ALJ/MLC/tcg Mailed 12/24/2002

Decision 02-12-066 December 19, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of San Diego Gas & Electric Company (U 902-E) for a Certificate Of Public Convenience & Necessity Valley-Rainbow 500kV Inter-Connect Project.

Application 01-03-036 (Filed March 23, 2001)

OPINION ON THE NEED FOR ADDITIONAL
TRANSMISSION CAPACITY TO SERVE THE
SAN DIEGO GAS & ELECTRIC COMPANY SERVICE TERRITORY

TABLE OF CONTENTS

Title Page

OPINION ON THE NEED FOR ADDITIONAL TRANSMISSION
CAPACITY TO SERVE THE SAN DIEGO GAS & ELECTRIC
COMPANY SERVICE TERRITORY 1

1. Summary 2

2. Project Description 3

3. Procedural Background 4

4. Request 5

5. Jurisdictional Issues 5

6. Reliability Need 7

6.1. What is the appropriate time horizon over which to
assess the need for SDG&E's Proposed Project? 9

6.1.0. Discussion 14

6.2. What is a reasonable supply forecast? 17

6.2.0. Will existing in-basin generating units remain on line? 20

6.2.0.1. RAMCO 20

6.2.0.2. Navy 22

6.2.0.3. Retirements of Encina and South Bay 23

6.2.0.4. Reasonable existing generation assumptions 24

6.2.1. Will new generating resources be built in SDG&E's
service territory? 27

6.2.1.1. Otay Mesa Generating Project 27

6.2.1.2. Palomar 31

6.2.1.3. Additional RAMCO units 32

6.2.1.4. Repowering and New Construction at
Existing Units 33

6.2.1.5. Reasonable new generation assumptions 33

6.2.2. What is the relevant G-1 event under reasonable
existing and new generation assumptions? 35

6.2.3. Will the Path 44 (South-of-SONGS) non-simultaneous import limit remain 2500 MW? 37

6.2.4. Will resources be available from Mexico? 38

6.2.4.1. Directly Connected Resources 38

6.2.4.1.1. AEP Resources-Western Baja 39

6.2.4.1.2. AES/CFE Western Baja 40

TABLE OF CONTENTS

(Continued)

Title Page

6.2.4.2. Exports and Through-Flow Capability 40

6.2.4.3. Conclusion 45

6.3. What is a reasonable demand forecast? 47

6.4. Based on these forecasts, will SDG&E have sufficient
resources to meet its customer demand over the adopted
planning horizon? 51

7. Economic Need 56

7.1. Estimated Project Costs 57

7.2. SDG&E's Economic Analysis 58

7.3. Critiques of SDG&E's Analysis 62

7.4. Discussion 68

8. Other Issues 69

9. Conclusion 70

10. Comments on Proposed Decision 71

11. Assignment of Proceeding 71

Findings of Fact 71

Conclusions of Law 74

ORDER 77

Attachment 1- Table of Acronyms

1.