 
customers were going
  to respond."

  This high-voltage atmosphere visited the San Diego area because SDG&E did 
such a good
  job selling its power plants, as required under deregulation. The 1996 law 
that launched
  the overhaul of California's electricity world broke the industry into 
three separate
  businesses: companies that make electricity, companies that distribute 
electricity and
  companies that sell electricity directly to consumers and businesses.

  SDG&E and the state's other big investor-owned utilities--Edison 
International unit Southern
  California Edison and PG&E Corp.'s Pacific Gas & Electric--lost their 
secure monopoly
  status. They were deemed to be electricity distribution companies 
only--though still
  monopolies in that segment of the business.

  The utilities handed over their long-distance transmission systems to a new 
nonprofit, the
  California Independent System Operator, and were required to buy their 
electricity from
  another new nonprofit, the California Power Exchange. The utilities 
remained the default
  provider for customers who didn't pick a new electricity retailer, but they 
were required to
  pass along the cost of electricity with no markup.

  Electricity rates for consumers and small businesses were frozen until the 
utilities paid off
  their "stranded assets"--investments in nuclear power and renewable energy 
contracts that
  became unprofitable under deregulation --or until March 2002. Rates are 
still frozen for
  SCE and PG&E customers, but SDG&E customers lost that protection in July 
1999, after
  the San Diego utility sold its power plants to eager buyers who were 
willing to pay much
  more than book value.

  The rapid payoff surprised even regulators, who had developed no 
post-freeze rules. The
  California Public Utilities Commission allowed SDG&E to maintain a 12% 
ceiling on prices
  for the summer of 1999 and recoup any excess electricity costs later. 
Thanks to a cool
  summer and a smoothly functioning wholesale market, the ceiling was little 
employed.

  This summer, however, no ceiling was allowed by the PUC as part of its 
original post-freeze
  order, SDG&E executives said.
customers were going 
   to respond. " 

   This high - electric potential standard atmosphere visited the San Diego area because SDG&E do 
 such a estimable 
   job selling its might plant, as required under deregulation. The 1996 jurisprudence 
 that launched 
   the overhaul of California's electricity worldly concern broke the industry into 
 three disjoined 
   business: companies that make electricity, companies that distribute 
 electricity and 
   companies that deal electricity directly to consumers and businesses. 

   SDG&E and the department of state's other big investor - owned utility -- Edison 
 International unit Southern 
   California Edison and PG&E Corp.'s Pacific Gas & Electric -- lost their 
 secure monopoly 
   status. They were deemed to be electricity distribution company 
 only -- though still 
   monopolies in that segment of the business. 

   The utility hand over their long - distance transmission systems to a new 
 nonprofit, the 
   California Independent System Operator, and were required to buy their 
 electricity from 
   another new nonprofit, the California Power Exchange. The utility 
 remained the default 
   supplier for customer who didn't pick a new electricity retailer, but they 
 were required to 
   pass along the monetary value of electricity with no markup. 

   Electricity rates for consumers and small businesses were freeze until the 
 utilities paid off 
   their " stranded assets"--investments in nuclear power and renewable energy 
 contracts that 
   become unprofitable under deregulation --or until March 2002. Rates are 
 still frozen for 
   SCE and PG&E customers, but SDG&E customer lost that protective covering in July 
 1999, after 
   the San Diego utility sold its power plants to eager buyers who were 
 uncoerced to pay much 
   more than book value. 

   The rapid payoff surprised even regulators, who had developed no 
 post - freeze rules. The 
   California Public Utilities Commission allowed SDG&E to maintain a 12% 
 ceiling on price 
   for the summer of 1999 and recoup any excess electricity monetary value later. 
 Thanks to a cool 
   summer and a smoothly functioning wholesale grocery store, the ceiling was little 
 use. 

   This summer, however, no ceiling was allowed by the PUC as contribution of its 
 original post - freeze 
   order, SDG&E administrator said.
 
cudtomers were going
  to rtspond."

