----- Forwarded by Jeff Dasovich/NA/Enron on 03/19/2001 11:42 AM -----

	"Daniel Douglass" <Douglass@ArterHadden.com>
	03/19/2001 11:15 AM
		 
		 To: <Barbara_Klemstine@apsc.com>, <Vicki_Sandler@apses.com>, 
<berry@apx.com>, <dcazalet@apx.com>, <billr@calpine.com>, 
<jackp@calpine.com>, <Ken_Czarnecki@calpx.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>, <foothill@lmi.net>, <camiessn@newwestenergy.com>, 
<jcgardin@newwestenergy.com>, <jsmollon@newwestenergy.com>, 
<rsnichol@newwestenergy.com>, <nam.nguyen@powersrc.com>, 
<Curtis_L_Kebler@reliantenergy.com>
		 cc: 
		 Subject: Draft Decision in Distributed Generation Proceeding



The Commission has issued a draft decision in the distributed generation  
proceeding.? It?adopts the Energy Division's program proposals for  load 
control and distributed generation initiatives and?authorizes a total  of 
$137.8 million in funding for these programs, on an annual basis through  
December 31, 2004.

Since the Commission cannot raise electric utility rates until?it  has 
determined that the rate freeze is over, it has decided to include the costs  
of these programs in the utility's distribution revenue requirement, on the  
electric side, and defer consideration of an electric rate increase until 
the  rate freeze ends.? 
?
The three utilities are directed, within 15 days, to file Advice Letters  
increasing their electric distribution revenue requirements, without 
modifying  current rates, to include the authorized program budgets.? In the 
interim,  all program costs?are to?be tracked in balancing accounts, and the  
utilities should establish such accounts for this purpose.? The utilities  
are also?directed to implement these programs, "without delay."

Under the adopted programs, SDG&E will administer a  demand-responsiveness 
pilot program, targeted to reach 5,000 residential  customers in its service 
territory. SCE will administer a similar pilot program,  targeted to 5,000 
small commercial customers. SDG&E and SCE will provide  financial incentives 
to customers who agree to set their thermostats at  pre-specified levels.? 
Through an internet interface, the utility will  monitor and verify actual 
interruption of loads at the customer site and provide  interactive 
information to customers about their electric usage, in order to  encourage 
peak demand reduction.? Within certain parameters, customers will  have the 
flexibility to override the thermostat settings, subject to  pre-specified 
penalties. 

The draft decision would?also authorize a pilot program to provide  
interactive consumption and cost information to small customers, such as  
historical energy bill information, representative energy usage and cost  
information for common appliances, and tariff options. PG&E?is directed  
to?contract with an independent web designer to develop a website that  
provides customer online access to this information.??The  Commission's?goal 
is to reach 10,000 to 15,000 customers in PG&E's  service territory.? The 
program will be targeted to residential customers  with relatively high 
monthly energy consumption, residential customers with  swimming pools, homes 
and small businesses in the San Francisco peninsula or in  Silicon Valley, 
and/or rural residences and small businesses.

The draft decision also proposes to implement a self-generation program  
across all the utility service territories.? Under the program, financial  
incentives will be provided to distributed generation technologies for 
amounts  ranging from $1 - $4 per watt and 30-50% of total project cost, 
depending on the  type of technology used.? There is a table on page 4 of the 
draft decision  which shows the amounts of the incentives.? 

The utilities are required to outsource to independent consultants or  
contractors all program evaluation activities, and are encouraged to 
outsource  as many other aspects of program implementation as possible.? All  
installation of technologies (hardware and software) at customer sites will 
be  done by independent contractors, and not utility personnel.? The 
utilities  are encouraged to coordinate and work closely with local 
governments,  community-based organizations and business associations to 
recruit and contact  interested customers.
?
Dan
 - 3-15-01 Draft Interim Decision.doc