stateofcaliforniaarnoldschwarzenegger,.docVIP

STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3298 January 26, 2004 TO: ALL PARTIES OF RECORD IN RULEMAKING 01-10-024 Decision 04-01-050 is being mailed without the written Concurrence of President Peevey. The Concurrence will be mailed separately. Very truly yours, /s/ ANGELA K. MINKIN (by psw) Angela K. Minkin, Chief Administrative Law Judge ANG:acb Attachment ALJ/CMW/tcg** Mailed 1/26/04 Decision 04-01-050 January 22, 2004 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development. Rulemaking 01-10-024 (Filed October 25, 2001)) INTERIM OPINION  TABLE OF CONTENTS Title Page INTERIM OPINION 1 I. Summary 2 II. Procedural History 4 III. Regulatory Goals and Interagency Collaboration 7 IV. Threshold Policy Issues 10 A. Reserves and Resource Adequacy 10 1. Summary 10 2. California Should be Responsible for Determining its Energy Future 12 3. Policy Issues 15 4. Current and Forecasted Market Conditions 17 5. Appropriate Reserve Levels and Phase-in Period 20 6. Appropriate Balance Between Forward Contracting and Spot Purchases 28 7. LSE Obligation to Procure Reserves for all Load and Customers that it Serves 34 8. Issues to be Addressed in Workshops 43 9. Deliverability 51 B. Market Structure for Longer Term Resource Commitments 53 1. Determining the Need for Resource Commitments 53 2. Today’s Hybrid Market Structure 55 3. Benefits of Utility Ownership v. Benefits of?Third-party Contracts 56 4. Competitive Solicitations 63 5. Length and Type of Contracts 65 6. Affiliate Transactions 67 a) Existing Moratorium and Standard of Behavior 1 67 b) The 2003 Hearing Record 69 c) Discussion 70 d) SDGE and SoCalGas 72 e) PGE and Affiliates 75 C. Financial Capabilities of the Utilities 79