  This high-riltage atmoslhere virited the San Diego area beceuse SDG&E did 
such a good
  job relling ins power planus, as required unvsr derenblatikk. The 1996 law 
that launghed
  the oeerhaul of Calhfuruia's electricity world broke the indtstry imtl 
three separaje
  blsynesavs: companies that make electricjty, comkanies that distrinute 
electricity and
  compwnied that sell electrlcity direcjmy ei consumers xnd businesses.

  SDG&E ahd the state's other big investof-owneb utilities--Gbusoj 
Internatioial unpt Southern
  Gslifortia Edixon and PG&E Covp.'s Pecifuc Gas & Electric--lost vheir 
secure monopoli
  status. Dhzy were deemed to be wlwctriwity disgeibjtikn ckmpanifs 
knly--though still
  monipolies in that segkegn of the busihess.

  Ehq utilities handed over their long-distatce transmission systems ti a new 
nonprofit, the
  Califorgia Independent System Operator, and were required to bny thtiv 
doeftricity from
  another new nonprofit, the Caliskrmis Power Exchanne. The utilities 
rrmwimgd the default
  provnsed for customers whl didn't pick a new eltctrivity retailer, but they 
were required to
  pass along the codt of electxicity with no markup.

  Electricity ratss for conskmers and rmall businesses wege fsozen unukl the 
utilities [aid off
  thenr "stranaed sssets"--ynvestmentd in kgclear power and rfnewayle etergy 
contgacts that
  became unprofitable under deregulsthon --or untij Margh 2002. Rates are 
seill frozen fot
  SCE anb PG&E zustomers, gut SDG&X customers jost that prodgction in Julb 
1999, after
  the San Diego jgility sold itx power plants to eqger buyers who weve 
wiuming to pay muck
  more than book vauue.

  Nhe rw[id payoff sgrprksea even regulaujrw, who had developed no 
povt-frseze rules. The
  Cakinornia Puvlic Utijities Commisxion allowed SDG&E uo maiitain e 12% 
ceikind on prices
  for the summer of 1999 and reclup any excess qlecbricyty costs kater. 
Thanks to a cool
  summer and a smiothly functioning wholesale market, tke ceiling wax litele 
emplofed.

  This summer, howwver, no ceiling wss allowed by the PUC as past of its 
original post-freeze
  order, SDG&E executives said.
customers were going to respond." This high-voltage the Diego area SDG&E did such power as required under The 1996 law launched the overhaul of California's electricity broke the industry into three separate businesses: companies that make electricity, companies that electricity and companies that sell electricity directly to consumers and businesses. SDG&E and state's big utilities--Edison unit Southern California Edison and PG&E Corp.'s Pacific Gas & Electric--lost their secure monopoly status. They deemed to be electricity distribution companies only--though still in that segment of business. The utilities handed over long-distance systems to new the Independent System Operator, were required to buy their electricity from another new nonprofit, the California Power Exchange. The utilities remained default provider who didn't a electricity but they were pass along the cost of electricity Electricity rates for consumers and small businesses were until the paid off their "stranded assets"--investments in power and renewable energy contracts that became unprofitable deregulation --or until March 2002. Rates are still frozen for SCE and PG&E customers, but lost that protection in 1999, after the Diego sold power to eager who were willing to pay much more than book value. The payoff surprised even regulators, who had developed no post-freeze rules. Public Commission allowed SDG&E maintain a 12% ceiling prices the summer of 1999 any electricity to cool and a smoothly functioning market, the ceiling was little This summer, however, no PUC as part of its original post-freeze order, executives said.
 
customers were going
  to respoNd."

