COM/MP1/SK1/jf2/acb Mailed 4/8/03

Decision 03-04-030 April 3, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding the Implementation of the Suspension of Direct Access Pursuant to Assembly Bill 1X and Decision 01-09-060.

Rulemaking 02-01-011 (Filed January 9, 2002)

OPINION ON COST RESPONSIBILITY

SURCHARGE MECHANISMS FOR

CUSTOMER GENERATION DEPARTING LOAD

TABLE OF CONTENTS

Title Page

OPINION ADOPTING COST RESPONSIBILITY 2

SURCHARGE MECHANISMS FOR 2

CUSTOMER GENERATION DEPARTING LOAD 2

I. Introduction 2

II. Procedural Summary 7

III. Overview of Parties' Positions 9

A. Pre-Settlement Positions 9

B. The Settlement Agreement 11

IV. Contested Issues and Positions of Parties 13

A. Recovery of DWR Bond Charges 13

1. Background 13

2. Parties' Positions Prior to the Settlement 15

3. Proposed Settlement Treatment 16

4. Parties' Positions in Opposition to the Settlement 17

B. DWR Ongoing Power Costs 19

1. Positions of Parties Prior to the Settlement 19

2. Position of Parties to the Settlement Agreement 20

3. Comments on the Settlement 21

a) Position of ORA 22

b) Position of Parties Representing Customer Generation Interests 24

c) Position of SDG&E and ORA 28

C. SCE'S Historical Procurement Charge 28

1. Parties' Positions - Pre-Settlement 28

2. Proposed Settlement Treatment 29

D. Ongoing Transition Costs 30

1. Background 30

2. Parties' Positions - Pre-Settlement 31

3. Proposed Settlement Treatment 32

E. Miscellaneous issues 33

1. Definition of Customer Generation and Departing Load 33

2. Biogas Digesters Exceptions to CRS 36

3. Implementation of Surcharges on Net Metering Customers 36

V. Discussion of Contested Issues 37

A. Fundamental Issues 37

1. Legal Authority for Imposing Cost Responsibility Surcharges 37

2. Disposition of the Settlement Agreement 40

B. Applicability of CRS Components to Customer Generation Departing Load 43

1. Clean Customer Generation Systems Under 1 MW 44

2. Ultra-Clean and Low-Emission Systems over 1 MW 47

3. Other Customer Generation 50

4. Applicability and Administration of a MW Cap 52

5. Other Excepted Customer Generation 55

VI. Tariff Filing Implementation 56

VII. Rehearing and Judicial Review 57

VIII. Comments on the Alternate Decision 57

IX. Assignment of Proceeding 58

Findings of Fact 58

Conclusions of Law 61

ORDER 63

II.

OPINION ADOPTING COST RESPONSIBILITY

SURCHARGE MECHANISMS FOR

CUSTOMER GENERATION DEPARTING LOAD