STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

May 9, 2001

TO: PARTIES OF RECORD IN APPLICATION 00-11-038 ET AL.

Enclosed are the proposed decision of Administrative Law Judge (ALJ) Christine Walwyn and the alternate order of President Loretta Lynch in the rate design phase of this proceeding. These items will be on the Commission's agenda at the May 14, 2001 meeting. The Commission may act then, or it may postpone action until later.

When the Commission acts on the proposed decision or the alternate, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Rule 77.7(f)(9) provides for reduction or waiver of the 30-day period for public review and comment when public necessity requires such reduction. We must balance whether the public necessity of adopting an order outweighs the public interest in having the full 30-day review and comment. We are convinced that these items fall under Rule 77.7(f)(9), and for that reason, we established a shortened period for comments on the proposed decision and the alternate.

Parties to the proceeding may serve comments on the proposed decision and the alternate by 6:00 p.m. on May 10, 2001 by electronic service, followed by formal filing on May 11, 2001. No reply comments will be accepted. Pursuant to Rule 77.3 of the Commission's Rules of Practice and Procedure, opening comments on each document shall not exceed 15 pages. Finally, comments on the proposed decision and the alternate must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest electronic service, hand delivery, overnight mail, or other expeditious method of service.

/s/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:tcg

Attachments

ALJ/CMW/tcg DRAFT 1

5/14/01

Decision PROPOSED DECISION OF ALJ WALWYN (Mailed 5/9/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (E 3338-E) for Authority to Institute a Rate Stabilization Plan with a Rate Increase and End of Rate Freeze Tariffs.	Application 00-11-038 (Filed November 16, 2000)
Emergency Application of Pacific Gas and Electric Company to Adopt a Rate Stabilization Plan. (U 39 E)	Application 00-11-056 (Filed November 22, 2000)
Petition of THE UTILITY REFORM NETWORK for Modification of Resolution E-3527.	Application 00-10-028 (Filed October 17, 2000)

(See Appendix A for List of Appearances.)

TABLE OF CONTENTS

Title Page

INTERIM OPINION REGARDING RATE DESIGN................................... 2

I. Summary 2

II. Background 3

III. Rate Design Principles and Goals 6

A. Equity 7

B. Conservation 9

IV. Revenue Requirement Increase 11

V. Revenue Allocation 16

A. Revenue Allocation Methodology 16

B. Revenue Requirement Shortfalls 22

1. Usage Under 130% of Baseline 22

2. CARE and Medical Baseline Exemption 26

3. Direct Access Customers 28

C. Amortization of Rate Increase as of March 27, 2001 29

VI. Preliminary Matters in Rate Design 31

A. Rate Freeze Constraints 31

B. Agricultural Definition 33

C. Bill Limiters 35

VII. Residential Rate Design 36

A. PG&E's E-8 Schedules 37

VIII. Nonresidential Rate Design 38

A. Tiering 38

B. Non-TOU Schedules 40

C. Time of Use 41

D. "Super Peak" Rate 42

E. County of Los Angeles' Proposal to Cap Rates for
Essential Customers 43

F. Agricultural 43

G. Master Meter Customers 44

H. Streetlight and Traffic Light Schedules 45

I. CIPA's Credit for Interruptible Customers 46

TABLE OF CONTENTS

(Cont'd)

Title Page

IX. Other Issues 46

A. Tracking and Posting Data 46

B. Expedited Installation of RTP Metering Systems 48

C. 10% Rate Discount Associated with Rate Reduction Bonds 49

D. Bill Display 51

E. Bill Insert 52

F. Customer Education 53

X. Next Steps 55

XI. Issuance of the Proposed Decision 56

INTERIM ORDER............................................................................... 73

Appendix A - List of Appearances

Appendix B - Pacific Gas and Electric Proposed Rates

Appendix C - Southern California Edison Proposed Rates

INTERIM OPINION REGARDING RATE DESIGN

I. Summary

This decision adopts a rate design for the three-cent per kilowatt-hour (kWh) rate increase authorized for Southern California Edison Company (Edison) and Pacific Gas and Electric Company (PG&E) in Decision (D.) 01-03-082. That surcharge was adopted on March 27, 2001 to provide the utilities with additional revenues on a going-forward basis in order for those utilities to comply with their statutory duty to provide adequate electric service to their customers. Pursuant to Assembly Bill (AB) 1X, residential use below 130% of baseline is exempt from this increase. In addition, we exempt all customers who qualify for the California Alternative Rates for Energy (CARE) and Medical Baseline programs from paying the surcharge.¹

In today's decision, we address the steps for allocating the rate increase to customer classes. First, we determine the revenue requirement, which is the starting point for revenue allocation and rate design. We then allocate the revenue increase among the customer groups. Finally, we design rates within the customer groups to collect the revenue requirement. We allocate revenue and design rates in a manner that is consistent with our overall goals of conservation and equity.

The rate design we adopt allows rates to be effective as of June 1, 2001. One important goal of this rate design is to provide both customers and this Commission the market information and technical tools (RTP metering systems) to actively respond to the wholesale market costs California Department of Water Resources (CDWR) could face this summer. We also set in place a framework that allows us to make midcourse corrections this summer.