4. Timeline for Advice Letter Review and Disposition

In this section, we summarize the major events in handling advice letters under GO 96-B. We highlight the time between the major events, and indicate things that can speed or slow the process.

The process begins with a utility submitting an advice letter to the appropriate Industry Division. Normally, the Industry Division will accept the advice letter for filing soon after the day it is submitted. The date of filing is the day when the Industry Division reports the advice letter and the utility-designated tier in the Commission's Daily Calendar. The Industry Division may delay the filing if, for example, the advice letter is incomplete.11 In that case, the utility will have an opportunity to supply the missing material to the Industry Division and to everyone on whom the advice letter was served. See General Rule 5.6.12

Assuming the advice letter filing is not delayed as discussed above, then the Daily Calendar report should happen quickly. The 20-day protest period runs from the date of filing, i.e., the day when the advice letter is reported in the Daily Calendar. The utility must reply to any protest; the reply is due five business days after the end of the protest period.

The filing, protest, and reply process is common to all advice letters. The timeline thereafter depends on the tier of the particular advice letter, and on the kinds of issues (if any) that emerge as the result of protest or the reviewing Industry Division's own analysis. Review time beyond the initial review period for a given advice letter may be taken so that the Industry Division may complete its analysis, and draft a resolution if one is necessary to the disposition of the advice letter.

Since the review timeline may vary by tier once the filing, protest, and reply steps are completed, our summary will address each tier separately. First, however, we discuss some statutory provisions related to the review process for advice letters.

The Public Utilities Code has many requirements for Commission procedures but relatively few requirements specific to advice letters.13 In devising our timelines for advice letter review, we have relied chiefly on Pub. Util. Code § 455. That statute only governs tariff changes "not increasing or resulting in an increase in any rate."14 Section 455 authorizes the Commission to investigate and, if need be, to suspend proposed tariff changes. In relevant part, § 455 says that:

In GO 96-B we propose to use the above timelines (with minor adjustments depending on the tier) for reviewing essentially all advice letters, including those advice letters that increase or result in an increase in rates. The only exceptions are those few advice letters for which a different process or timeline is specified by statute or by other Commission order.

While § 455 allows up to 330 days (including initial review and periods of suspension) for disposition of an advice letter, we are confident that review of most advice letters under GO 96-B will consume much less time. To speed review and disposition, we (1) expressly delegate authority to the Industry Divisions to handle the review and disposition of many kinds of advice letters, and (2) allow certain noncontroversial advice letters to be deemed approved within a stated period (30 or 60 days, depending on the tier). These two changes to current practice should significantly improve the timeliness of our advice letter dispositions.

Another improvement in GO 96-B over current practice is that, while we expressly authorize the reviewing Industry Division to suspend a proposed tariff change while investigating the change, we also limit the length of time for which the tariff change may be suspended. Regrettably, we will need to use this suspension authority often for advice letters that require disposition by Commission resolution. Resolutions generally must be circulated for public review and comment pursuant to Pub. Util. Code § 311(g)(1). Drafting, placing on the Commission's agenda, and voting on a resolution within the 30-day initial review period contemplated by § 455 is generally not possible. With rare exceptions, the disposition of Tier 3 advice letters, and of any other type of advice letter for which a Commission resolution is usually required, will consume more than 30 days despite everyone's best efforts.15

The initial review period for a Tier 1 advice letter (i.e., an advice letter effective pending disposition) is 60 days; filing, protest, and reply all occur during this period, as described above. After 60 days have elapsed from the date of filing, the advice letter is deemed approved unless there is a timely protest or the reviewing Industry Division notifies the utility and protestants (if any) that the initial review period is being extended.

The Industry Division may extend the period for various reasons. For example, staff may need to get additional information regarding the advice letter, typically by means of an information request to the utility (see General Rule 7.5.2). Staff may also need more time to complete its analysis of the advice letter, or to draft a resolution if staff finds that Commission disposition of the advice letter is necessary. In addition, where there has been a timely protest and there has not been a disposition of the advice letter within the initial review period, the review period will be automatically extended. In that situation, the Industry Division will notify the utility and protestants of the length of the extension.

