On April 30, the California Supreme Court denied a petition for writ of review of California Public Utilities Commission ("Commission") Decision 02-11-022 (November 8, 2002) filed by Strategic Energy, LLC; 7-Eleven, Inc.; and El Torito Restaurants, Inc. (the "Petition"). The Petition was the only state court challenge to D.02-11-022 filed, and any additional state court actions filed to challenge the Decision would now appear to be untimely. Assuming a writ of certiorari is not obtained from the United States Supreme Court, this leaves a collateral attack in federal court asserting federally-based claims as the only potentially viable method of challenging the legality of D.02-11-022.

Decision 02-11-022 adopted a methodology for calculation of the direct access cost responsibility surcharge, or "DA CRS." The DA CRS contains several components. The first is a surcharge imposed upon direct access customers to pay for costs the Department of Water Resources ("DWR") incurred and will incur procuring power for bundled customers (i.e., customers who purchase power from a utility) from September 20, 2001 forward, called the "DWR Power Charge." All direct access customers who took bundled service for any length of time after February 1, 2001, must pay that portion of the DA CRS associated with the DWR Power Charge.

The DA CRS also contains a component to pay costs associated with revenue bonds that DWR issued in November, 2002 to pay for power it procured for bundled customers between January 17, 2001, and September 20, 2001.

The DA CRS will also pay for a portion of the uneconomic costs of Pacific Gas and Electric Company's, Southern California Edison's, and San Diego Gas and Electric's retained generation. All direct access customers, not just those who took bundled service after February 1, 2001, must pay that portion of the DA CRS associated with the uneconomic portions of utility-retained generation. For direct access customers in Southern California Edison's service territory, the DA CRS also includes a Historical Procurement Charge, which compensates Southern California Edison for its past undercollection of procurement costs.

The DA CRS is currently capped at 2.7¢ per kilowatt/hour, but the Commission is now considering the possibility of raising that cap.

The Petition challenged two portions of D.02-11-022. First, the Petition asserted that the Commission committed legal error when it imposed the DWR Power Charge portion of the DA CRS on direct access customers who had taken bundled service after February 1, 2001. The Petition contended that only those direct access customers who had taken bundled service on or after July 1, 2001, should be subject to the Charge (thereby exempting any direct access customer who had taken bundled service between February 1, 2001, and June 30, 2001, from paying the DWR Power Charge). The Petition also challenged the imposition of the DWR Power Charge on direct access customers of Enron that were returned to bundled service against their wishes. The Supreme Court provided no explanation of its reasons for denying the Petition.