3. The Joint Petition

On April 17, 2003, PG&E and SDG&E filed a Joint Petition to Modify D.03-04-029. PG&E and SDG&E request that the Commission authorize them to make certain changes to the Operating Agreements designed to conform the two agreements and correct unintentional errors in the previously approved Operating Agreements. The changes are indicated in a "redline" version of the Operating Agreements attached to the Joint Petition.

PG&E and SDG&E state that DWR agrees with the changes recommended in the Joint Petition and that, following Commission approval, PG&E and SDG&E will enter into modified Operating Agreements with DWR and submit them to the Commission through compliance advice filings, at which time they would supersede the executed Operating Agreements.

Under Rule 47 (f) of the Commission's Rules of Practice and Procedure, responses to petitions for modification must be filed within 30 days of the date that the petition was served. No party filed a response to the Joint Petition, and the matter is uncontested.

The majority of the changes requested are corrections to unintentional typographical errors identified by PG&E and SDG&E and can be approved without further discussion. However, three of the requested modifications involve substantive changes to the Operating Agreements.

First, PG&E and SDG&E request certain revisions to the definition of Energy Delivery Obligations in Exhibit C of the Operating Agreements to make the two agreements consistent. As noted in the red-line revisions provided in the Joint Petition, in order to make the two agreements and the order consistent on
this point, it is necessary to revise the PG&E- DWR Operating Agreement to add "all pumping loads" and clarify both Operating Agreements such that the definition of "wholesale obligations" consists of those wholesale obligations "existing as of January 1, 2003."

Second, PG&E and SD&GE request a revision to the definition of Utility Supply for purposes of calculating the Surplus Energy Percentage in Exhibit C of the Operating Agreement. The revised Exhibit C would be modified to read: "Utility Supply is total energy dispatched from utility retained generation, new Utility contracts and Utility market purchases with adjustments for transmission losses, existing wholesale obligations, Western Area Power Administration load, Ancillary Services and ISO Instructed Energy, exchange transactions, all pumping loads, and ISO Uninstructed Energy..."

Finally, PG&E and SDG&E request revisions to the definitions of "Uninstructed Retail Load Deviations" and "Uninstructed Supply Deviations" in Exhibit C of both Operating Agreements to clarify that load or supply deviations will be calculated net of any positive or negative uninstructed supply deviations and to make the PG&E and SDG&E agreements uniform. The revisions do not alter the determinations in D.03-04-029 regarding who is responsible for the load or supply deviations for purposes of pro rata share calculation.

Having reviewed the requested modifications, we find that the modifications should be granted. The first and second requested modifications serve to better align the definition of "Energy Delivery Obligations" and "Utility Supply" in the Operating Agreements with the definitions included in the D.02-12-069, the Operating Order applicable to Southern California Edison and between the two Operating Agreements. We agree with PG&E and SDG&E that the definitions of Energy Delivery Obligations and Utility Supply should be consistent among the three utilities to the extent possible and will grant PG&E
and SDG&E's request. The third set of substantive revisions simply provide more detail to the definitions of Uninstructed Load Deviations and Uninstructed Supply Deviations without changing the determination of who is responsible for pro rata share calculations.

The modifications requested by PG&E and SDG&E in the red-line versions of the Operating Agreements attached to their April 17, 2003 Joint Petition are approved. PG&E and SDG&E should modify the Operating Agreements consistent with this decision and file the executed Operating Agreements with the Commission as directed below.