ALJ/JSW/sid Mailed 12/23/2002

Decision 02-12-071 December 19, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for Expedited Approval of Servicing Agreement between State of California Department of Water Resources and Southern California Edison Company Pursuant to Chapter 4 of the Statutes of 2001 (Assembly Bill 1 of the First 2000-2002 Extraordinary Session).

Application 01-06-044 (Filed June 25, 2001)

OPINION APPROVING THE 2003 SERVICING ORDER CONCERNING SOUTHERN CALIFORNIA EDISON COMPANY AND THE CALIFORNIA DEPARTMENT OF WATER RESOURCES

Summary

On October 8, 2002, the California Department of Water Resources (DWR) submitted to this Commission a memorandum and proposed modifications to the "First Amended and Restated Servicing Agreement" (Amended Servicing Agreement) between DWR and Southern California Edison Company (SCE).¹ DWR's submission was made in response to D.02-09-053 (the "Contract Allocation Decision"), which directed DWR and SCE to negotiate appropriate modifications to the Amended Servicing Agreement as a result of the allocation of energy from, and operational responsibility for, DWR's electricity contracts to SCE and the other two large electric utilities.

Today's decision approves a modified version of DWR's proposed modifications, which we have labeled as the "2003 Servicing Order Concerning State of California Department of Water Resources And Southern California Edison Company" (Servicing Order). Because the changes that DWR proposed, and that we here approve with modifications, were not agreed to by SCE, we are constrained to issue a Servicing Order rather than approve a Servicing Agreement. Appendix A of this decision contains a marked version of the revisions to the Servicing Order that we approve today. SCE is ordered to comply with the terms and conditions of the Servicing Order. The Servicing Order sets forth the terms and conditions under which SCE will provide the transmission and distribution of DWR-purchased electricity, as well as billing, collection, and related services on behalf of DWR. The Servicing Order also addresses DWR's compensation to SCE for providing those services.

Today's Servicing Order is needed because DWR and SCE have been unable to negotiate a mutually agreeable servicing arrangement. Due to the upcoming date when SCE is to assume operational control of the DWR contracts allocated to it, a Servicing Order needs to be put into place prior to year's end.