COM/HMD/LLK/tcg ALTERNATE DRAFT Agenda ID #1274

Alternate Order to

Agenda ID #1272

Decision ALTERNATE PROPOSED DECISION OF COMMISSIONER DUQUE (Mailed 10/21/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of San Diego Gas & Electric Company (U 902-E) for a Certificate Of Public Convenience & Necessity Valley-Rainbow 500kV Inter-Connect Project.

Application 01-03-036 (Filed March 23, 2001)

OPINION ON THE NEED FOR ADDITIONAL
TRANSMISSION CAPACITY TO SERVE THE
SAN DIEGO GAS & ELECTRIC COMPANY SERVICE TERRITORY

TABLE OF CONTENTS

Title Page

OPINION ON THE NEED FOR ADDITIONAL TRANSMISSION
CAPACITY TO SERVE THE SAN DIEGO GAS & ELECTRIC
COMPANY SERVICE TERRITORY 1

1. Summary 2

2. Project Description 3

3. Procedural Background 4

4. Request 5

5. Jurisdictional Issues 5

6. Reliability Need 7

6.1. What is the appropriate time horizon over which to
assess the need for SDG&E's Proposed Project? 9

6.1.0. Discussion 14

6.2. What is a reasonable supply forecast? 17

6.2.0. Will existing in-basin generating units remain on line? 20

6.2.0.1. RAMCO 20

6.2.0.2. Navy 22

6.2.0.3. Retirements of Encina and South Bay 24

6.2.0.4. Reasonable existing generation assumptions 24

6.2.1. Will new generating resources be built in SDG&E's
service territory? 26

6.2.1.1. Otay Mesa Generating Project 27

6.2.1.2. Palomar 31

6.2.1.3. Additional RAMCO units 32

6.2.1.4. Repowering and New Construction at Existing
Units 33

6.2.1.5. Reasonable new generation assumptions 33

6.2.2. What is the relevant G-1 event under reasonable
existing and new generation assumptions? 35

6.2.3. Will the Path 44 (South-of-SONGS) non-simultaneous import limit remain 2500 MW? 36

6.2.4. Will resources be available from Mexico? 36

6.2.4.1. Directly Connected Resources 37

6.2.4.1.1. AEP Resources-Western Baja 38

6.2.4.1.2. AES/CFE Western Baja 39

6.2.4.2. Exports and Through-Flow Capability 39

6.2.4.3. Conclusion 44

TABLE OF CONTENTS

Title Page

6.3. What is a reasonable demand forecast? 46

6.4. Based on these forecasts, will SDG&E have sufficient
resources to meet its customer demand over the adopted
planning horizon? 50

7. Economic Need 51

7.1. Estimated Project Costs 52

7.2. SDG&E's Economic Analysis 53

7.3. Critiques of SDG&E's Analysis 57

7.4. Discussion 63

8. Other Issues 64

9. Conclusion 65

10. Comments on Alternate Proposed Decision 65

11. Assignment of Proceeding 66

Findings of Fact 66

Conclusions of Law 68

ORDER 71

Attachment 1 - Table of Acronyms

1.