II. FACTUAL AND PROCEDURAL BACKGROUND

On January 19, 2001, the Commission issued the Interim Decision temporarily restraining PG&E and Edison from refusing to provide adequate service to all of their customers, including refusing to act as scheduling coordinators to serve all their non-direct access customers with the California Independent System Operator (ISO). Edison and PG&E were also ordered to appear for an evidentiary hearing on January 29, 2001 to show cause why a preliminary injunction should not issue.

The Interim Decision was issued within the context of a continuing power emergency. The Governor had declared a state of emergency, and emergency hearings had been held in December 2000. At hearings on financial issues held in December and January, a representative of Edison indicated that Edison would ask to be relieved of its obligation to serve if Edison could not purchase power in excess of the 7 cents per kilowatt-hour available in retail revenues to pay for power. (Tr. at 755.) Additional hearings were scheduled for February 2001. In addition, an independent audit was ordered.

On January 18, 2001, a declaration from Gary Heath, Executive Director of the Electricity Oversight Board, related PG&E's assertion to Deputy Director Raymond Hart of the California Department of Water Resources (CDWR) that PG&E told him that beginning on January 20th, it would only schedule its own generation, and would not purchase additional needed generation to serve remaining customer load. Mr. Heath verified this assertion with PG&E Vice President Dan Richard at 2:15 p.m. on January 18. Mr. Richard confirmed that PG&E would only serve its customers through its own generation, and would not schedule the resources secured by CDWR for PG&E's remaining load. Mr. Heath stated that PG&E cannot rely on its own generation to meet its obligations to serve all the customers in its service territory. If PG&E does not obtain additional generation, the reliability of service to PG&E customers would be seriously jeopardized.

On January 24, 2001, Edison timely filed a rehearing application alleging that the Interim Decision does not comport with standards previously adopted by the Commission concerning the issuance of a TRO or preliminary injunction, and that no grounds exist for the Commission's order. Edison argues further that the interim opinion does not follow the requirements prescribed by Public Utilities Code §2102, and the interim decision is vague and ambiguous regarding what action the injunction requires the companies to continue to do, or to be restrained from doing. Edison seeks immediate review of the rehearing application, as well as the immediate suspension of the hearings set for January 29, 2001, pending consideration of the rehearing application.

On January 29, 2001, the Commission conducted evidentiary hearings on the TRO to determine if a preliminary injunction should issue. Briefs were submitted on February 2, 2001.

On February 20, 2001, PG&E timely filed a rehearing application of D.01-01-046 alleging error on the grounds that the Commission committed legal error in issuing the TRO, in issuing the order to show cause (OSC), and in Finding of Fact No. 4, which asserts that the evidence obtained at hearing did not support a finding that PG&E or Edison cannot continue to provide service unless there are substantial rate increases. With respect to the TRO, PG&E asserts that the facts did not warrant the extraordinary remedy of injunctive relief, the TRO does not address an existing violation, and the TRO's reference to a general obligation to provide adequate service to all customers is unlawfully vague and ambiguous, and the TRO's reference to scheduling coordinator responsibilities conflicts with federal law. Regarding the OSC, PG&E claims error because a preliminary injunction or legal action against PG&E would have the same legal effects as the TRO. PG&E also asserts that the OSC failed to meet the procedural requirements of the Public Utilities Code and the Commission's own rules by failing to designate the OSC as an adjudicatory proceeding, or issuing a preliminary scoping memorandum advising PG&E of the scope of the issues to be considered.