Comments on Proposed Decision
Section 311(d) provides that there must be a 30-day review and comment period on proposed decisions, unless there is an unforeseen emergency situation, the parties to this proceeding so stipulate, or otherwise provided by law. In this case, SDG&E and ORA, the active parties to this phase of the proceeding, have stipulated to reduce the review and comment period. We therefore shorten the time for comments. Opening comments will be due on October 29 and reply comments will be due on November 5 by noon. Parties shall expedite service of comments and all comments shall be served electronically and by regular mail service. In addition, all other parties will be deemed to have stipulated to a shortening of time unless they so indicate in their opening comments.
1. The Settlement Agreement is the product of extensive discussions between the parties. Both ORA and SDG&E entered into these discussions (1) after conducting thorough discovery of each other's positions; (2) after a complete review of that discovery and the filed testimony; and (3) after cross-examination of SDG&E's witnesses during hearings.
2. On February 7, 2001, approximately two months prior to the submittal of ORA's report, DWR initiated procurement of SDG&E's "net short" electric power requirements thereby obviating the current need for SDG&E to procure energy for its bundled customers in excess of its utility-retained generation. SDG&E continues to have the obligation to serve its customers.
3. SDG&E and ORA fairly reflect all affected interests. ORA represents the interests of all SDG&E's customers. SDG&E represents the interests of both its shareholders and customers.
4. As demonstrated by the testimony and rebuttal testimony of SDG&E and the ORA report and the Linsey Declaration, there is a significant contestable discrepancy between SDG&E and ORA as to the degree and extent of the reasonableness of SDG&E's electric procurement practices from July 1, 1999 through February 7, 2001.
5. The Settlement Agreement results in a reduction of SDG&E's $750 million ERCRSA undercollection by $100 million. This is a significant sum of substantial benefit to SDG&E's customers.
6. To the extent these deferred obligations are reduced, SDG&E's customers are no longer obligated to reimburse SDG&E for them. By virtue of this settlement, more than 13% of the ERCRSA undercollection will be eliminated.
7. Conducting a separate or further proceeding focused solely on the additional five month period from September 1, 2000 to February 7, 2001 would unnecessarily consume valuable resources of the Commission, SDG&E and other parties and would delay, and possibly prevent, the realization of the benefits identified above pertaining to reduction of the ERCRSA undercollection.
8. The disallowance provided for in the Settlement Agreement is $100 million for the period from July 1, 1999 through February 7, 2001. This sum is a large percentage of the disallowance that might have been adopted in this proceeding for the period July 1, 1999 through February 7, 2001, if the Commission had adopted all of ORA's analysis.
1. For purposes of compliance with the statutory requirements implemented by AB 265, the reasonableness review required by Section 332.1(g) requires no more than one "proceeding" to determine the prudence and reasonableness of SDG&E's procurement activities after June 1, 2000.
2. The Settlement Agreement fully resolves all issues associated with the reasonableness of SDG&E's electric procurement activities for the period from July 1, 1999 through February 7, 2001.
3. Approval of the Settlement Agreement complies with Section 332.1(g) of the California Public Utilities Code.
4. Approval of the Settlement Agreement is consistent with D.00-09-040 (September 7, 2000). That decision was issued to implement various provisions of AB 265, including California Public Utilities Code section 332.1(g).
5. A disallowance of $100 million for the period July 1, 1999 to February 7, 2001, is within the range of outcomes the Commission could have found was reasonable based on record evidence had this matter not been settled.
6. The Settlement Agreement is reasonable in light of the strength of each party's litigation position, the risk, expense, and complexity of litigation, and the settlement amount upon which the parties agreed.
7. The Settlement Agreement is reasonable in light of the whole record, consistent with law, consistent with prior Commission decisions, and in the public interest.
8. As provided in Rule 51.8 of the Commission's Rules of Practice and Procedure, and consistent with the terms of the Settlement Agreement itself, the adoption of the Settlement Agreement is binding on all parties but does not constitute approval of, or precedent regarding, any principle or issue in the proceeding or in any future proceeding.
9. The decision should be effective today so that the settlement may be implemented expeditiously.
IT IS ORDERED that:
1. The August 31, 2001 motion of San Diego Gas & Electric Company (SDG&E) and the Office of Ratepayer Advocates (ORA) for approval of the Settlement Agreement dated August 30, 2001, is granted and that Settlement Agreement is approved without modification.
2. The record period for the portion of this proceeding addressing SDG&E's electric procurement practices is July 1, 1999 through February 7, 2001.
3. SDG&E shall reduce the undercollection balance in the Energy Rate Ceiling Revenue Shortfall Account by the sum of $100 million dollars as a full, complete, and final resolution of all issues associated with SDG&E's electric procurement practices over the period of time between July 1, 1999 and February 7, 2001.
4. The portion of Application 00-10-008 addressing SDG&E's electric procurement practices, as expanded to include the period of time through February 7, 2001, is fully and finally resolved, and all ORA proposals for disallowances, audits, and other penalties are denied with prejudice.
5. This decision approving the Settlement Agreement is a final and binding resolution as to the reasonableness and prudence of SDG&E's electric procurement practices from July 1, 1999 through February 7, 2001 for the purpose of any future year Annual Transition Cost Proceeding or other Commission proceedings pertaining to SDG&E's electric procurement activities.
This order is effective today.
Dated , at San Francisco, California.
