X. Next Steps

As discussed above, we are interested in implementing a real time pricing (RTP) program as soon as the technical impediments can be resolved. The technical impediments are (1) any delays the CEC experiences in implementing its $35 million SB1X 5 authorized program to install interval meters for all customers of PG&E, Edison, and SDG&E who have a connected load of 200kW or greater; (2) delays caused by the time necessary for PG&E and Edison to make the necessary changes to their billing systems; and (3) posting of real time prices by the ISO for the day ahead or spot market.

The proposals presented by CEC and Dr. Borenstein at hearings were general in nature, did not include specific details necessary for implementation, and were based on the premise that the technical impediments listed above posed an effective barrier to implementing actual programs by June 1, 2001. The proposal presented by Enron contained more specific information and addressed the lack of ISO posted price information by using Dow Jones electricity price indices as its marginal price signal.

We will proceed expeditiously to develop and adopt a voluntary RTP that will be available to customers when their interval meters are installed. We will direct Energy Division to work closely with PG&E and Edison on their billing system constraints and the manual billing procedures that can be done for customers until the system changes are complete.

Our RTP process will begin with a workshop facilitated by Energy Division on May 21, 2001 and we anticipate adopting a final program later this summer.

We are convinced that a comprehensive review of PG&E's and Edison's rate schedules and rate design should be undertaken when the Commission and interested parties have sufficient data and the time and resources necessary to thoroughly review the issues. We plan to embark on this process soon so that a comprehensive, rigorous review of rate design will be undertaken in early 2002.

We recognize that we may need to quickly make a mid-course correction this summer and modify the rate design within each customer class to provide more pronounced peak period price signals, and possibly collect a higher energy surcharge, if CDWR provides information on its energy purchases that require this action. If we determine that a mid-course correction is needed, we will afford notice and provide all parties the opportunity to be heard on an expedited schedule.