Message-ID: <16169655.1075863604299.JavaMail.evans@thyme>
Date: Mon, 28 Aug 2000 11:24:00 -0700 (PDT)
From: mona.petrochko@enron.com
To: douglas.condon@enron.com, james.wood@enron.com, edward.hamb@enron.com, 
	greg.cordell@enron.com, dennis.benevides@enron.com, 
	roger.yang@enron.com, martin.wenzel@enron.com
Subject: SDG&E Emergency Motion for Bilateral Authority-Draft Decision
Cc: west.ga@enron.com, james.steffes@enron.com, harry.kingerski@enron.com, 
	paul.kaufman@enron.com, richard.shapiro@enron.com
Mime-Version: 1.0
Content-Type: text/plain; charset=ANSI_X3.4-1968
Content-Transfer-Encoding: quoted-printable
Bcc: west.ga@enron.com, james.steffes@enron.com, harry.kingerski@enron.com, 
	paul.kaufman@enron.com, richard.shapiro@enron.com
X-From: Mona L Petrochko
X-To: Douglas Condon, James M Wood, Edward Hamb, Greg Cordell, Dennis Benevides, Roger Yang, Martin Wenzel, Tim Belden@ECT, David Parquet@ECT, Robert Badeer@ECT, Karen Denne@Enron
X-cc: West GA, James D Steffes, Harry Kingerski, Paul Kaufman, Richard Shapiro, Mary Hain@Enron
X-bcc: 
X-Folder: \Robert_Badeer_Aug2000\Notes Folders\Notes inbox
X-Origin: Badeer-R
X-FileName: rbadeer.nsf

Attached is a Draft Decision approving SDG&E's Emergency Motion for authori=
ty=20
to enter into bilateral contracts.

The decision directs to enter into bilateral agreements that will expire by=
=20
12/02.  It provides similar reasonableness guidance as provided to SCE=20
(bilateral contracts must be within 5% of actual annual procurement costs).=
 =20

The draft decision rejects SDG&E's request to allocate those contracts to=
=20
residential and small commercial customers.  It rejects SDG&E's request for=
=20
an exemption from the affiliate rules, which would have allowed SDG&E to=20
enter into bilateral agreements with its trading affiliate without posting=
=20
those transactions or providing an opportunity for a bid process.

Because this decision adopts the same principles in the SCE and PG&E=20
Decisions, I give a low probability to changing the decision language. =20
However, if folks would still like us to weigh in on an issue, please let m=
e=20
know asap.  Thanks.

Mona
---------------------- Forwarded by Mona L Petrochko/SFO/EES on 08/28/2000=
=20
03:18 PM ---------------------------


"Daniel Douglass" <douglass@ArterHadden.com> on 08/25/2000 05:26:31 PM
To: <JBarthrop@electric.com>, <mnelson@electric.com>,=20
<rschlanert@electric.com>, <Bruno_Gaillard@enron.com>, <kmagrude@enron.com>=
,=20
<mpetroch@enron.com>, <susan_j_mara@enron.com>, <athomas@newenergy.com>,=20
<Jeff.Hanson@phaser.com>, <anchau@shellus.com>, <andrew.madden@utility.com>=
,=20
<ben.reyes@utility.com>, <chris.king@utility.com>, <david.bayless@utility.c=
om>
cc: =20
Subject: Draft Decision Issued in SDG&E Emergency Motion