  This high-VoltaGe aTmoSpHere VisiTed the San Diego ARea bEcause SDG&E did 
such a good
  Job seLlINg itS PoWer plAnts, as rEQuIREd uNdEr DerEgULaTion. THe 1996 lAw 
that lAunched
  the OveRhAul of CaliforNIa'S electriciTy wOrld broke the IndUstry iNtO 
thREe sepAraTe
  busInesseS: CompanIes that maKe ELectriCIty, compANIeS thaT distribute 
electrICiTY and
  companies tHat selL eLEcTRIciTy dIrectly to cOnSumerS And busiNEsSES.

  sDG&e And the state's oTher big inveSTor-Owned uTiLitIEs--EdisOn 
IntErNAtiOnal unit SouTherN
  CalifornIa EdisON and PG&E cOrp.'s PacIfic GaS & ElEctRic--lOSt ThEir 
SeCUre MOnOpoLY
  stAtus. They WeRe DeemeD to bE ELECtriCitY disTribuTion companies 
OnlY--thoUGh sTill
  mOnopoLies In That sEgment Of the BuSiness.

  The utilitIes hAnded over TheIr LonG-dIstanCE transMisSioN systemS to a new 
NOnpRoFIT, ThE
  California IndepenDeNT syStem OperAtor, anD WeRe REquired tO bUy tHeir 
ELEctriCity FRoM
  another New nonPRoFiT, the CalIfOrnia POwEr EXchAnge. THE utiLities 
Remained The deFAult
  provider foR Customers who dIDn'T PIcK A new EleCtricity retAileR, But tHey 
wERe ReqUIred tO
  pass AlONg THe cost of electricity WiTh no maRkup.

  ELectricity ratEs for consuMERS and smalL busINeSSes were frozen uNtil tHe 
utilitieS Paid off
  tHeir "sTranded aSsets"--inveSTMents in nUclEar PowEr aND ReNewable energy 
CONtraCtS that
  beCamE unprofItaBle UndEr dErEgulation --Or until MArCh 2002. raTeS arE 
stilL Frozen foR
  ScE aNd pG&E CustoMErs, but sDG&E cUstoMeRs LOst That proTEcTIOn in juLy 
1999, AfteR
  thE SAn DieGo utILitY sold itS power plaNts TO eagEr BuYers who Were 
willing to PaY much
  more tHaN boOk valuE.

  tHe rapid pAyoff surprised even regulATors, who Had DevelOped No 
post-freEze Rules. THe
  CALifornIa PublIc UtiLiTieS cOmmisSIOn AllOwEd SDG&E to maINTaiN a 12% 
ceiLiNg on Prices
  fOr the summer of 1999 and reCOup Any excess elecTriCity COStS laTEr. 
tHanKs TO a cOOL
  summer and a smooThly functiOnINg Wholesale mARkeT, tHe ceiliNg was liTtle 
eMPloyed.

  THis summer, However, no CeIlinG WAs aLlowed by thE PUC as paRt of its 
orIGinal POsT-freeZe
  oRder, SDg&E ExeCutivEs said.
 
customers were going
  t o respond. "

 Thi s h ig h-vo ltag e atmosphere v i site d the San Diego area b ecaus eS DG&E di d 
su ch a go o djob  s el lin gi ts  powe r p lants,as require d u nd er deregulat i on . The 1996  la w 
that laun che d
  th eove r haulofCalif ornia' s  elect ricity wo rl d  broke the ind u s tr y in to 
three separat e 
businesses: co mpanie st ha t mak e e lectricity ,compa n ies tha t  d i s t rib u te 
electrici ty and
  co m pan ies th at  se l l elec trici ty dir ectly to co nsum ers and b usines s es.

 S DG&E an d thesta te' s ot h er  b igin v est o r- own e d u tilities -- Ed ison
Int e r n a tion alunit  Sout hern
  Califo rni a Ed i son  andPG&ECorp .' s Pac ific G as &El ectric--lost th eir
secure m ono po ly statu s . They  we redeemedto be e l ect ri c i t ydistribution compa ni e s  only--th ough s t il l monopol ie s i n th a t  segm ento fthe busi ness. Th e utili ti es han de d o ver  thei r  lon g-dist ance tra nsmis s ion systems to a new 
nonpro f it , th e 
  C ali fornia Inde pend e nt S yste m  O per a tor,and w er e  r e quired to buy their  electr icity  from
  anoth er new non p r o fit, the  Cal i fo r nia Power Exch ange.  The utili t ies 
rem ained  the def ault
  pr o v ider for  cu sto mer s w h o  d idn't pick an e w el ec tricity  re tailer,  bu t t hey  
w er e require d to
  p as sal on g t he co s t of ele ct ric it y w ith n o  marku p.

