ALJ/TRP/sid DRAFT Agenda ID #1722

Ratesetting

3/13/2003 H-9

Decision PROPOSED DECISION OF ALJ PULSIFER (Mailed 1/28/2003)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding the Implementation of the Suspension of Direct Access Pursuant to Assembly Bill 1X and Decision 01-09-060.

Rulemaking 02-01-011 (Filed January 9, 2002)

(See Decision 02-11-022 for a list of appearances.)

OPINION ADOPTING COST RESPONSIBILITY

SURCHARGE MECHANISMS FOR

CUSTOMER GENERATION DEPARTING LOAD

TABLE OF CONTENTS

Title Page

OPINION ADOPTING COST RESPONSIBILITY SURCHARGE MECHANISMS FOR CUSTOMER GENERATION DEPARTING LOAD 2

I. Introduction 2

II. Procedural Summary 6

III. Standard for Considering Settlements 9

IV. Legal Authority for Imposing Cost Responsibility Surcharges 13

V. Overview of Parties' Positions 16

A. Pre-Settlement Positions 16

B. The Settlement Agreement 18

VI. Review of Specific Provisions of the Settlement Agreement 20

A. Recovery of DWR Bond Charges 20

1. Background 20

2. Parties' Positions Prior to the Settlement 22

3. Proposed Settlement Treatment 24

4. Parties' Positions in Opposition to the Settlement 26

5. Discussion 27

a) Consideration of Incentives Favoring Customer Generation 33

B. DWR Ongoing Power Costs 35

1. Positions of Parties Prior to the Settlement 35

2. Position of Parties to the Settlement Agreement 37

3. Comments on the Settlement 38

a) Position of ORA 38

b) Position of Parties Representing Customer
Generation Interests 41

C. Position of SDG&E and ORA 45

1. Discussion 45

a) Prevention of Cost Shifting 46

b) Incentives to Promote Alternative Generation 48

c) Rules for Administering the MW Cap 53

D. SCE'S Historical Procurement Charge 55

1. Parties' Positions - Pre-Settlement 55

2. Proposed Settlement Treatment 56

3. Discussion 57

E. Ongoing Transition Costs 57

1. Background 57

2. Parties' Positions - Pre-Settlement 58

3. Proposed Settlement Treatment 60

4. Discussion 61

F. Miscellaneous issues 64

1. Definition of Customer Generation and Departing Load 64

2. Biogas Digesters Exemptions 66

3. Implementation of Surcharges on Net Metering Customers 67

4. Tariff Filing Implementation 68

VII. Rehearing and Judicial Review 68

VIII. Comments on the ALJ Proposed Decision 68

IX. Assignment of Proceeding 69

Findings of Fact 69

Conclusions of Law 71

ORDER 74

ATTACHMENT A - Settlement Agreement

I.

OPINION ADOPTING COST RESPONSIBILITY

SURCHARGE MECHANISMS FOR

CUSTOMER GENERATION DEPARTING LOAD