STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

July 26, 2001 6

8/2/2001

TO: PARTIES OF RECORD IN RULEMAKING 99-11-022

This is the draft decision of Commissioner Loretta M. Lynch. It will be on the Commission's agenda at the meeting on August 2, 2001. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, 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.

Pursuant to Rule 77.7(f)(9), comments on the draft decision must be filed by July 31, 2001 and no reply comments will be accepted.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including Commissioner Lynch at gig@cpuc.ca.gov. Finally, comments must be served separately on the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

Very truly yours,

/s/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:tcg

COM/LYN/tcg 6

8/2/01

Decision DRAFT DECISION OF COMMISSIONER LYNCH (Mailed 7/26/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking into Implementation of Public Utilities Code Section 390.

Rulemaking 99-11-022 (Filed November 18, 1999)

OPINION

Summary

In this decision the Commission approves as reasonable contract amendments proposed by Southern California Edison Company (SCE) to its contracts with qualifying facilities (QFs) regarding incentive payments for excess generation. The Commission believes that the terms and conditions contained in those amendments taken together are reasonable. SCE will be allowed to recover the costs it incurs under these contract amendments, subject to continued Commission review regarding the utility's future administration of those contracts.