authorized to issue $400 million of excess short term borrowing through December 31, 2010, in addition to the short-term debt that SDG&E may issue without Commission authority pursuant to § 823 (c).

2. SDG&E's authority to issue short-term debt pursuant to § 823 (c), without Commission authorization, and in accordance with its current capitalization of $1.6 billion, is approximately $80.4 million.

3. As of September 30, 2005, SDG&E has not used any amount under its existing $400,000,000 short term debt authority.

4. In A.05-12-026, SDG&E requested authority to issue $550 million of excess short term-debt, through December 31, 2010, to temporarily finance the following: (i) new utility infrastructure; (ii) balancing account undercollections; (iii) fuel inventories; (iv) the retirement and refunding of long-term debt and preferred stock; and (v) other short-term cash needs that may arise from time to time.

5. SDG&E may need to issue up to $550 million of excess short-term debt during 2006-2010 to finance new utility infrastructure and for other purposes.

6. SDG&E claims that approval of its increased short-term borrowing capacity is a necessary element for the implementation of its updated procurement plan.

7. SDG&E represents that it will invest more than $600 million annually during 2006-2009 to finance utility infrastructure investments, including more than $3 billion for electric generation and transmission capacity.

8. Decision 05-05-047 eliminated the requirement for SDG&E to reduce its outstanding short-term debt to 5% of the par value of SDG&E's long-term capital outstanding at least once every twelve months.

11. The § 1904(b) fee is $81,000 and not $281,000.

12. SDG&E made an overpayment of $200,000 in the fee required by § 1904(b).

13. This Decision supplants and replaces SDG&E's authority to issue short-term debt conferred by prior Decisions.

14. Notice of A.05-12-026 appeared in the Commission's Daily Calendar on December 22, 2005. There is no known opposition to this Application.

Conclusions of Law

1. A public hearing is not necessary.

2. The Application should be granted to the extent set forth in the order that follows.

3. SDG&E should be granted authority through December 31, 2010, to issue $550 million of excess short-term debt for temporary financing of the following purposes: (i) new utility infrastructure; (ii) balancing account undercollections; (iii) fuel inventories; (iv) the retirement and refunding of long-term debt and preferred stock; and (v) other short-term cash needs. All disbursements should be reflected in the report required by GO 24-B.

4. As authorized in D.05-05-047, SDG&E should be able to continue through December 31, 2010, to renew, refinance, extend, or replace, as necessary, the excess short-term debt issued, pursuant to this Decision, for the purposes authorized by this Decision.

5. SDG&E should not use the short-term debt authorized by this Decision, or the $80.4 million of short-term debt issued pursuant to §823(c), to fund dividends, inter-corporate borrowing, or management fees paid to its parent company or other affiliates.

6. As granted in D.05-05-047, SDG&E should be exempt from the requirement to bring its short-term debt to 5% of its long-term capital outstanding, at least once every 12 months, to help ensure that SDG&E has access to sufficient capital to fund needed infrastructure investments.

7. The short-term borrowing authorized by this Decision is not subject to the Competitive Bidding Rule.

8. SDG&E should maintain records pursuant to § 824 and GO 24-B that (i) identify the specific short-term debt issued pursuant to this Decision, and (ii) demonstrate that the proceeds from such debt have been used only for the purposes authorized by this Decision.

9. SDG&E should be refunded the amount of $200,000 for the overpayment of the fee required by § 1904(b).

10. SDG&E should file the reports required by GO 24-B on a quarterly basis, unless directed otherwise by Commission staff.

11. The following order should be effective on the date of signature.

ORDER

IT IS ORDERED that:

1. Application 05-12-026, filed by San Diego Gas & Electric Company (SDG&E), is granted, as set forth herein.

2. SDG&E is authorized, pursuant to Pub. Util. Code § 816 et seq., to issue $550 million of excess short-term borrowing, through December 31, 2010, for the following purposes: (i) temporary financing for new utility infrastructure; (ii) balancing account undercollections; (iii) fuel inventories; (iv) temporary financing for the retirement and refunding of long-term debt and preferred stock; and (v) other short-term cash needs, that may arise from time to time. All disbursements should be reflected in the report required by GO 24-B.

3. The short-term borrowing that SDG&E may issue, pursuant to this order, is in addition to the short-term debt that SDG&E may issue without Commission authorization, pursuant to Pub. Util. Code § 823 (c).

4. SDG&E is granted authority through December 31, 2010, to renew, refinance, extend, or replace, as necessary, the short-term debt issued pursuant to this order, for the purposes authorized by this order.

5. SDG&E shall not use the short-term debt authorized by this order to pay dividends, finance inter-corporate borrowing, or pay management fees to its parent company or other affiliates.

6. SDG&E shall file quarterly, the reports required by General Order 24-B, unless directed otherwise by Commission staff.

7. SDG&E is exempt from the 5% condition described in Conclusion of Law 6.

8. The Fiscal Office shall send SDG&E a check in the amount of $200,000 representing overpayment of fee required by § 1904(b) for A.05-12-026 (with CSR # 43714 dated December 22, 2005 and the decision number for this proceeding as reference).

9. The authority granted herein shall be effective until the financing authorization is fully utilized.

10. Application 05-12-026 is closed.

Dated May 25, 2006, at San Francisco, California.

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