ALJ Cooke has issued the attached draft decision with regard to the August =
=20
9, 2000, emergency motion filed by SDG&E to enter into bilateral power =20
contracts.? SDG&E sought similar authority to that granted to Edison  and=
=20
PG&E in D.00-08-023.? The draft decision would grant the motion,  but would=
=20
impose certain conditions different from those requested by the  utility.?=
=20
The differences are summarized below:
?
Background
Under the terms of the  Commission=01,s D.00-08-021, SDG&E is currently=20
authorized to participate  in the PX forward markets for energy services,=
=20
subject to seasonal trading  limits, through the end of the last utility ra=
te=20
freeze.? SDG&E is not  proposing an increase to the limits approved in=20
D.00-08-021 and will treat its  capacity purchases under those limits,=20
although it reserves the right to request  expanded authority in the future=
.?=20
The draft decision also notes that  SDG&E proposes that costs associated=20
with, and gains/losses from these  bilateral contracts should be attributed=
=20
only to small commercial and  residential customers.? It also notes that=20
intervenors focused on four  general areas of concern regarding the specifi=
c=20
authority requested by  SDG&E: duration of contracts, reasonableness=20
standards, request for  exemption from affiliate rules, and ratemaking.
?
Duration of  Contracts
SDG&E requested  authority to enter into bilateral contracts that expire on=
=20
or before December  31, 2005.? The ALJ notes that the Commission recently=
=20
instituted an  investigation into the impact of the functioning of the=20
wholesale electric  market on retail rates in SDG&E=01,s service territory =
and=20
that the OII  will consider whether SDG&E should be removed from that defau=
lt=20
provider  role.? The ALJ states that, "the Commission should not compromise=
 =20
future long-term solutions by affording SDG&E greater purchasing authority =
=20
than is needed to address the current emergency situation.? For this  reaso=
n,=20
we limit SDG&E=01,s authority to what we described in D.00-08-023  as near-=
term=20
bilateral contracting authority, that is, contracts with delivery  occurrin=
g=20
on or before December 31, 2002."
?
Reasonableness  Standards
The draft decision  suggests that the OII provides a forum to establish a=
=20
common framework for all  three utilities for determining the reasonablenes=
s=20
of their bilateral  purchases.? However, in the interim, it adopts the same=
=20
reasonableness  standard for near-term contracts as it did for SCE.? "If th=
e=20
average  price of SDG&E=01,s bilateral transactions, delivered or requiring=
 =20
delivery, over the course of an annual period exceeds the average price of =
=20
SDG&E=01,s corresponding portfolio of transactions, delivered or  requiring=
=20
deliver over the same period, by more than 5%, then the Commission  will=20
initiate a reasonableness review.? Reasonableness reviews, to the  extent=
=20
needed, will take place as part of SDG&E=01,s Annual Transition  Cost=20
Proceeding."
?
Affiliate Rules  Exemption
SDG&E's request to be  exempted from the affiliate rules for any purchases=
=20
from affiliates was  denied.
?
Ratemaking
TURN  urged the Commission to reject SDG&E=01,s request to limit the ratema=
king =20
impacts of the bilateral contracts to its residential and small commercial =
=20
customers, saying that, "the potential risks and benefits should be spread =
=20
among all customers."? The draft decision states that, "we do not  believe =
it=20
prudent to limit the cost exposure for these contracts solely to  residenti=
al=20
and small commercial customers.? This aspect of  SDG&E=01,s motion is denie=
d."
?
Transparency  Considerations
The ALJ orders SDG&E  to disclose all bilateral transactions to the Energy=
=20
Division on a confidential  basis in a monthly report.? The draft decision=
=20
notes that, "WPTF and  ARM argue that additional transparency of bilateral=
=20
transactions is required,  compared to that proposed by SDG&E.? We adopt=20
consistent disclosure  standards for SDG&E bilateral contracts as that=20
adopted in D.00-08-023 for  PG&E and SCE.? This issue may be revisited on a=
=20
going forward basis in  I.00-08-002."
?
Response Time
The normal response time  has been shortened.? Parties to the proceeding ma=
y=20
file comments on the  draft decision no later than noon on September 5,=20
2000.? I suggest that  comments be filed agreeing with the thrust of the=20
decision, but strongly  advocating that SDG&E be required to publicly post=
=20
its transactions, as it  agreed to do in Advice Letter 1234-E, with regard =
to=20
SDG&E's participation  in the Block Forward Market.? In addition, we should=
=20
consider whether to  refight the issue of limiting the ratemaking impacts o=
f=20
the bilateral contracts  to SDG&E's residential and small commercial=20
customers.
?
Comments or  suggestions???
?
Dan

 - ALJ Cooke Draft Decision.doc
