COM/MP1/jf2/acb ALTERNATE DRAFT Agenda ID #3125

Ratesetting

1/8/04

Decision DRAFT ALTERNATE DECISION OF PRESIDENT PEEVEY

(Mailed 12/24/03)

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)
William Ahern, Janet Beautz (for Santa Cruz County Board of Supervisors), Charlie Betcher, Robert J. Boileau, William Burns, Alvin Colley, James Crettol, Michael Gallo, Dave Hennessy, Dennis Herrera, Nettie Hoge, Walter Johnson, Fred Keeley, Reggie Knox, William Knox, Bruce Livingston, Elizabeth Martin, Barbara McIver, Robert Meacher, Deidra O'Merde, Elizabeth Sholes, Mary Frances Smith, Ladan Sobhani, Peter Van Zant, Mary Ann Woomer, and Carl Zichella, Complainants, vs. Pacific Gas and Electric Company, Defendant.	Case 02-02-027 (Filed February 27, 2002)
Application of PACIFIC GAS AND ELECTRIC COMPANY for Review and Recovery of Costs Recorded in the Electric Restructuring Costs Account (ERCA) for 1999 and Forecast for 2000 and 2001. (U 39 E)	Application 00-07-013 (Filed July 11,2000)

OPINION REGARDING END OF RATE CONTROL PERIOD

AND VALUATION OF GENERATION-RELATED ASSETS

TABLE OF CONTENTS

Title Page Title Page

OPINION REGARDING END OF RATE CONTROL PERIOD 1

AND VALUATION OF GENERATION-RELATED ASSETS 1

1. Summary 2

2. Background 2

2.1. Rate Controls and Energy Crisis 2

2.2. Rehearing on End of Rate Controls and Positions of Parties 6

2.3. Valuation of Generation Assets and Positions of Parties 8

3. Discussion 9

3.1. End of Transition and Return to Regulation with AB 6X 9

3.2. Rate Controls 11

3.3. Other Possible Dates 13

3.3.1. March 31, 2000 14

3.3.2. January 17, 2001 16

3.3.3. February 1, 2001 17

3.3.4. March 31, 2002 21

4. Close Proceeding 21

5. Comments on Draft Alternate Decision 23

6. Assignment of Proceeding 23

Findings of Fact 23

Conclusions of Law 25

ORDER 26

OPINION REGARDING END OF RATE CONTROL PERIOD

AND VALUATION OF GENERATION-RELATED ASSETS

1. Summary

Assembly Bill (AB) 1890, enacted in 1996, set electricity rates at specific levels until the earlier of March 31, 2002, or when certain events occurred. In March 2001, we found that the conditions to permit rate adjustments under AB 1890 in advance of March 31, 2002 had not been met. (Decision (D.) 01-03-082.) In January 2002, we granted limited rehearing on that issue. (D.02-01-001.)

We now find that the rate controls pursuant to AB 1890 ended on January 18, 2001, and that it is unnecessary to perform valuation of utility retained generation assets in identifying this date. All issues that must be decided in this rehearing are now resolved, and the rehearing portion of this proceeding is closed.