Summary of Standards Adopted in D.00-08-023 and D.00-09-075

The Commission granted the three utilities authority to enter into bilateral contracts that expire on or before December 31, 2005, subject to previously adopted limits applicable to forward energy products, including capacity products. The decisions articulated the circumstances under which the Commission would conduct reasonableness review of SCE and SDG&E near-term (power delivered through December 31, 2002) bilateral contracts. Specifically, if the average price of SCE's or SDG&E's bilateral forward transactions, delivered or requiring delivery over the course of an annual period, exceeds the average price of SCE's or SDG&E's remaining portfolio of transactions, delivered or requiring delivery over the same period, by more than 5%, then the Commission will initiate a reasonableness review. The decisions imply but do not explicitly state that such transactions that are less than or equal to the 5% of average price ceiling are reasonable. A finding of reasonableness regarding such transactions would come in the context of a future proceeding. D.00-08-023 adopted an approach for developing, prospectively, a range of reasonable prices for PG&E near-term and "interim term" bilateral forward contracts. The decision implied that contracts with prices outside the predefined range would be subject to reasonableness review. D.00-08-023 provided a pre-approval process for SCE medium-term contracts (delivery after December 31, 2002). The pre-approval process requires SCE to file an advice letter that justifies the contract.