COM/CXW/tcg Mailed 9/20/2001

Decision 01-09-059 September 20, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of San Diego Gas & Electric Company (U 902-E) for an Order Implementing Assembly Bill 265.	Application 00-10-045 (Filed October 24, 2000)
Application of San Diego Gas & Electric Company (U 902-E) for Authority to Implement an Electric Rate Surcharge to Manage the Balance in the Energy Rate Ceiling Revenue Shortfall Account.	Application 01-01-044 (Filed January 24, 2001)

(See Appendix A for a list of appearances.)

INTERIM OPINION ADOPTING RATE INCREASES TO IMPLEMENT THE DEPARTMENT OF WATER RESOURCES' REVENUE REQUIREMENT

1. Summary

In accordance with Assembly Bill (AB) 1 of the First Extraordinary Session of 2001 (Stats. 2001, Ch. 4; hereinafter referred to as AB 1X), we take the following actions. First, we establish an interim charge of 9.02 cents per kilowatt-hour (kWh), the proceeds of which San Diego Gas & Electric Company (SDG&E) shall disburse to the California Department of Water Resources (DWR) in accordance with the SDG&E/DWR Servicing Agreement that we recently approved in Decision (D.) 01-09-013.

Second, we determine that an interim, system-average, retail rate increase of 1.46 cents per kWh, or 12.1%, is required to implement the DWR revenue requirement for SDG&E's retail end use customers.¹ DWR is currently procuring more than half of the electric power supplied to those customers. Taking into account the relative amounts of energy supplied by DWR and by SDG&E's utility retained generation (URG), and SDG&E's current rate of disbursements to DWR, we determine that the retail rate increase of 1.46 cents per kWh is required to implement the 9.02 cents per kWh DWR charge. This rate increase will take effect on September 30, 2001 and is intended solely to provide additional funds to DWR.

Both the 9.02 cents per kWh DWR charge and 1.46 cents per kWh retail increase are adopted on an interim basis and are subject to possible further adjustment after the Commission completes its current comprehensive review of actions needed to implement the DWR revenue requirement. (Application (A.) 00-11-038, et al.) Our adoption of an interim DWR charge is made without prejudice to our deliberations in A.00-11-038, et al. We act today to increase both the DWR charge and SDG&E's retail rates with the intention of mitigating the impact of possible future rate increases, and to establish retail rate structures that will promote conservation by SDG&E's customers.

This decision also meets certain obligations created by recent rate stabilization legislation applicable to SDG&E.² Pursuant to Public Utilities Code, Section 332.1(b),³ as first enacted by AB 265 and as amended by ABX1 43, residential, small commercial, and street lighting customers are subject to a rate ceiling of 6.5 cents per kWh on the energy component of their bills. Pursuant to § 332.1(f), as amended by ABX1 43, customers not subject to subdivision (b), i.e., larger commercial and industrial customers, and all agricultural customers regardless of size or consumption pattern, are subject to a frozen energy rate component that was initially set at 6.5 cents per kWh but may be adjusted subsequently, as provided in the statute. For purposes of this decision, customers listed in § 332.1(b) are referred to as "small" or "AB 265" customers. Customers subject to § 332.1(f) are referred to as "large" or "ABX1 43" customers. The energy rate ceiling applicable to small customers and the frozen energy rate applicable to large customers are subject to different statutory requirements that must be considered in this decision. Among other things, we determine that neither the rate ceiling for small customers nor the frozen rate for large customers affects the need to increase rates to implement the DWR revenue requirement. As we respond to our obligations with respect to the DWR revenue requirement and the rate stabilization legislation, we exercise our ratemaking authority in this decision, both in the assignment of revenue responsibility to the various customer classes and in the establishment of specific rates and rate structures.

Based on the revenue allocation principles adopted herein, and the exemptions from rate increases and other mitigation measures that we apply to certain customer categories, the average rate increases by customer class are as shown below.

