
Date: Wed, 23 May 2001 03:28:00 -0700 (PDT)
From: james.steffes@enron.com
To: jeff.dasovich@enron.com, susan.mara@enron.com, harry.kingerski@enron.com,
sandra.mccubbin@enron.com, jennifer.thome@enron.com
Subject: What Did the CPUC Mean by Not Charging DA with the 3c/kwh
Surcharge?
Cc: richard.shapiro@enron.com
Bcc: richard.shapiro@enron.com

Guys and Gals --

Commercial wants our opinion (in fact they want us to contact the CPUC and
legislative members) to gauge the "true" meaning of the DA bypass of the
3c/kwh Surcharge.  This question basically has arisen because there is a
customer that we may not re-DASR if the Surcharge bypass extends in
perpetuity (or if at least is there a Window of Opportunity that keeps
customers from paying).  Put in other words, would anyone give us a "free
pass" if we move load to DA right now and promise to keep them there with no
ability to return to electric utility service?

My current analysis looks something like this --

The term "Surcharge" is only applicable until the end of the AB1890 rate
freeze (which will end no later than March.1.02 and may end earlier if (a)
federal court finds in PG&E/SCE favor or (b) California legislature mandates
an earlier end-date.  Surcharge is a "term of art" to get around the problems
of the AB1890 rate freeze.
At the end of the AB1890 rate freeze, it is my understanding that the CPUC
will modify fully the rate structure and level to ensure full cost recovery
on a going forward basis (therefore Utility Retained Generation, QF expense,
CDWR current expenses (both energy purchase and financing costs will be
included).
Other outstanding costs will include (1) Utility Undercollection from May.00
until when no additional CA-ISO costs are applied) and (2) CDWR costs
beginning Jan.17.01 until the end of AB1890 rate freeze new rates.
Understanding how these costs will be recovered and by whom will most likely
(70%) be decided by the Legislature with some decision-making by the CPUC.
Utility Undercollection Bypass - 25%
CDWR Jan.17.01 thru AB1890 end Bypass - 80% for people who never were on
Utility Service, 10% for people who used Utility Service post Jan.17.01
CDWR Net Unavoidable Bypass - 10% for people who used Utility Service post
Jan.17.01, 80% for others.

LEGISLATION IMPACTING THIS DECISION

There are three key direct access bills being considered (the Bowen bill -
SB2x27, the Kelley bill - AB2x42, and the Battin bill - SB2x??).

The Bowen bill would remove the DA suspension authority granted in AB1x1 and
replace it with the following (1) if a customer has not bought from an
electric utility on or after Jan.17.01 there are no charges [except there may
be an entrance fee to use the electric utility going forward] and (2) if a
customer wants to switch from an electric utility to an ESP they must pay "to
the department any uncollected amounts equivalent to the department's net
unavoidable cost of power procurement, including any financing costs,
attributable to that customer" to ensure the satisfaction of any power
purchase obligation or bond obligation to serve "that customer".  The
recovery period shall be coincident with the terms of bonds issued to finance
the purchases.  The CPUC has 90 days from the effective date to notify
customers of their obligations.

The Kelley bill would remove the DA suspension authority granted in AB1x1 and
replace it with the following (1) if a customer has not bought from an
electric utility on or after Jan.17.01 there are no charges, (2) every
customer is allowed to buy from an ESP a % of their load equal to the amount
served by Utility Retained Generation (not CDWR purchases) with no charges,
(3) after the effective date, any customer that buys from the electric
utility and wants to switch must pay "to ensure satisfaction of any power
purchase obligation or bond obligation incurred by the department" with the
following constraints - (a) for res and small commercial customers, if DA
load is less than load growth or (b) to self gen customers, if the customer
has given 180 days prior notification or (c) if the customer has given DWR 12
months' advance written notice (then only a fee equal to 12 months
unavoidable costs).  The CPUC has 30 days from the effective date to notify
customers of their obligations.

The Battin bill would ... still reviewing

CPUC DECISIONS IMPACTING THIS

May 5 Order - DA doesn't pay current DWR expenses.  Good for bypass of these
costs.




