Follow-up on Monday California conference call, regarding passthrough of the 
1 cent surcharge.

SCE:

Does NOT appear to be passing through the 1 cent surcharge to Direct Access.  

In a letter to the PUC's Energy Division on June 19, SCE said:  "By 
incorporating both the 1 and 3 cent per kWh surcharges into the generation 
component of total rates in Advice 1545-E, SCE has effectively exempted DA 
customers from these surcharges by including them in the new DA credit. ..  
SCE, however, is not entirely sure whether the Commission intends to exempt 
the DA customers from the 1 cent per kWh surcharge and has previously 
requested Energy Division's opinion on this matter."

This letter was responding to a request by AReM for clarification of this 
very issue.  In a prior Advice Letter 1529-E, of April 5, SCE seemed to say 
that the generation rate (that forms the basis of the PX credit) does not 
include the 1 cent surcharge.   

So, SCE seems to think the PUC has been unclear about whether the 1 cent 
surcharge applies to Direct Access, and as a result is not billing it to 
Direct Access.  This is in spite of the PUC's January 4 order, where it said 
"All other customers, including direct access customers, are subject to this 
surcharge." (p. 21)  

Of course, it is not at all clear what SCE will do if the PUC clarifies for 
SCE that they could have been billing the surcharge to Direct Access 
customers.

PG&E:

Is passing through the 1 cent surcharge to Direct Access.  PG&E's Advice 
Letter 2119-E, of May 22, clearly exemps Direct Access from the 3 cent 
surcharge only.

Where are the $$ from the surcharges going?

March 27 PUC Order of Commissioner Lynch:

"PG&E and Edison shall enter the revenues from the rate increases into 
balancing accounts and the revenues shall be subject to refund if, at a later 
date, we determine that the utilities failed to use the funds to pay for 
future power purchases.  The revenues the utilities have collected and 
continue to collect from the one-cent per kilowatt-hour rate increase 
authorized on January 4, 2001 shall be used to pay for power purchases and 
not for any other costs incurred by the utilities. " (p. 55)

"It is reasonable that a certain amount of the revenues from the rate 
increases will be provided to DWR for its power costs, once DWR provides us 
with its revenue requirement. " (p. 51)

So, the utilities have been directed to hold the money from the surcharges in 
balancing accounts pending the PUC's acceptance of DWR's revenue 
requirement.  

Call me with any questions.