SRT/k47 8/15/2000

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of SIERRA PACIFIC POWER COMPANY for Approval of a Proposed Distribution Performance-Based Ratemaking Mechanism Supported By a cost of Service Study.

Application 00-07-001

ADMINISTRATIVE LAW JUDGE'S RULING

SETTING A PREHEARING CONFERENCE AND

REQUIRING PREHEARING CONFERENCE STATEMENTS

This ruling sets a prehearing conference (PHC) for 10:00 a.m. on September 20, 2000, in San Francisco, California. At that time, parties will be expected to address the proper category for these proceedings, the need for hearing, the issues to be considered, and the timetable for resolving the proceedings, as well as the topics raised below. By September 15, 2000, all parties shall file and serve PHC statements. Parties shall also send the statements to the assigned Administrative Law Judge (ALJ) and to each other by e-mail.¹

Background

Sierra Pacific Power Company (Sierra) conducts its retail electric business in California and Nevada. As a consequence of this Commission's order in Decision (D.) 97-12-093, all California electric utilities, including Sierra, were required to take several steps to comply with AB 1890, the California legislature's electric restructuring statute²:

Each of these [electric] companies is required to unbundle its rates into components that reflect its underlying cost for generation, transmission, distribution and public purpose programs. Where a company is seeking to recover any uneconomic cost of generation, it must reflect the resulting transition charges on its bills to all customers, track its collection of transition costs in a balancing account, undergo a market valuation process, surrender control of its jurisdictional transmission facilities to the Independent System Operator (ISO), freeze its rates at June 10, 1996 levels and provide a 10% rate reduction for residential and small commercial customers.³

In the same decision, the Commission directed Sierra to file a distribution Performance Based Ratemaking (PBR) proposal no later than December 31, 1999.⁴ While Sierra filed an application containing its PBR proposal on the due date, the Commission dismissed that application without prejudice because it was not supported by adequate detail.⁵ Sierra filed a more detailed application on July 3, 2000 seeking Commission approval of its proposed PBR. It also submitted a cost of service study in order to set base rates.