As discussed at the Scoping Workshop of May 20, 1996, San Diego Gas & Electric Company (SDG&E) asks this Working Group to consider how best to coordinate proceedings mandated under the Rate Case Plan (RCP) with the various transitional proceedings established pursuant to the Commissions Roadmap decision, D. 96-03-022. As demonstrated by the attached charts, in the case of SDG&E, the two schedules are on a collision course.

A. Under the RCP schedule, by the end of 1996, SDG&E must:

1. Develop new rate proposals and identify necessary modifications to margina cost methodologies for our November 1 Rate Design Window (RDW) filing. This work is currently underway, employing the scarce resources of our Pricing Services Department. [Note that under the RCP, anyone can propose rate changes, thereby triggering a RDW proceeding even if SDG&E chooses not to file an application of its own.]

2. Analyze and develop the volumes of data necessary to submit a Notice of Intent to file our Test Year 1999 General Rate Case (NOI). Although the NOI filing deadline is not until Summer, 1997, work must begin soon given the huge task of processing a GRC. Intensive work will begin at the end of this year. Again, the same analysts/rate design experts in our Pricing Services Department have substantial responsibilities in preparing the NOI (and subsequent GRC).

3. File our Energy Cost Adjustment Clause (ECAC) application in October 1996. Pricing Services Department will also be heavily involved in this case as well and must begin developing proposals immediately.

4. Litigate our Biennial Cost Allocation Proceeding (BCAP). Discovery is underway. Hearings are scheduled to begin in August of this year. Certain BCAP witnesses are also actively engaged in the restructuring and RCP proceedings.

5. File and litigate the Cost of Capital Proceeding.

B. Pursuant to the Roadmap Decision (and Commissioner Rulings), by the end of 1996, SDG&E must:

1. In the restructuring docket, submit proposals on July 15 "to provide information on separating [our] rates into identifiable components, each of which is tied to a particular function." D. 96-03-022 at p. 36.

2. File our proposal for funding the independent system operator (ISO).

3. Develop and file new Performance Based Ratemaking mechanisms for the Generation and Distribution functions.

4. Prepare our Phase II ISO/WEPEX filing at the Federal Energy Regulatory Commission regarding tariffs, contracts, and related documents.

5. File our application to identify and value undepreciated sunk costs of non-nuclear generation assets.

6. File a Section 851 Application for transfer of control of transmission system assets.

7. File Direct Access proposals.

8. File application and litigate first annual CTC proceeding.

9. Actively participate in workshops and contribute to workshop reports on public goods charges, low income issues, consumer protection and numerous other issues.

PROPOSED RATE CASE PLAN CHANGES:

As stated in our Issues Statement filed May 15, SDG&E must be relieved from certain RCP requirements or our ability to meet the restructuring obligations will be severely compromised. This problem is not unique to SDG&E. Representatives of Pacific Gas and Electric Company (PG&E) and Southern California Edison agree that suspension of portions of the RCP is both necessary and urgent. The specific relief requested by the companies will likely be different, however, given the particular status of each utilitys PBR mechanism.

As stated in our May 15 Issues Statement, the Commission should eliminate formal, litigated GRC proceedings, and replace them with a PBR monitoring and evaluation process. This would enable the Commission to regulate utility services under the restructuring model in a more efficient and effective manner. Neither SDG&E nor the Commission can afford to expend scarce resources on command and control type regulation any longer. PBR works. SDG&E is a testament to its effectiveness. Since SDG&E has a Base Rate PBR mechanism in place through 1997, and is developing PBR proposals to be effective January 1, 1998, the Commission should eliminate the GRC for SDG&E.

Since the primary goal of this Commission is the orderly transition to a restructured electric service industry serving California, SDG&E proposes that the Commission immediately suspend portions of the RCP, specifically the requirement to file SDG&Es 1999 GRC and associated rate design window filings. Should restructuring take longer than currently anticipated or take an unexpected direction, the Commission could simply reinstate these filings, albeit on a different schedule. SDG&E believes the suspension of these proceedings should be acceptable to all parties--IOUs and others-- given that rate designs and marginal costs will be extensively reviewed by this working group.