Some ideas for Friday's comments - 

Two of the Commission's stated goals in the ACR were:

Reduce the disparity in prices paid for energy among customer classes:  Enron 
suggests a restatement of this goal.  Energy prices should be an accurate 
indication of the costs imposed on the system.  For example, the average cost 
of 1 kW @ 100% load factor is much different than 1 kW used at 30% load 
factor, all on-peak, and much different than 1 kW used at 70% load factor, 
all off-peak.  In practice, each customer class has a mixture of customers 
leaning toward each of these extreme.  True equity requires that customers 
with similar load patterns pay non-disparate energy prices, regardless of 
which class the customer is in.   A more proper statement of this goal is:  
reduce the disparity between prices paid for energy and costs imposed on the 
system across all customer classes.  

Tier rates to promote conservation:  Enron suggests a restatement of this 
goal. Traditionally, the California Commission has favored rate designs that 
reflect marginal costs.  Marginal cost pricing, in and of itself promotes 
efficient use of energy because of the many reasons the CPUC itself has cited 
over the years.  In the situation at hand,  the indicators of marginal cost 
in the wholesale power market are CDWR's purchase cost in hours when the CDWR 
is covering the net short, and the hourly wholesale spot market price (the 
wholesale on-peak forward curve, as a proxy)  in hours when the CDWR is not 
filling the net short.  Conservation will be incented with use of price 
signals that reflect market conditions.  A more proper statement of this goal 
is:  To provide customers with the motivation to respond appropriately, 
design marginal rates within the rate classes to reflect marginal wholesale 
costs.

Regarding these goals, it will take time for the commission and parties to do 
this - which plays to EES URM and the idea of keeping the 3 cents as an 
interim rate design while a 6 month rate design case can take place.  I think 
it is inconceivable, however, that the CPUC does not have strong price 
signals in place for this summer.  So I think we use the "equal percent of 
marginal costs" idea to get price signals in place, but much flatter ones 
than in the ACR.  (for a variety of reasons, I don't think the 2-part real 
time pricing being pushed by Mr. Stoness can fly without some radical 
modifications, but let's talk).

About the residential increase, we may want to weigh in on whether 
residentail usage above 130% of baseline gets the full brunt of the total 
residential increase or just 3 cents.  Let's talk about the politics.

We also will want to say 1) DA is exempt from the increase  2) any increase 
prior to the effective date of the new rate design should be 3 cents across 
the board.