II. BACKGROUND
D.11-05-047 adopted residential electric rate design measures for PG&E's residential electric customers for the following three years in Phase 2 of PG&E's general rate case (GRC) in A.10-03-014.2 In 2001, by D.01-05-064, in response to Assembly
Bill 1 from the First Extraordinary Session3 (AB 1X) legislation mandating that all residential electricity use up to 130 percent of baseline be capped at levels in effect on February 1, 2001, the Commission adopted a five-tier rate design for PG&E based on an increasing rate per kilowatt hour (kWh) within each successive tier of use.4 Because of restrictions in AB 1X, all future residential rate increases were allocated to rates in
Tiers 3-5, and above the Tier 1 baseline and Tier 2 (130 percent of baseline) threshold. To protect low-income households against escalating costs, the Commission froze rates for the CARE program at July 2001 levels providing what has been termed a "safe harbor" of 130 percent of baseline. In addition, non-CARE Tier 1 and 2 rates were
also frozen from early 2001 until 2009. In 2009, pursuant to Senate Bill (SB) 6955
non-CARE rates became subject to statutorily limited increases in 2010 as set forth in Public Utilities Code section 739.9. Approximately one-half of PG&E's residential households and three-quarters of its residential kWh sales are in Tiers 1 or 2.
Because of the AB 1X rate freeze imposed on Tiers 1 and 2, all residential rate increases for PG&E's customers between 2001 and 2009 were imposed on Tiers 3-5 (for usage exceeding 130 percent of baseline). Pursuant to D.10-05-051, PG&E's Tiers 4 and 5 have been consolidated into a single Tier 4, thus narrowing some of the disparity between the upper and lower-tiered rates. Over time the rate tier differentials have widened. For example, at the time of its GRC application, PG&E's Tier 4 rate was almost three times as high as the rate imposed on Tier 2 customers.
A.10-03-014 was filed on March 22, 2010. Evidentiary hearings on residential rate design issues were held on November 12, 15, 18, 19 and 22, 2010. Opening briefs were filed on December 20, 2010 and reply briefs were filed on
January 10, 2011. On April 5, 2011, the proposed decision (PD) of the presiding Administrative Law Judge (ALJ) and the alternate proposed decision (APD) of the Assigned Commissioner (AC) President Peevey were filed. Among other things, the PD denied PG&E's proposed residential fixed customer charge, while the APD approved the proposed charge. President Peevey's APD was withdrawn prior to a vote at the Commission's Meeting of May 26, 2011; the Commission adopted D.11-05-047 at that meeting. The Commission issued D.11-05-047 on June 2, 2011. The joint application for rehearing of D.11-05-047 was timely filed on July 1, 2011 by PG&E, SCE and Kern Taxpayers. Also on July 1, San Diego Gas & Electric Company filed a motion to intervene and participate as a party, which was denied in a July 28, 2011 ruling of the presiding ALJ. Timely oppositions to the joint application for rehearing were filed by the Commission's Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN) and The Vote Solar Initiative (Vote Solar).
The joint applicants for rehearing contend that D.11-05-047 erred by
(1) finding the PG&E proposed fixed customer charge is unlawful and, thus, by not approving it, and (2) rejecting the charge on policy grounds. All three of the responses to the joint application for rehearing of D.11-05-047 oppose it on the grounds that the Commission correctly determined the legislative language at issue was ambiguous and, thus, correctly considered the legislative intent of the statutory language and properly interpreted the ambiguous statutory language so as not conflict with the intent of the legislation. They also argue that the joint application for rehearing improperly alleges a policy argument in an application for rehearing and, in any event, fails to demonstrate error in the decision's policy grounds.
2 Phase 1 of the GRC concerned revenue requirement issues; Phase 2 addressed marginal cost, revenue allocation, and rate design issues. (D.11-05-047 at p. 3.)
3 Chapter 4 of the Statutes of 2001-02, First Extraordinary Session.
4 Previously, a two tier rate structure was in place for PG&E.
5 Chapter 337 of the Statutes of 2009-10.