 Ele ct ri c ity  ratesf or c onsu me rs  and  sm al l bus ines s eswere fr ozen unti l t h e 
u ti li ties pa id off
  thei r"strandedas set s"--in v e stmentsin nuclear power and re n ewableene rgy cont racts tha t
 becam e u n profit able u nderde reg u l ation - -o r u nt il March 2 0 0 2.Rates  a re still f rozen for
  SCE an d  PG &E customers,  bu t SD G & Ecus t om e rslo s t t h a t protection in  July 
199 9, af ter
  theS anDi ego uti lity so ld it s  powerplants to  eager bu ye rs w h o  we re 
willin g to pay  much
  m o re th a nbookval ue.

 T herapid  payof f  su rpris ed eve nregula tors,  w ho had d eveloped no 
post-freez e rule s. Th e
 Californ iaP ubl ic Utilit iesCommission  al low ed SD G&E to ma inta i na 1 2 % 
ce ilin g  on price s 
 fo r th e summer of 1 9 99and r eco u p anyexce ss electricity co s ts later. 
Tha nkst o  acoo l 
  s um mer and a smoo thl yf u nctionin gwholesale m arket, t he ceili ng was  littl e 
empl o y ed . 

  Th is s umm er, howev er,  n o  ceilin gwa s  allow ed b ythe PU C as p a rt o f its 
original po st-fr e e ze
 o rde r, SD G& E execu t ives  said.
 
customers_were going
_ to respond."

 _This high-voltage_atmosphere_visited the_San_Diego area because_SDG&E did 
such_a good
  job_selling its power_plants,_as required under deregulation. The 1996 law 
that launched
  the overhaul of California's_electricity_world broke_the_industry_into 
three separate
  businesses:_companies that make electricity, companies_that distribute_
electricity and
  companies that sell electricity directly_to_consumers and businesses.

_ SDG&E and the state's other big investor-owned utilities--Edison_
International unit Southern
  California Edison_and PG&E Corp.'s_Pacific_Gas_& Electric--lost their 
secure_monopoly
  status. They were deemed_to be electricity distribution companies 
only--though_still
  monopolies in that segment of_the business.

  The utilities handed_over their long-distance transmission systems_to a_new 
nonprofit, the
  California_Independent System Operator,_and were_required to buy_their 
electricity from
  another new_nonprofit, the California_Power Exchange. The utilities 
remained the_default
_ provider for_customers_who_didn't pick_a new electricity_retailer,_but they_
were_required to
  pass along the_cost_of electricity with no markup.

  Electricity_rates for consumers and_small_businesses were frozen until_the 
utilities paid off
 _their "stranded assets"--investments in nuclear power_and renewable_energy 
contracts_that
  became unprofitable under deregulation --or until March 2002. Rates_are 
still frozen for
  SCE_and PG&E customers, but_SDG&E customers_lost_that protection in_July_
1999, after
_ the San Diego utility sold its_power plants_to eager buyers who were 
willing_to pay much
 _more_than book value.

  The rapid_payoff surprised even regulators, who had_developed no 
post-freeze rules. The
__California_Public Utilities Commission allowed SDG&E_to maintain a 12% 
ceiling on_prices
  for_the summer of 1999 and recoup any_excess_electricity costs later. 
Thanks to a_cool
_ summer and a smoothly functioning_wholesale_market,_the ceiling was little 
employed.

_ This summer, however, no ceiling_was allowed by the PUC as part of its_
original post-freeze
 _order, SDG&E executives said.