3. Legal Background
D.09-09-029 established the process for review of projects and investments by investor-owned utilities such as PG&E when seeking Recovery Act funding. PG&E filed its Application prior to being selected as a grant recipient.21
D.09-09-029 provided that a utility could seek contingent approval for a project from the Commission in advance of the project being selected by the DOE.22
In such instances, the Commission determined that projects would be best reviewed through the application process.23 The Application was considered under an accelerated schedule set forth by D.09-09-029, which shortened the protest period to 15 days, with replies due 7 days after the protest in order to produce a timely review consistent with the goals of the Recovery Act.
Under § 454(a) of the Public Utilities Code,
Except as provided in Section 455, no public utility shall change any rate or so alter any classification, contract, practice, or rule as to result in any new rate, except upon a showing before the commission that the new rate is justified.
Thus, the Commission must review utility projects that lead to changes in rates to ensure that they are just and reasonable. In addition, the burden of making a showing that the proposed rates are just and reasonable rests with the utility requesting the change in rates.
In this case, the responsibility for showing that PG&E's contribution of $24.9 million to Phase 1 of the CAES project is just and reasonable falls with PG&E.
21 PG&E was not entitled use the Tier-3 advice letter process set forth in D.09-09-029 because it sought contingent approval prior to being awarded the DOE grant. PG&E decided not to withdraw this application and resubmit under the advice letter process.
22 D.09-09-029 at 5.
23 D.09-09-029 at 32.
