FW: IMPORTANT ! : Motion of San Diego Gas & Electric Company (U ,
 FYI.  We should discuss.
=20
Best,
Jeff
-----Original Message-----
From: Dan Douglass [mailto:douglass@energyattorney.com]
Sent: Saturday, August 25, 2001 2:14 PM
To: Vicki Sandler; Tamara Johnson; Mara, Susan; Steve Huhman; Roger Pelote;=
 Rob Nichol; Randy Hickok; Nam Nguyen; Jim Crossen; Dasovich, Jeff; Janie M=
ollon; Jack Pigott; Greg Blue; George Vaughn; Gary Ackerman; Ed Cazalet; De=
nice Cazalet Purdum; Curtis Kebler; Curt Hatton; Corby Gardiner; Charles Mi=
essner; Carolyn Baker; Bill Ross; Karen Shea; Max Bulk
Subject: IMPORTANT ! : Motion of San Diego Gas & Electric Company (U 902-E)=
 for Adoption of an Electric Procurement Cost Recovery Mechanism and for Or=
der Shortening Time


Yesterday, SDG&E filed a motion for adoption of an electric procurement cos=
t recovery mechanism and for an order shortening time for parties to file c=
omments on the mechanism.  The attached email from SDG&E contains the motio=
n, an executive summary, and a detailed summary of  their proposals and rec=
ommendations governing procurement of the net short energy requirements for=
 SDG&E's customers.  The utility requests a 15-day comment period, which me=
ans comments would have to be filed by September 10 (September 8 is a Satur=
day).  Reply comments would be filed 10 days later.

The filing provides the following discussion of direct access:


  _____ =20

"Developing the net short requirements of consumers depends on the extent t=
o which they might be served instead by third party providers. The level of=
 direct access will affect these net short requirements. At present, there =
is substantial uncertainty concerning the future disposition of direct acce=
ss and third party supply of retail customers that jeopardizes creation of =
an optimal plan. This uncertainty has the potential for increasing costs to=
 San Diego retail customers as a result of unnecessary over- or under commi=
tments. To resolve this uncertainty, the Commission needs to coordinate dir=
ect access with resource planning, at least on an interim basis. SDG&E disc=
usses below how to provide for this coordination.=20

As the retail market matures, SDG&E expects that direct access elections wi=
ll gain stability and will not be characterized by severe volatility. That =
stability will allow planners to make reasoned assumptions on direct access=
 and rely on them in developing a procurement plan. However, today, direct =
access is subject to substantial uncertainty. Before the high prices of the=
 summer of 2000, approximately 20% of SDG&E's retail load had elected direc=
t access. By the beginning of 2001, direct access had reduced by nearly hal=
f. More recently, SDG&E has seen an increase in direct access, perhaps as a=
 result of two factors: first, would direct access customers be able to avo=
id paying a share of CDWR contract costs, and second, would the state suspe=
nd direct access, as appears to be permitted under ABx-1 1. Furthermore, th=
e legislature is considering legislation that would permit direct access, a=
nd other bills that would encourage municipal aggregation of load. The effe=
ct of this latter bill is similar to direct access, but it could cause larg=
e quantities of load to leave or return to the system quite abruptly.=20

These events illustrate the need for added coordination between direct acce=
ss and resource planning. The necessary coordination could come by using an=
 open enrollment period each planning cycle under which direct access elect=
ions take place. During that enrollment period, the utility is provided inf=
ormation on the amount of load electing direct access (or municipal aggrega=
tion) and the length of the direct access commitment. This open enrollment =
period would last for 90 days and commence 180 days before SDG&E is schedul=
ed to submit its procurement plan. Customers over 20kW would make commitmen=
ts to service by suppliers other than SDG&E of at least 5 years. Smaller cu=
stomers would make minimum one year commitments. These commitments and the =
use of a specific enrollment period would provide SDG&E with the informatio=
n it needs to plan to meet net short requirements and minimize the risk of =
over- or under-commitment.=20

In order to ensure an orderly process that protects consumers, change of se=
rvice would not occur until the commission ruled on the procurement plan, a=
nd, to the extent that the commission determined that excessive direct acce=
ss placed an unreasonable burden on utility customers, it could choose to l=
imit direct access. Those electing to leave utility procurement would pay a=
n exit fee to cover the costs of commitments made by CDWR and utility retai=
ned generation committed to those customers in order to protect remaining c=
ustomers. As a result of this change, SDG&E would not plan to provide commo=
dity service to departing customers. Customers returning from direct access=
 prematurely would be subject to a re-entry fee and to spot energy pricing,=
 again to protect those customers who did not elect to switch.
=20
Coordinating direct access with the planning process, at least for a near-t=
erm period, is important to ensuring a reasonable procurement plan."

  _____ =20


The filing also briefly discusses competitive default supplier role:

  _____ =20

"When the State embarked on industry restructuring, one purpose was to take=
 advantage of the benefits that competitive markets can provide. Although C=
alifornia's experience with markets has not been as anticipated, it is stil=
l possible that a disciplined application of the market with adequate regul=
atory oversight can offer advantages to consumers. In fact, some states hav=
e undertaken to use the competitive market to meet customers' net short req=
uirements. For example, in parts of Pennsylvania, the State decided to auct=
ion off a piece of the procurement obligation to the competitive market. Ca=
lifornia may decide that it wants to do the same type of thing. If a portio=
n of the net short is auctioned off in this manner, from a planning standpo=
int, it should be treated the same as direct access: SDG&E will need adequa=
te notice and information to facilitate its planning for any net short posi=
tion remaining to be served, and the same use of exit fees and re-entry fee=
s should also apply."

  _____ =20


There are a number of issues here which I think WPTF may want to comment up=
on, as we have dealt with many of these issues in previous filings.  Please=
 let me (and others) know if you agree.
=20
Dan

Law Offices of Daniel W. Douglass
5959 Topanga Canyon Blvd.  Suite 244
Woodland Hills, CA 91367
Tel:   (818) 596-2201
Fax:  (818) 346-6502
douglass@energyattorney.com

----- Original Message -----=20
From: Evans, Darleen <mailto:DEvans@sempra.com>=20
=20
Sent: Friday, August 24, 2001 4:49 PM
Subject: Motion of San Diego Gas & Electric Company (U 902-E) for Adoption =
of an Electric Procurement Cost Recovery Mechanism and for Order Shortening=
 Time




<<A.01-01-044 Procurement Plan(v1).DOC>> <<A.01-01-044 Exc. Summary(v1).DOC=
>> <<A.01-01-044 Motion(v1).DOC>>=20


_________________________________

Darleen Evans

Sempra Energy - Law Department

619-699-5056

devans@sempra.com <mailto:devans@sempra.com>
harry.kingerski@enron.com, d..steffes@enron.com, susan.mara@enron.com