LYN/TOM/sid 3/17/2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Almond Tree Hulling Co.; Arakelian Farms; Baugher Ranch; Beretta Property Management; Campos Brothers Farms; Central Califonria Almond Association, Inc.; CF Koehen & Sons, Inc.; Dairyland Hullers; Farmers Cooperative; Harriet Baldwin; Harris-Woolf Almond Huller; Hashem Naraghi; Hilltop Circle L. Ranch; James M. Paiva; James R. Lewis Orchards Inc.; John Wynn; Minturn Almond Huller Co-op, Inc.; Pacific Almond Co.; Paramount Farms, Inc.; Paramount Farming Company; Parreira Almond Processing Co.; Peter D. Peterson; Stewart and Jasper Orchards; South Valley Farms; Strain Orchards; The Hulling Company, Inc.; TM Duche Nut Co Inc.; Vernon Paddack; West Valley Hulling/Barry Baker; Xcel Shelling, LLC, Complainants, vs. Pacific Gas and Electric Company and DOES 1 through 100, inclusive, Defendants.

Case 04-01-020 (Filed January 21, 2004)

SCOPING MEMO AND RULING OF ASSIGNED

COMMISSIONER AND ADMINISTRATIVE LAW JUDGE

This ruling confirms the category, need for hearing, scope, and schedule of this proceeding in accordance with Article 2.5 of the Commission's Rules of Practice and Procedure (Rules).

1. Background

Complainants are almond hullers, whose electricity charges are currently billed under Pacific Gas and Electric Company's (PG&E's) commercial electric rate schedules. The complaint alleges that on or around August to October 2003, Complainants asked PG&E to serve their almond hulling operations under PG&E's agricultural electric rate schedule, and that in approximately December 2003, PG&E denied their requests. Complainants therefore seek a Commission order requiring PG&E to serve their almond hulling operations under PG&E's agricultural rate schedule and to issue a refund for the difference between the amounts paid by Complainants pursuant to PG&E's commercial electric rate schedule and the lesser amounts that would have been charged under PG&E's agricultural rate schedule, for the period beginning on the date of Complainants' requests for service under an agricultural rate schedule and the date of the Commission's order. Complainants also seek pre- and post-judgment interest on the requested refund.

In its answer, PG&E contends that Complainants' almond hulling and shelling operations do not qualify for an agricultural rate under PG&E's tariffs and Commision decisions interpreting these tariffs. PG&E states that under Commission precedent, agricultural rates do not apply to operations in which a product is crushed or cut during processing, because the product undergoes a "change in form." PG&E contends that when almonds are hulled, the hulls are altered and crushed during their removal from the shell. In addition, PG&E claims that a viable wholesale and retail market exists for unshelled almonds, unlike the situation addressed in Air-Way Gins, Inc., et al. v. PG&E (Air-Way Gins), Decision (D.) 03-04-059, in which the Commission found that cotton ginning qualified for agricultural rates in part because there was no market for raw unginned cotton.¹

PG&E denies that an award of interest is appropriate if Complainants prevail in this case. According to PG&E, the Commission generally awards interest only when a utility has clearly erred or has been derelict in its duties, and PG&E previously asked for Commission guidance regarding whether almond hulling and shelling operations qualify for agricultural rates in its comments on the Presiding Officer's Decision in Air-Way Gins.

PG&E also asserts that to the extent that complainants seek recovery for a period beyond the three years preceding the filing of the complaint, their claims are time-barred.

In the answer, PG&E states that this proceeding should be categorized as ratesetting and asks the Commission to consider the broad rate impacts of changing almond hullers to an agricultural rate. Since agricultural rates are generally lower than commercial rates, PG&E contends that switching Complainants to an agricultural rate would cause PG&E to suffer a revenue shortfall, which would necessitate cost shifting to other customers and classes of customers in violation of Section 740.11. PG&E further asserts as an affirmative defense that Complainants' eligibility for electric service at an agricultural rate would be more appropriately decided in Phase II of PG&E's 2003 GRC. If the Commission finds that almond hulling and/or shelling operations are eligible for agricultural rates, PG&E asks the Commission to support and implement an appropriate modification to the agricultural and general service revenue requirement allocations consistent with the results of this case.

A prehearing conference was held on March 4, 2004, at the Commission Courtroom in San Francisco.

¹ In Air -Way Gins, the Commission also found that cotton ginners were entitled to electric service at an agricultural rate because ginning did not result in a "change in form" of the cotton. (See D.03-04-059.)