Background

Pursuant to Decision (D.) 97-05-021, SCE will file its avoided cost posting on September 6, 2000. The avoided cost posting is based on the Transition Formula adopted in D.96-12-028 which incorporates various border price indices. According to SCE, Natural Gas Week, the one index that was available at the time the motion was filed, included a price as high as $7.00/MMBtu for gas delivered at Topock. This price represents an increase of $2.50/MMBtu over the posted August gas price. SCE projects that this increased price would increase avoided cost payments to SCE's qualifying facilities by approximately $29 million over the preceding month.

On July 28, 2000, SCE filed a petition to modify D.96-12-028 to revise its Transition Formula. On August 28, 2000, the Office of Ratepayer Advocates (ORA) recommending that the Commission review the border gas indices used in SCE's Transition Formula on an emergency basis. In addition, ORA referenced a complaint filed by this Commission at the Federal Energy Regulatory Commission that seeks recession of certain contracts that the Commission contends have permitted natural gas suppliers and their affiliates to increase prices through the withholding of capacity. On September 1, 2000, the Assigned Administrative Law Judge (ALJ) issued a ruling adding the question of the reliability and validity of the border prices to the issues raised in SCE's petition to modify D.96-12-028. The ALJ's Ruling provides an opportunity for all parties to address the merits of permanent revisions to the Transition Formula.