Sue Mara
Enron Corp.
Tel: (415) 782-7802
Fax:(415) 782-7854
----- Forwarded by Susan J Mara/NA/Enron on 05/16/2001 08:23 AM -----

	"Daniel Douglass" <Douglass@ArterHadden.com>
	05/15/2001 04:53 PM
		 
		 To: <Barbara_Klemstine@apsc.com>, <Bob_Anderson@apses.com>, 
<Vicki_Sandler@apses.com>, <berry@apx.com>, <dcazalet@apx.com>, <ed@apx.com>, 
<billr@calpine.com>, <jackp@calpine.com>, <sschleimer@calpine.com>, 
<gavaughn@duke-energy.com>, <rjhickok@duke-energy.com>, <gtbl@dynegy.com>, 
<jmpa@dynegy.com>, <jdasovic@enron.com>, <susan_j_mara@enron.com>, 
<Tamara_Johnson@enron.com>, <curt.hatton@gen.pge.com>, 
<foothillservices@mindspring.com>, <camiessn@newwestenergy.com>, 
<jcgardin@newwestenergy.com>, <jsmollon@newwestenergy.com>, 
<rsnichol@newwestenergy.com>, <nam.nguyen@powersrc.com>, 
<curtis_l_kebler@reliantenergy.com>, <JTeeter@SDGE.com>, 
<roger.pelote@williams.com>
		 cc: 
		 Subject: Today's Rate Design Decision



President Lynch's draft decision was voted out today.?  The CPUC currently 
has the attached version posted on its website, although the  final version 
may differ somewhat.? The decision continues to provide (see  p. 29) that 
Direct Access?customers will not be subject to the  surcharge, as AReM has 
advocated.
?
Based on some of the discussion which occurred at oral  argument on Friday, 
the decision now has wording indicating that although the  utilities are 
authorized to include the load of DA customers in calculating the  revenue 
requirement associated with the surcharge, DA customers do not have to  pay 
the surcharge for the same reasons AReM expressed repeatedly in the  
proceeding.? Any shortfall in utility revenues due to including DA demand  in 
the revenue requirement will be allocated on an equal cents/kWh basis to all  
non-exempt sales.? It is noted that this may shift costs to residential  
customers "since the majority of direct access demand, and thus the majority 
of  the resulting shortfall, is non-residential."
?
The decision also makes clear that DA customers will not be  entitled to 
include the surcharge under the current direct access credit system  and that 
the Commission intends to reexamine and restructure the current direct  
access credit system "to reflect current structural reality."? Hopefully,  
this will mean movement to a "bottoms-up" calculation methodology, as AReM 
has  also advocated.? My understanding from Peter Bray is that Commissioner  
Bilas made some remarks indicating that he would support instituting a  
proceeding to restructure DA pricing.
?
This is the result we wanted with regard to exempting DA  customers from the 
surcharge.? We now need to see if TURN or any other  consumer advocacy group 
chooses to challenge the allocation methodology for any  shortfall.? 
?
Dan
 - 5-16-01 Proposed Decision of President Lynch.doc