COM/CXW/mzr ALTERNATE DRAFT Agenda ID #1151

(Alt. To Agenda ID #1147)

Decision ALTERNATE DRAFT DECISION OF COMMISSIONER WOOD (Mailed 9/24/2002)

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)

O P I N I O N

TABLE OF CONTENTS

Title Page

O P I N I O N 1

I. Introduction 2

II. Background 5

III. Procedural Summary 7

IV. Scope of Costs Subject to CRS 8

V. Legal Authority for Imposing Cost Responsibility Surcharges 10

A. DWR-Related Costs 11

B. Non-DWR Related Costs 12

VI. Standard for Determining Ratepayer Indifference 17

A. Parties' Positions 17

B. Discussion 22

VII. Modeling of DA Cost Responsibility Surcharges for DWR Costs 25

A. Role of Modeling in Analyzing DA Cost Shifting 25

B. Summary of Proposed CRS Based on Modeled Results 28

C. Merits of Multi-Year Modeling Versus Annual Forecasting 31

1. Parties' Positions 31

2. Discussion 34

D. Verification of Computer Models 36

VIII. Structure of Costs Comprising DA CRS 37

IX. "Historic Costs" 38

A. Parties' Positions 38

1. Separate Levelized Charge or Bond Charge 38

2. Claimed Double-Counting of Bond Charge 44

3. Discussion 47

X. DA Customers Cut-Off Date for Applicablility of the Bond Charge 53

A. Parties' Positions 53

B. Discussion 55

XI. Criteria for Determining July 1 Cut-off Date for Applicability of DA-CRS 58

A. Parties' Positions 58

B. Discussion 59

XII. Ongoing DWR Operating and Portfolio Costs 63

A. Overview 63

XIII. Modeling of Ongoing DWR "Indifference" Costs 65

A. Areas of Dispute Relating to Forecasts 67

1. Assumptions Regarding New Generation Additions 67

2. Assumptions Regarding Market Price for Surplus Power Sales 68

B. Categories of Costs to be Excluded to Measure "Bundled Ratepayer Indifference 72

1. Exclusion of 130% of Baseline Quantities 72

2. Long-Term Contract Only Versus Incremental Short-Term Costs 74

3. Administrative & General Costs 77

C. Utility-Specific versus Statewide Surcharges 78

1. Parties' Positions 78

2. Discussion 80

XIV. Proposals for DA CRS Covering Costs Other than DWR Procurement 80

A. Introduction 80

B. Parties' Positions 81

1. PG&E Proposal 81

2. SCE Proposal 84

3. SDG&E Proposal 87

4. ORA 92

5. CMTA 93

6. CLECA 94

C. Discussion 95

XV. CRS Mitigation: Capping or Levelizing CRS 97

A. Legal And Policy Considerations 98

B. Arguments For And Against A Cap 101

C. Issues For Further Consideration In Establishing A DA CRS Cap 109

XVI. Other Issues 113

A. Implementation of DA CRS in Coordination with Companion Proceedings 113

1. Remittance of Funds to DWR 115

2. Revenue Allocation and Rate Design of Non-DWR Costs 116

B. Process for Updating the DA CRS/ True ups and Balancing Account Treatment 119

C. Billing and Tariff Implementation 126

D. TURN's Proposal to Include the Costs of the Interruptible Program in the Distribution Component of Rates 126

E. Negative CTC 127

F. Rescission of the One Cent Surcharge from D.01-01-018 as Applicable to Direct Access Customers 129

G. PG&E's WAPA Contract 132

H. Additions to DA List 134

XVII. Rehearing and Judicial Review 135

Findings of Fact 135

Conclusions of Law 140

ORDER 146

APPENDIX A - Summary of Parties' Proposals Concerning Direct Access Cost Responsibility Surcharge Cost Elements for 2003

APPENDIX B - Modeling Scenarios Performed by Navigant Consulting, Inc.

APPENDIX C - PG&E Calculation of DA CRS (Using Navigant Model)

APPENDIX D - SDG&E Calculation of DA CRS (Using Navigant Model)

APPENDIX E - CLECA Calculation of DA CRS (Using Henwood Model)

Table 1- Total Utility Resource Versus DWR-Only Basis

Table 2- Total Utility Resource Basis by Individual Utility

APPENDIX F - List of Inputs and Calculations for Computing DA CRS

APPENDIX G - List of Appearances

I.