Jim and Jeff --

I spoke with Brian Cragg about the Commission's adjustment of QF prices.  He
said that to date they have only done it on a going forward basis.  They did
say when they issued their decision in March which changed the formula for
QF  pricing that they were going to continue their examination of the
formula inputs and additional future changes could be made retroactive to
March.  To date they have not taken further action.

In the past, when the Commission has made changes to rates to reflect
overcollections or undercollections, they have not gone back and
recalculated each bill. The corrections are made on a going forward basis.
Thus in the case of the PX energy charge, the energy charge on customer's
future bills would be reduced to reflect the past over payments.
Conversely, the PX credit would be reduced to reflect the fact that they
were to high in the past.

Jeanne

-----Original Message-----
From: James.D.Steffes@enron.com [mailto:James.D.Steffes@enron.com]
Sent: Friday, August 10, 2001 8:57 AM
To: JBennett@GMSSR.com; jdasovic@enron.com; James_D_Steffes@enron.com
Subject: RE: CPUC Authority to Adjust Rates


Jeanne --

Not quite sure that I am getting the picture.  Let me lay it out more
directly.

The PX Credit for October 2000 was $225 based on the actual market rates.

Now FERC is saying that October 2000 hourly prices for CalPX DA and CalPX
HA markets were "too high" in June 2001.  Can the CPUC change the PX Credit
for October 2000 and make the Utilities recalculate our Negative CTC?

What is prospective?  Have they ever done this before?

Jim

    -----Original Message-----
   From:   JBennett <JBennett@GMSSR.com>@ENRON

[mailto:IMCEANOTES-JBennett+20+3CJBennett+40GMSSR+2Ecom+3E+40ENRON@ENRON.com
]


   Sent:   Thursday, August 09, 2001 7:35 PM
   To:     Jeff Dasovich (E-mail); Jim Steffes (E-mail)
   Subject:  CPUC Authority to Adjust Rates

   Jeff and Jim --

   I have done some research into the issue of whether the CPUC would be
   able
   to restate the UDC's PX Energy Charges (and thus PX Credits) back to
   October
   if the FERC were to apply its mitigation plan back that far. Thus far,
   my
   research indicates that the answer is yes (or at least there is a strong
   argument that the answer is yes) and it would not violate the rule
   against
   retroactive rate making.  The reasoning is as follows:

   The Commission (as affirmed by the courts) have ruled that they may
   subject
   a utility's rates to refund to account for adjustments made pursuant to
   a
   methodology or formula adopted before the date the utility's rates
   became
   subject to refund. Thus any ratemaking is considered prospective because
   the
   formulas are in place before the utility's rates are made subject to
   refund.
   The PX Energy Charge is calculated pursuant to the formula/mechanism set
   forth in the utility's tariffs.  These charges were always subject to
   adjustment on a prospective basis due to the settlement process.  The
   change
   in energy prices which would be effected by the FERC ruling could very
   well
   be viewed as an adjustment made pursuant to a formula.  Thus the change
   would not be considered retroactive ratemaking.

   I had a chance to talk with Mike Day for a couple of minutes about this
   issue.  He concurred with my analysis.

   Jeanne

   P.S. Please forward this e-mail to anyone you think needs to see it.



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