2. Stranded Cost Recovery

The costs of the SGRP will be recovered as part of Edison's generation revenue requirement. This revenue requirement is recovered from "bundled customers." In the underlying proceeding, TURN expressed concern that some of the SGRP costs could become stranded if the legislative suspension of direct access expired or a core/non-core market structure was adopted. TURN proposed that SGRP costs be treated the same way as costs for new generation projects. Under TURN's proposal, current bundled customers who later choose different service would remain responsible for costs associated with the SGRP for at least 10 years. (Decision, at p. 59.) The Decision rejected this proposal as beyond the scope of the proceeding. According to the Decision, this matter should be addressed in "any consideration of the reopening of direct access." (Decision, at p. 60.)

The Application claims this approach is in error. The Application is wrong. TURN/CEC ignore an important difference between this proceeding and proceedings involving the construction of new facilities. The Application recognizes that the policy it advances was developed by the Commission for "new resource additions." (Application, at p. 13, quoting Long Term Procurement Plans [D.04-12-048] (2004) __ Cal.P.U.C.3d __, __, at p. 61 (slip. op.).) Yet the application simply assumes that this policy should apply to the SGRP, even though SONGS is an existing resource. In fact, the Commission stated in Long Term Procurement Plans, supra, that it chose to address stranded cost issues for new resources for reasons related to the financing of new construction. (Id., at p. 58.) Thus there is no reason to assume, as TURN does, that this policy necessarily must apply when existing resources, such as SONGS, require further investment so they can continue to provide capacity.

Moreover, there is nothing erroneous about the conclusion that this issue is not yet ripe. The Decision points out that stranded cost issues are likely to arise with respect to all existing facilities-not just SONGS-if the market changes. (Decision, at p. 60.) Thus, the Decision determines to consider all of these issues at the same time. The Application's use of the phrase, "somehow inappropriate" implies that there is something wrong with this determination. Yet the Application does not explain why it is improper to address stranded cost issues for all existing resources at the same time. The Application's attempt to characterize the Decision as containing an "implicit assumption" on how SONGS costs will be recovered in the future is also misplaced. The Decision expressly defers consideration of these issues to another proceeding. TURN/CEC cannot read into the Decision "implicit" statements about how that future proceeding will be resolved.

Finally, the Application asserts that this Decision is in error because R.03-10-003 is not addressing the treatment of SONGS costs with respect to its rules for Community Choice Aggregation, which is expected to result in the departure of bundled customer loads. (Application, at p. 14.) If TURN/CEC believe that proceeding should address a particular issue, they should bring the issue up in that proceeding. There are parties in R.03-10-003 who are not participating in this proceeding. We should not make procedural determinations about that rulemaking in this docket.

We will, however, modify the Decision in two respects. First, language will be added to make the distinction between existing plant and newly constructed plants clear. Second, the Decision will be clarified to indicate that stranded costs can be caused by certain types of market changes, not just direct access.