IV. Relationship of this Proceeding to the DWR Revenue Requirement Redetermination

Parties express differing views concerning the scope of this phase of the proceeding and how it relates to the determination of the overall DWR revenue requirement for 2003 in A.00-11-038 et al., and to the finalization of the total revenue requirement for DA load applicable to the 2001-2002 undercollection and to the 2003 prospective revenue requirement for DA CRS elements. PG&E, in particular, views this phase as forum to adopt final values for those DA CRS elements. Accordingly, PG&E recommends that a final 2003 prospective DA CRS revenue requirement be determined in this phase of the proceeding using the same DWR analysis used to develop the DWR revenue requirement in A.00-11-038. PG&E calculates its DA CRS amount to be $381 million, and proposes that this amount be used to set its DA CRS obligation in this proceeding. PG&E also proposes adoption of CTC elements.

Other parties disagree that this phase of the proceeding is intended to adopt final DA CRS values, but rather view that process as subject to a separate phase to be coordinated with the DWR proceeding in A.00-11-038. Parties object to the proposed DA CRS values offered by PG&E and argue that further scrutiny of its proposal is warranted before any final charges are adopted.

We have previously stated that the DA CRS total obligation should be determined using consistent assumptions with the overall DWR revenue requirement in order to avoid a mismatch between the allocation of costs between bundled and DA customers. Yet, this phase of the proceeding is not focused on determining the precise amount of the total DA CRS obligation, but rather, on the appropriate cap to impose. These are two separate and distinct steps in the process. For purposes of assessing the appropriate cap, the most reliable and accurate estimates of relevant resource assumptions over time are more important than exact tracking with assumptions underlying the total DWR revenue requirement as determined in A.00-11-038. The appropriate time to focus on consistent matching of resource assumptions between the DA CRS and DWR revenue requirement is in the phase of the proceeding where we actually determine the total DA CRS obligation for the 2001-2003 period in parallel with the total DWR revenue requirements determined in A.00-11-038. We shall address, quantify, and implement the total DA CRS DWR obligation for the period from 2001 through 2003 utilizing consistent resource assumptions with the DWR revenue requirements determination in A.00-11-038. We direct the ALJs in both of these proceedings to coordinate, as required, to implement this process expeditiously.

We affirm that this phase of the proceeding is focused on setting the DA CRS cap. Thus, we use the data presented in this proceeding to assess longer term conditions as a basis to set an appropriate DA CRS cap. The finalization of the actual DWR and URG revenue requirement elements is a separate exercise that must be closely coordinated with the DWR proceeding in A.00-11-038. A separate determination is also required of the actual recorded undercollection applicable to the DA CRS for the historic period from September 20, 2001 through December 31, 2002.

While DWR used its base case assumptions from its previous DWR revenue requirements filing as a point of departure for modeling scenarios, we are not bound by those assumptions for our purpose here which is a multi-year assessment of DA CRS based upon the best information available. Accordingly, we do not adopt final figures for DWR or CTC revenue requirements for any of the utilities in this phase of the proceeding. We do establish a specific process, however, as outlined above to assure that final figures are adopted on a timely basis in coordination with A.00-11-038 et al.