Comments on Draft Decision

The draft decision of the Administrative Law Judge (ALJ) in this matter was mailed to the parties in accordance with Pub. Util. Code § 311 (g) (1) and Rule 77.7 of the Rules of Practice and Procedure. SCE filed comments on November 12, 2003. DWR submitted a memorandum commenting on the Draft Decision on November 12, 2003.

With one exception, SCE's comments restate arguments already presented during the proceeding and we decline to make the requested modifications for the reasons already articulated in this decision. The one new argument SCE raises concerns the purchase of residual net short supply and the sale of residual net long capacity. SCE argues that by including the purchase of residual net short supply and the sale of residual net long capacity within the scope of economic dispatch activities subject to SOC #4, while declaring that the least cost dispatch standard is part of the utility's procurement plan, the Draft Decision creates ambiguity regarding the scope of the disallowance cap adopted in D.02-12-074 and D.03-06-067. SCE argues that if the purchase of residual net short supply and the sale of residual net long capacity are to be construed as economic dispatch activities under SOC #4, the Commission should affirm that the purchase of residual net short and sale of residual net long are subject to the disallowance cap under D.03-06-067.

SCE's argument is without merit. In D.03-06-067, we found that while SOC #4 review (and the associated disallowance cap) focuses on utility decisions to dispatch DWR-IOU supply resources and transact in the market, the type of products purchased or sold, transaction procedures followed, and the contract's terms and price will be reviewed in the quarterly compliance Advice Letter filings consistent with D.02-10-062, D.02-12-069, and D.02-12-074. In other words, the prudence of the utility's decisions to dispatch resources and execute market transactions is part of the review under SOC #4, while the transaction procedures followed, and the type of products purchased and sold, fall under the approved procurement plan and are not covered by SOC #4 or the disallowance cap.

In response to DWR's comments we make a minor clarification to Exhibit A, Section III.C to ensure a consistent policy among the three IOUs with respect to surplus sales.