VI. Compliance with Rate Reduction Statutes Pre and Post Deregulation/Restructuring

AB 1890 (Brulte, 1996) legislated a rate reduction for residential and small commercial customers through the inclusion of Pub. Util. Code § 368(a), which provided that rates for residential and small commercial customers were to be reduced to a level at least 10% below the rates in effect on June 10, 1996.¹³ Subsequently, the legislature passed SB 85xx (Burton, 2001), which prevented the Commission from eliminating the 10% rate reduction on residential and small commercial customers because of the passage of time, or the end of the AB 1890 transition period.¹⁴ Because SB 85xx's safeguarding of the 10% rate reduction prevails over AB 1890's schematic for the legislated rate reduction, the Commission must now undertake a thorough review of the revenue requirement and rate design of any electric utility before it can raise the rates for residential and small commercial customers. ¹⁵

In D02-06-071, we granted PacificCorp an interim rate increase based on our determination that is was needed in order to provide PacifiCorp with a reasonable opportunity to earn a return on equity of 5.8%, which we determined not to be excessive. The proceeding before us now is a general rate case in which we are to look comprehensively at PacifiCorp's revenue requirement and true up the issues remaining from D.02-06-071. In this decision, the parties entered into uncontested settlements of all the general rate case issues for PacifiCorp, including the rates necessary to achieve the revenue requirement. This proceeding constitutes the kind of thorough review of the revenue requirement and rate design of an electric utility contemplated by SB 85xx. Although the proposed decision in this proceeding resulted from settlements, rather than a litigated analysis of the revenue requirement and rate design, the proceeding and the settlements suffice for SB 85xx purposes as within the Commission's authority to institute a proceeding "to raise rates for reasons other than the termination of the 10-percent rate reduction set forth in subdivision (a) of Section 368."¹⁶ The analysis contained herein discusses the reasons for the adopted revenue requirement and the resulting rate increases for all PacifiCorp customers, including the residential and small commercial customers.