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

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