Regarding proposed rate freeze for large SDG&E customers at 6.5 cents:

Adds to DWR's burden of covering the net short positions without any further 
clarification of how shortfall will be funded.  The incentive these customers 
now have to participate in DA and thereby remove burden from DWR is removed.

Creates incentives to increase usage and decrease conservation, exactly at 
the time that just the opposite effect is desired.  Rate at frozen level 
removes all price signal effect in unregulated market.

These are customers who under existing law already have had choice, as an 
alternative to paying market price,  of 1) voluntarily opting in to a one 
year 6.5 cent rate freeze, with a true-up, or 2) buying commodity and risk 
management products in the competitive market, as many of them have already 
done, and 3) reducing usage to save money.  This bill takes takes away the 
last two choices/incentives. 

Adopting "rates by proxy" (in a sense, indexed to PG&E and SCE rates) creates 
the potential for a regulatory nightmare.

As an alternative, the Legislature should consider extending the voluntary 
opt-in program under existing law.  This would preserve existing protection, 
keep choices available to customers, and not unduly add to DWR's burden.

As another alternative, we could be a lot more willing to accept this IF the 
"end of the rate freeze" date in (f) were specified to occur no earlier than 
the date new rates are put in place (the proposed language from 18X, 
remember?) and it were clear that existing DA contracts were not overturned 
by this Act.