Conclusions of Law

1. Rule 51 et seq, should be used to review the settlement agreement. The settlement meets the criteria of an uncontested settlement under Rule 51(f) and San Diego Gas & Electric 46 CPUC 2d 538 (1992).

2. If modified as set forth in this order, the settlement between SDG&E and the active parties resolves all issues in this proceeding and, if modified, it is reasonable in light of the whole record, consistent with law, and in the public interest. It should therefore be adopted as set forth in the following order.

3. A 2% limit on changing residential customer revenue allocation is reasonable because it allows the rates to move towards full cost of service while providing some rate-shock insulation.

4. Adoption of the proposed settlement, as modified, creates no precedent for subsequent rate design applications for SDG&E.

5. The Settlement as modified does not contravene or compromise any statutory provision or Commission decision, and is consistent with law.

6. The proceeding should be closed.

ORDER

IT IS ORDERED that:

1. The July 26, 2005 Joint Motion for Adoption of Settlement Agreement by Alliance for Retail Energy Markets, California City-County Street Light Association, California Farm Bureau, City of Chula Vista, City of San Diego, Federal Executive Agencies, Office of Ratepayer Advocates, San Diego Gas & Electric Company (SDG&E), and Utility Consumers' Action Network (UCAN) is granted if modified as set forth herein.

2. SDG&E shall eliminate the Total Rate Adjustment Component from the proposed tariffs and rates by including the rate element in the distribution component of every rate otherwise adopted in the settlement.

3. SDG&E shall include in its application a complete analysis of UCAN's proposal to use duct-firing in a combustion turbine to determine marginal generation capacity costs.

4. SDG&E shall include the use of constant dollars or present value, in all of its analysis in support of the next rate design application.

5. SDG&E shall include a study regarding the correlation of the customer's average and peak demand during peak hours with peak and other high load hours on the system as agreed to and as otherwise described in the settlement as a part of its next rate design application. SDG&E shall also provide detailed work papers for that study to UCAN at the time the application is filed.

6. SDG&E shall file a compliance advice letter with the Commission's Energy Division within 10 days of the effective date of this decision. It shall be served on the service list for this proceeding. The advice letter shall modify its tariffs to implement the rate design as adopted in the settlement and will be effective on January 1, 2006, or the first day of the month following the effective date of this order, subject to Energy Division determining that the revised tariffs are in compliance with this order.

7. This proceeding is closed.

This order is effective today.

Dated __________________, at San Francisco, California.

************ APPEARANCES ************

Edward G. Poole
Attorney At Law
ANDERSON & POOLE
601 CALIFORNIA STREET, SUITE 1300
SAN FRANCISCO CA 94108
(415) 956-6413
epoole@adplaw.com

For: Western Manufactured Housing Community Association

Maurice Brubaker
BRUBAKER & ASSOCIATES, INC.
1215 FERN RIDGE PARKWAY, SUITE 208
ST. LOUIS MO 63141
(314) 275-7007
mbrubaker@consultbai.com

For: Brubaker & Associates, Inc.

Ronald Liebert
Attorney At Law
CALIFORNIA FARM BUREAU FEDERATION
2300 RIVER PLAZA DRIVE
SACRAMENTO CA 95833
(916) 561-5657
rliebert@cfbf.com

For: California Farm Bureau Federation

Regina M. Deangelis
Attorney At Law
CALIFORNIA PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO CA 94102
(415) 355-5530
rmd@cpuc.ca.gov

For: ORA

Fritz Ortlieb
Attorney At Law
CITY OF SAN DIEGO
1200 3RD AVENUE, SUITE 1200
SAN DIEGO CA 92101
(619) 236-6318
fmo@sdcity.sannet.gov

For: City of San Diego

Laurence Chaset
Legal Division
RM. 5131
505 VAN NESS AVE
San Francisco CA 94102
(415) 355-5595
lau@cpuc.ca.gov


Norman J. Furuta
Attorney At Law
DEPARTMENT OF THE NAVY
2001 JUNIPERO SERRA BLVD., SUITE 600
DALY CITY CA 94014-3890
(650) 746-7312
norman.furuta@navy.mil

For: Federal Executive Agencies

Daniel W. Douglass
Attorney At Law
DOUGLASS & LIDDELL
21700 OXNARD STREET, SUITE 1030
WOODLAND HILLS CA 91367
(818) 593-3933
douglass@energyattorney.com

For: Alliance for Retail Energy Markets (AREM)

Douglas K. Kerner
Attorney At Law
ELLISON, SCHNEIDER & HARRIS LLP
2015 H STREET
SACRAMENTO CA 95814
(916) 447-2166
dkk@eslawfirm.com

For: Duke Energy North America

Gregory Heiden
Legal Division
RM. 5039
505 VAN NESS AVE
San Francisco CA 94102
(415) 355-5539
gxh@cpuc.ca.gov


Richard Mccann, Ph.D
M. CUBED
2655 PORTAGE BAY ROAD, SUITE 3
DAVIS CA 95616
(530) 757-6363
rmccann@umich.edu

For: M. Cubed

Randall W. Keen
DAVID L. HUARD
Attorney At Law
MANATT PHELPS & PHILLIPS, LLP
11355 WEST OLYMPIC BLVD.
LOS ANGELES CA 90064
(310) 312-4361
pucservice@manatt.com

For: The CIty of Chula Vista


James M. Brennan
Attorney At Law
MCCRACKEN, BYERS & HAESLOOP, LLP
1528 SO. EL CAMINO REAL, SUITE 306
SAN MATEO CA 94402
(650) 377-4890 X 22
jbrennan@landuselaw.com

For: California City and County Street Light Association CAL-SLA

Kay Davoodi
NAVY UTILITY RATES AND STUDIES OFFICE
1314 HARWOOD STREET SE
WASHINGTON NAVY YARD DC 20374-5018
(202) 685-3319
khojasteh.davoodi@navy.mil

For: Navy Utility Rates and Studies

Gail L. Slocum
PACIFIC GAS AND ELECTRIC COMPANY
77 BEALE STREET
SAN FRANCISCO CA 94105
(415) 973-6583
glsg@pge.com

For: Pacific Gas and Electric

Glen J. Sullivan
MEREDITH ALLEN
Attorney At Law
SEMPRA ENERGY
101 ASH STREET
SAN DIEGO CA 92101
(619) 699-5162
gsullivan@sempra.com

For: San Diego Gas and Electric

Michael Shames
Attorney At Law
UTILITY CONSUMERS' ACTION NETWORK
3100 FIFTH AVENUE, SUITE B
SAN DIEGO CA 92103
(619) 696-6966
mshames@ucan.org

For: UCAN


********** STATE EMPLOYEE ***********


Los Angeles Docket Office
CALIFORNIA PUBLIC UTILITIES COMMISSION
320 W. 4TH STREET, SUITE 500
LOS ANGELES CA 90013
LAdocket@cpuc.ca.gov

Theresa Cho
Executive Division
RM. 5207
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-2682
tcx@cpuc.ca.gov


Dexter E. Khoury
Office of Ratepayer Advocates
RM. 4209
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1200
bsl@cpuc.ca.gov


Donald J. Lafrenz
Energy Division
AREA 4-A
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1063
dlf@cpuc.ca.gov

For: Energy Division

Douglas M. Long
Administrative Law Judge Division
RM. 5023
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-3200
dug@cpuc.ca.gov


Anne W. Premo
Energy Division
770 L STREET, SUITE 1050
Sacramento CA 95814
(916) 324-8683
awp@cpuc.ca.gov

For: Energy Division

(END OF APPENDIX A)

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