4. Settlement Agreement Provisions

The primary feature of the settlement is that a pre-deployment funding level of $3.4 million for the period of September 2005 through March 2006 be adopted, found reasonable and recovered by the ratemaking accounts set forth in the July 8, 2005 supplemental filing by the Joint Parties. The Joint Parties also recommend approval of $5.9 million in bridge funding that would be spent only in the event that a Commission decision on SDG&E's proposed AMI Project is delayed past March 2006. There are conditions on what types of activities can be included in the bridge funding and a reporting mechanism to ensure that bridge spending is consistent with the settlement provisions. The implementing tariffs filed on July 8, 2005 describe the types of costs that may be recorded in the memorandum account and the timing by which the balances in the account will be recovered annually.

As part of the settlement, SDG&E commits to hold at least one working group meeting to present a formal pre-deployment activity report and will hold more than one if requested by any party to the settlement. Part of the activity report will review the results of SDG&E's Broadband Over Powerline integration test. Other terms of the settlement commit the parties not to oppose certain actions of the Commission related to coordination, AMI functionality, and open architecture. The settlement explicitly defers consideration of whether SDG&E's proposed AMI system meets the minimum functionality criteria set forth in Commissioner Grueneich's May 9, 2005 Assigned Commissioner's Ruling (ACR).