ALJ/DUG/jt2 Mailed 6/19/2006

Decision 06-06-009 June 15, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of SOUTHERN CALIFORNIA GAS COMPANY for authority to update its gas revenue requirement and base rates. (U 904 G)

Application 02-12-027
(Filed December 20, 2002)

Application of SAN DIEGO GAS & ELECTRIC COMPANY for authority to update its gas and electric revenue requirement and base rates. (U 902-M)

Application 02-12-028
(Filed December 20, 2002)

Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service and Facilities of Southern California Gas Company and San Diego Gas & Electric Company.

Investigation 03-03-016
(Filed March 13, 2003)

OPINION ON PHASE 3 FOR THE LIMITED REHEARING
GRANTED IN DECISION 05-05-018 FOR THE CALCULATION
OF SAN DIEGO GAS & ELECTRIC'S SHARE OF
SAN ONOFRE NUCLEAR GENERATING STATION COSTS

TABLE OF CONTENTS

Title Page

OPINION ON PHASE 3 FOR THE LIMITED REHEARING
GRANTED IN DECISION 05-05-018 FOR THE CALCULATION
OF SAN DIEGO GAS & ELECTRIC'S SHARE OF SAN ONOFRE
NUCLEAR GENERATING STATION COSTS 1 1

Summary 2 2

Background 2 2

Procedural History Phase 3 4 4

Scope of the Rehearing 4 4

Relevant Record and Exhibits 5 5

Revenue Requirement Adopted in D.04-12-015 7 7

Clear and Convincing Evidence Requirement 12 12

Results Sharing 13 13

Internal Market Mechanism 15 15

Post-retirement Benefits Other than Pensions 17 17

Contractual Overheads 17 17

Escalation Rates 18 18

Adopted Changes to the Revenue Requirement 18 18

Attrition Year 2005 19 19

Comments on Draft Decision 19 19

Assignment of Proceeding 20 20

Findings of Fact 20 20

Conclusions of Law 21 21

ORDER 22 22

OPINION ON PHASE 3 FOR THE LIMITED REHEARING
GRANTED IN DECISION 05-05-018 FOR THE CALCULATION
OF SAN DIEGO GAS & ELECTRIC'S SHARE OF
SAN ONOFRE NUCLEAR GENERATING STATION COSTS

Summary

The Commission granted limited rehearing on the forecast of San Diego Gas & Electric Company's (SDG&E) share of San Onofre Nuclear Generating Station (SONGS) costs in order to be consistent with Decision (D.) 04-07-022 and ensure that there is a sufficient record. This decision clarifies the record and adopts a correct forecast for test year 2004 and the attrition year 2005. This decision finds that D.04-12-015 under-estimated test year 2004 expenses by $6.524 million and that post-test year 2005 expenses should include an escalated allowance to adjust for the under-estimated expenses.