Average Rates by Customer Class *

Customer Class	Current Cents/kWh	Adopted Cents/kWh	Percent Increase
Residential - usage up to 130% of baseline quantities	12.96	12.96	0
Residential - usage above 130% of baseline quantities	14.80	16.65	12.49
Small commercial	13.98	15.90	13.71
Medium/large commercial **	10.40	12.32	18.43
Street lighting	13.16	15.07	14.56
Large commercial/industrial	10.06	11.97	19.03
Agricultural	13.25	15.16	14.45
System Total	12.06	13.52	12.10
* Does not reflect subsidies for medical baseline customers ** Certain of SDG&E's "medium/large commercial" customers are classified as "small commercial" customers for purposes of AB 265

For SDG&E's residential customers, we establish a five-tier rate structure that is generally similar to the residential rate structure that we recently adopted in D.01-05-064 for customers of Southern California Edison Company (Edison) and Pacific Gas and Electric Company (PG&E). Rates for customers eligible for the California Alternative Rates for Energy (CARE) program are exempt from the increases adopted by this order.⁴ Electric consumption by residential customers falling within 130% of their respective baseline allowances, which is approximately 59% of consumption by non-CARE customers, is exempt from today's rate increases.⁵ Finally, we exempt medical baseline customers from the adopted increases and direct SDG&E to recalculate rates in order to spread the minor cost of this subsidy among other customers. The current and adopted rates for non-CARE residential customers are shown in the following tables.

Adopted Residential Rate Increases

(Not Applicable to CARE or Medical Baseline; Does Not Reflect Cost of Subsidies to Medical Baseline Customers)

Summer

Tier	Percent of baseline	Current Rate (Cents/kWh)	Adopted Rate (Cents/kWh)	Percent Increase
1	Up to 100%	12.83	12.83	0
2	100-130%	15.28	15.28	0
3	130-200%	15.28	16.20	6.02
4	200-300%	15.28	17.11	11.98
5	Over 300%	15.28	18.69	22.32

Winter

Tier	Percent of baseline	Current Rate (Cents/kWh)	Adopted Rate (Cents/kWh)	Percent Increase
1	Up to 100%	12.83	12.83	0
2	100-130%	14.57	14.57	0
3	130-200%	14.57	15.45	5.97
4	200-300%	14.57	16.32	12.00
5	Over 300%	14.57	18.12	24.43

For a residential customer using 500 kWh per month, these rate increases result in monthly bill increases as shown in the following table. As also shown in the table, a residential customer using 1,000 kWh per month will generally face substantially larger increases. This is due to the tiered rate structure which assigns increasing revenue responsibility to increasingly larger consumption amounts. The bill increases vary by baseline zones, by season, and by whether the customer is an all-electric customer. Baseline Zone 1 covers the western portion of SDG&E's service territory from the Pacific Ocean extending roughly 20 miles inland. Zone 2 is the central part of SDG&E's service territory, and Zone 3 covers the eastern region of its service territory. Most of SDG&E's residential customers reside in Zone 1. Data provided by SDG&E in the rate stabilization proceeding (A.00-11-038, et al.) show that in calendar year 2000 nearly 99% of SDG&E's approximately 1.1 million residential customer accounts were in Zone 1, about 1% were in Zone 2, and about 0.1% were in Zone 3.

Residential Bill Impacts (Not Applicable to CARE
or Medical Baseline Customers); Does Not Reflect Cost of Subsidies to Medical Baseline Customers

Basic Allowance

Season	Baseline Zone	Increase ($/Month) 500 kWh/ 1000 kWh Month Month		Percent Increase 500 kWh 1000 kWh Month Month
Summer	1	$1.60	$14.51	2.3%	9.9%
	2	$1.01	$10.76	1.5%	7.4%
	3	$0.46	$ 7.87	0.7%	5.5%
Winter	1	$1.51	$ 14.59	2.2%	10.3%
	2	$0.96	$ 10.55	1.4%	7.5%
	3	$1.51	$ 14.59	2.2%	10.3%

All Electric Allowance

Season	Baseline Zone	Increase ($/Month) 500 kWh 1000 kWh Month Month		Percent Increase 500 kWh 1000 kWh Month Month
Summer	1	$1.05	$10.99	1.5%	7.6%
	2	$0.00	$4.94	0.0%	3.5%
	3	$0.00	$2.13	0.0%	1.5%
Winter	1	$0.00	$6.01	0.0%	4.4%
	2	$0.00	$0.00	0.0%	0.0%
	3	$0.00	$2.62	0.0%	2.0%