III. Procedural History

On February 5, 2001, Administrative Law Judge (ALJ) Joseph DeUlloa issued a ruling setting a prehearing conference on February 6, 2001, to discuss the requirements of the Department of Finance for implementing AB 1X. The ALJ ruling also set workshops⁵ on February 6 and 7 for the implementation of AB 1X and a second prehearing conference on February 7 to discuss workshop progress.

Initially, the utilities proposed to submit advice letters that would take effect on the day submitted to the Commission. The ALJ rejected this approach and issued a ruling directing the utilities to serve their proposals for determining CPA. The ruling also provided parties an opportunity to comment on the proposals for determining CPA. The issues we decide are not predicated on factual disputes. Rather, the issues we decide are interpretations of law. Although a trial-type evidentiary hearing has not been held, parties have been afforded an opportunity to be heard through written comment on the utilities' proposals, and comments on DWR's letter. Further, parties will have an opportunity to submit comments on the proposal contained in this order. In short, there will have been a fair hearing.

On February 23, 2001, Edison, PG&E, and SDG&E each served a proposal to calculate the CPA on a monthly basis by subtracting generation-related costs from generation-related revenues. Each proposed to calculate generation-related revenue residually from the total retail rate and also adjust revenues for certain costs. Each utility's proposal for calculating CPA differs in the inputs used in its calculation. Further, all three, in effect, propose to create balancing accounts for tracking CPA on a monthly basis.

The Office of Ratepayer Advocates (ORA), Aglet Consumer Alliance (Aglet), and Enron Energy Services, Inc. (Enron) either challenge some of the adjustments made in calculating generation-related revenues and / or also challenge some of the expenses the utilities include in generation-related costs. Greenlining Institute and Latino Issues Forum request that the Commission exempt CARE eligible customers from the CPA. TURN offered more extensive comment and advocates that the Commission also consider other aspects of AB 1X in adopting a CPA, such as freezing rates for residential usage up to 130% of baseline, and reject the utilities' balancing account approach. Further, TURN also challenges the adjustments to revenue, and generation costs identified by the utilities.