Message-ID: <15157588.1075844221428.JavaMail.evans@thyme> 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 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: richard.shapiro@enron.com X-From: James D Steffes X-To: Jeff Dasovich, Susan J Mara, Harry Kingerski, Sandra McCubbin, Jennifer Thome X-cc: Richard Shapiro X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\California X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf 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.