4. Discussion
We opened this OIR to reexamine utility tariff rules and practices pertaining to billing and deposits for small business customers. As a result of the Workshop and parties' comments, the Report recommends certain tariff changes for small business customers. We will adopt these recommendations as discussed below.
4.1. Defining Small Business Customers
We adopt the Report's definition of small business customers as those non-residential electric customers who use 40,000 kWh or less annually or whose demand is 20 kW or less, or non-residential gas customers who use 10,000 therms of gas or less annually.6 Alternatively, we agree that non-residential customers may qualify as a small business customer if they qualify as a micro-business under Section 14837. In order to qualify under Section 14837 a non-residential customer must provide the utility with necessary documentation. The utility shall accept as appropriate documentation an affidavit signed by the owner of the business certifying and declaring that the business qualifies under Section 14837. In addition, for dual-commodity (electric and gas) utilities, a non-residential customer may qualify separately under either electric or gas maximum annual usage rules (e.g. the customer would be treated as a small business only for the service type for which it qualifies.)7
As many non-residential customers may be unaware of the Government Code Section 14837, self-certification option, for customers subject to back-billing who do not qualify based on demand or usage we direct the utilities to inform these customers that there is a self-certification option, so they may ascertain their eligibility.
4.2. Back-billing
The proposed change in the back-billing rule for small businesses from the current three-year period to three months is reasonable, is not opposed by any party, and should be adopted.
In adopting this revision we clarify certain implementation matters. If the small business energy usage exceeds the maximum electric or gas usage as a result of applying the three-month back-billing to calculate annual usage, this exception is permissible, and the small business definition still applies.
4.3. Refund Periods for Metering and Billing Errors
BCO staff recommends that utility tariffs be revised to correct a discrepancy between the refund period for billing errors and metering errors. Currently the refund period is a maximum of three years for billing errors and six months for metering errors, except that PacifiCorp's tariffs provide that the refund period is a maximum of six months for both billing and metering errors. BCO staff recommends that refund periods for both billing and metering errors be a maximum of three years for both types of errors.
SCE and PG&E state they are not opposed to revising their tariffs to align these refund periods. Non-utility parties also support this BCO staff recommendation.
In order to provide consistency between the maximum refund periods for billing and metering errors we will adopt the refund period of three years for overcharges resulting from both billing and metering errors. This shall apply to all utilities, including PacifiCorp.
4.4. Deposits
We will adopt the Report's recommendation that small business deposits be equal to twice the average bill. As pointed out by Greenlining, small businesses may use large amounts of energy in certain months and it would be unreasonable to base a deposit on a customer's unusual energy use in one month. Furthermore, as DRA explains and as noted in the Report,8 only five states require deposits equal to twice the maximum bill. This lower deposit requirement is a reasonable step in reducing the financial burden on small businesses.
BCO staff also recommends development of other utility payment plans and programs as an alternative to a deposit. We encourage and support these alternative credit mechanisms, including automatic or direct pay plans, which provide an alternative to a deposit. We will not direct utilities to offer specific types of alternative credit mechanisms, but will allow utilities to develop their own alternative credit mechanisms in lieu of deposits, and give customers the choice of making a deposit or using an alternative credit mechanism.
4.5. Re-Establishment of Service Deposits
Although we revise tariff rules to reduce the financial burden on small businesses by adjusting the back-billing period and reducing deposit requirements, we are also mindful that deposits provide a degree of financial security which may reduce the potential for increased uncollectible expenses. In order to balance the potential for increased uncollectible expenses against the need to reduce these costs for small businesses, we will not waive the deposit requirements for re-establishment of service except where re-establishment of service is due to failure to pay charges related to back-billing. This one exception is consistent with our adoption of the tariff change to back-billing.
4.6. Notice Requirements
BCO staff recommends that small business customers be entitled to receive one warning letter per 12-month period prior to any deposit request for a late payment.9 After a late payment, the small business customer would receive a warning letter informing that customer that the next time there is a late payment within the calendar year, the utility may require a deposit to re-establish credit. We agree with this recommendation and expect utilities to include this warning notice requirement in their tariffs for small businesses.
4.7. Implementation Period for the Revised Tariff Measures
Joint Utilities and SCE estimate that it will take approximately six to eight weeks for the utilities to develop communication practices and to fully implement these new requirements.10 We agree that this is a reasonable period for implementation and will order that the measures adopted herein must be implemented within 60 days of the effective date of today's decision through a Tier I Advice Letter.
4.8. Proposed Sunset Date for the Adopted Tariff Measures
The utilities recommend that if the deposit rules are changed these measures should sunset on January 1 or 31, 2012, or the effective date of the utilities' next general rate case (GRC).11 The utilities explain that adopting a sunset date is appropriate for determining whether these rule revisions are effective in the long-term. DRA argues that the National Bureau of Economic Research declares the beginning and end of recessions retroactively, and any relief provided may not reach some small businesses in time.12 Greenlining also points out that small businesses continue to face a severe cash and credit crunch and thus it would be premature to conclude that this measure should sunset.13
We have considered these arguments and agree that it is not appropriate to sunset our adopted tariff measures for small businesses. It is difficult to become a successful small business, even in the best of economic times. Moreover, it is appropriate to treat small businesses like residential customers in terms of back-billing. Like residential customers, small businesses do not usually have the ability to pay large back-bills on short notice and they do not, as a general matter, have the expertise to be able to prevent and detect potential billing or meter errors.
4.9. Utility Costs Due to Revised Small Business Tariff Measures
The utilities request that they be allowed to recover any costs associated with the revised back-billing and deposit rules.14 DRA15 and Greenlining16 contend that utility compliance with the adopted measures should not result in significant cost changes, however if there is cost recovery, such costs should be recovered in GRCs. The revised small business tariff measures adopted in this decision are new and there is little information available to estimate the costs of implementing these measures. Therefore, it would be premature to either estimate such costs or include them in a cost recovery mechanism such as a memorandum account. We do not anticipate there will be a significant financial impact on the utilities as a result of the changes set forth in this decision. However, utilities have the opportunity to request changes in their GRCs.
6 Under this definition, "annually" is measured by electric or gas use in the twelve (12) billing months ending in the most recent calendar year. Small businesses that have less than 12-months' usage can qualify as small businesses through Section 14837.
7 For example, a non-residential customer of a dual-commodity utility could use less than 40,000 kWh and qualify as a small business electric customer, or use less than 10,000 therms and qualify as a small gas business customer.
8 Report at 19.
9 As discussed above, the deposit is limited to twice the average monthly bill. In addition, the customer may make the choice to enroll in an automatic payment or similar program in lieu of a deposit.
10 Joint Utilities Opening Comments at 6, and SCE Reply Comments at 8.
11 SCE Reply Comments at 8, PG&E Reply Comments at 5, Joint Utilities Opening Comments at 6.
12 DRA Reply Comments at 4-5.
13 Greenlining reply comments at 5.
14 Joint Utilities Opening Comments at 6, SCE Opening Comments at 9, PacifiCorp Reply Comments at 4, Southwest Gas Opening Comments at 4, and PG&E Reply Comments at 4.
15 Id. at 8.
16 Greenlining Reply Comments at 6.
