ALJ/XJV/jva Mailed 7/3/2006

Decision 06-06-062 June 29, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Concerning Relationship Between California Energy Utilities And Their Holding Companies And Non-Regulated Affiliates.

Rulemaking 05-10-030
(Filed October 27, 2005)

OPINION AMENDING ORDER INSTITUTING RULEMAKING

TABLE OF CONTENTS

Title Page

OPINION AMENDING ORDER INSTITUTING RULEMAKING 1 1

1. Summary 2 2

2. Background and Amended Scope 2 2

3. Discussion 7 7

3.1. California's Experience 7 7

3.1.1. Edison/Edison International 7 7

3.1.2. PG&E/PG&E Corporation 8 8

3.1.3. SoCalGas/SDG&E/Sempra Energy 9 9

3.1.4. Lessons Learned 10 10

3.2. Problems with the Existing Affiliate Transaction Rules 12 12

3.2.1. Applicability to the Utility Holding Company 13 13

3.2.2. Applicability to Specific, Unregulated Affiliates 14 14

3.2.3. Scope of Covered Transactions 14 14

3.2.4. Express Exceptions in the Rules 16 16

3.2.5. Conflicts of Interest 17 17

3.2.6. Discovery from the Utility Holding Company and
Affiliates 18 18

3.3. Possible Solutions 19 19

3.3.1. Protecting and preserving the utility's financial health 19 19

3.3.2. Strengthening separation rules governing a utility, its unregulated affiliates and the holding company 20 20

3.3.3. Increasing reporting requirements regarding
interactions between a utility and its affiliates 21 21

3.3.4. Prohibiting utility procurement from affiliates without
prior Commission approval 22 22

3.3.5. Reiterating cooperation required in discovery from
holding companies and utility affiliates 23 23

3.3.6. Increasing reporting of information about compensation packages from utilities and requiring information from holding companies and utility affiliates 23 23

4. Content of Comments 23 23

5. Schedule 24 24

6. Service of This Ruling; Eligibility to File Comments and Participate
in Oral Argument 25 25

7. Category of Proceeding and Need for Hearing 26 26

8. Ex Parte Rules 26 26

ORDER 26 26

OPINION AMENDING ORDER INSTITUTING RULEMAKING

1. Summary

Today's order amends the Commission's October 2005 Order Instituting Rulemaking (OIR or R.), both as to scope and schedule, and requests public comment on the extent to which there should be future revisions to the Commission's (1) Affiliate Transaction Rules and (2) General Order (GO) 77-L (which governs the reporting of compensation paid to executive officers and employees of regulated utilities). The amended OIR continues to apply only to the previously designated Respondents, California's major energy utilities and their holding companies: Southern California Edison Company (Edison)/Edison International, Pacific Gas and Electric Company (PG&E)/PG&E Corporation, and Southern California Gas Company (SoCalGas) and San Diego Gas & Electric Company (SDG&E), both owned by Sempra Energy.