Conclusions of Law

1. Section 360.5 mandates that we determine the amount of the CPA which is allocable to power sold by DWR. That allocation must be paid by the utilities to DWR upon receipt of revenues from retail end users.

2. Contracts for and purchases of power by DWR are per se reasonable.

3. Under Section 80134(b), DWR will notify this Commission of its revenue requirement and we must ensure its receipt.

4. Water Code Section 80114 means that this net short stream of income is totally within the control of DWR, is not subject to any prudency review by this Commission, must be paid to DWR and is therefore irrevocably DWR's money.

5. The Commission must facilitate DWR's purchases of power so it may carry out its responsibilities under AB X1. Therefore, we believe it appropriate to provide these assurances.

6. DWR may recover, and the Commission shall approve and impose, either as part of the CPA or as additional rates, rates sufficient to enable DWR to recover its revenue requirements and the provisions of this sentence shall constitute an agreement within the meaning of Section 80110.

7. We shall stay action on implementation of the suspension of direct access under Water Code Section 80110 until further order.

8. Due to the need for DWR to enter into contracts pursuant to AB X1, we conclude that the public interest in providing certainty about our implementation of certain aspects of AB X1 outweighs the interest in allowing a full comment period; therefore, we shall reduce this period.

INTERIM ORDER

IT IS ORDERED that:

1. DWR may recover, and the Commission shall approve and impose, either as part of the CPA or as additional rates, rates sufficient to enable DWR to recover its revenue requirements and the provisions of this sentence shall constitute an agreement within the meaning of Section 80110.

2. Implementation of Water Code Section 80110's suspension of direct access shall be stayed pending further order.

This order is effective today.

Dated _____________________ at San Francisco, California.

ATTACHMENT A

[Letterhead of Department of Water Resources]