ATTACHMENT 8
                                
                         RESPONSES TO 
                ACR 143 STATUS REPORT QUESTIONS

     In 1994, the Legislature passed Assembly Concurrent
Resolution (ACR) 143 relating to the CPUC's proceedings on
restructuring the electric utility industry.  ACR 143, among
other things, directed the Commission to report to the
Legislature by January 31, 1995 on its restructuring efforts and
identify policies to address a number of issues.  To this end,
the CPUC issued its January 24, 1995 Status Report on
Restructuring California's Electric Services Industry and
Reforming Regulation.   In this Report, we identified six
concerns that were reflected in the ACR 143 reporting criteria. 
Here we summarize how our proposal addresses these concerns.

1.   How are the market benefits of increased competition best
     realized and equitably distributed among all customer class?

     All customers would gain the benefits of competition in the
generation market, through the lower energy costs gained from the
competitive energy pool.  The monopoly distribution utility, as
the sole purchaser of energy in its territory, would pass on
these lower energy costs to all customers.  Further, all
customers, regardless of customer class, would be able to
negotiate financial contracts for virtual direct access
(sometimes called "contracts for differences") directly with
energy suppliers, or intermediaries, for their power needs.  All
that is needed is the proper meter to measure the power.  We
expect a variety of marketers, brokers and aggregators to enter
the market over time to facilitate these transactions.  

2.   How can a restructured market best provide safe and reliable
     service to its customers?

     The utility would remain as an electric distribution
monopoly for the physical delivery of power to customers.   The
utility would continue to be responsible for safety and
reliability, and the CPUC would oversee and regulate this
responsibility.  Energy suppliers would also be certificated and
regulated by the CPUC, in terms of safety and consumer
protection, and the CPUC would have the authority to revoke a
firm's certification if the firm fails to perform adequately.  If
an entity fails to provide sufficient power to the pool, the pool
operator would procure alternate power to serve the customers. 
This action would be transparent to the customers.

3.   How should nondiscriminatory access to the market be assured
     for all power producers in a restructured environment?  How
     should restructuring ensure that market power in generation
     is not overly concentrated?

     The utility ultimately would not own any generation assets,
except for nuclear and hydroelectric plants (which could be
placed into an affiliate).  The pool operator would be charged
with allowing any and all producers to supply power through the
grid in a non-discriminatory manner.  Market power would be
avoided by disaggregation of utility generation assets other than
nuclear and hydroelectric plants.  




4.   How should responsibilities for uneconomic assets and
     obligations be allocated among industry participants, and
     over what period of time?

     Compensation for uneconomic assets and obligations would be
provided through a competitive transition charge (CTC) which
would be imposed on all customers of the monopoly utility as a
surcharge.  The surcharge would be a percentage of the total
utility bill.  The CTC would be imposed in a manner so as not to
increase rates over what they would have been without
restructuring, and so as to allow customers to benefit from any
lower rates they can derive from energy suppliers.  

5.   How can a restructured industry adequately accommodate
     environmental concerns and recognize the benefits of cost-effective demand-side management and resource diversity?

6.   How should cost recovery for certain public policy programs,
     such as low-income rate assistance, economic development
     research, development and demonstration, and low-emission
     vehicles be addressed in a restructured industry? 

     In response to questions 5 and 6, we propose short term
strategies which require the utility to continue to implement
these important legislative requirements.  We would identify
costs for various programs as line items on customer bills as
part of distribution charges.  The utility would meet its
resource diversity mandate by meeting minimum resource mix
requirements.  In the long term, we plan to work with the
Legislature to initiate legislation that provides for alternate
means to meet many of these public policy goals.  This effort may
involve reassigning responsibility for implementing these
programs to entities other than regulated utilities.  In our
proposal,  we suggest specific approaches that we believe will
best accomplish these Legislative policies in a more competitive
industry structure for each of the programs identified in ACR
143.



                     (END OF ATTACHMENT 8)