On or before the 60th day, the Industry Division will notify the utility and any protestants if disposition of the advice letter will not occur within the 60-day initial review period. The notification will state the reason for the extension. This first extension of the review period is for up to 90 days. There may be a further extension of up to six months (180 days); thus, disposition of a Tier 1 advice letter should not consume more than 330 days (= 60 days for initial review + up to 90 days for 1st extension + up to 180 days for final extension).

In short, while the overall timeline for Tier 1 advice letters is consistent with § 455, we have structured the first 150 days differently: The initial review period under GO 96-B is 60 days, not 30 days. However, the 30-day initial review period under § 455 does not concern the date by which an advice letter must be approved or rejected. Instead, the statute sets the date by which proposed tariff changes must either be suspended or allowed to take effect, "subject to the power of the [C]ommission...to alter or modify them." Since we are allowing Tier 1 advice letters to become effective pending disposition, we are not constrained by § 455 to complete our review within 30 days. Note also that an extension of the Tier 1 review period means only that disposition of the advice letter will take a little longer; the extension does not cancel the effectiveness of the advice letter.

Our reason in choosing a 60-day initial review period for Tier 1 is to ensure that our procedural innovation (i.e., allowing certain advice letters to become effective pending disposition) works as we intend. Although we expect the new procedure will benefit consumers and stimulate competition, these results will depend, in part, on our finding and promptly correcting any misuse of the procedure. A 60-day rather than a 30-day initial review period is therefore necessary to allow adequate scrutiny before the advice letter may be deemed approved.

Like Tier 1, Tier 2 advice letters concern matters generally not expected to require a Commission resolution; however, unlike Tier 1, the tariff or other changes proposed in a Tier 2 advice letter do not become effective until the advice letter is approved. As discussed earlier, a utility that prefers prior approval to immediate effectiveness may submit under Tier 2 an advice letter that otherwise would qualify for Tier 1.

The initial review period for a Tier 2 advice letter is only 30 days. The initial and further review periods follow the § 455 timeline exactly. Thus, a Tier 2 advice letter is deemed approved if, after the 30-day initial review period has elapsed, there is no timely protest and the reviewing Industry Division has not notified the utility that the advice letter is being suspended.16 However, the Industry Division will suspend the advice letter to continue its review beyond the initial review period. Our General Rules deliberately use "suspension" rather than "extension" to describe review of a Tier 2 advice letter beyond the initial review period. In contrast to a Tier 1 advice letter, which continues in effect during subsequent review periods, a Tier 2 advice letter is not in effect during the initial review period, and its effectiveness will be suspended throughout any subsequent review period. The suspension is consistent with § 455 and with the fundamental premise of Tier 2 (and Tier 3) advice letters that approval of these advice letters must occur before any proposed change becomes effective.

Tier 3 advice letters concern matters whose disposition is expected to require action by the Commission.17 As with Tier 2 advice letters, the initial review period is 30 days, but unlike Tier 2, a Tier 3 advice letter may not be deemed approved. Due to the kinds of subjects dealt with in Tier 3 advice letters, proper regulatory oversight requires us to ensure affirmatively the propriety of a Tier 3 advice letter before allowing the proposed changes to take effect, regardless of whether there has been a protest to the advice letter. Since GO 96-B provides that a tariff change proposed in a Tier 3 advice letter may not become effective unless and until the Commission itself approves the advice letter, the suspension of such advice letters under GO 96-B is automatic if (as generally will be the case) disposition does not occur by the end of the initial review period.

Because Commission resolutions, like other Commission decisions, are subject to public review and comment under by Pub. Util. Code § 311(g)(1), only in extraordinary circumstances will we be able to dispose of a Tier 3 advice letter by the end of the initial review period.18 For virtually all Tier 3 advice letters, the reviewing Industry Division will send a suspension letter to the utility and any protestants by the end of that period. The letter will indicate that staff is drafting a resolution for the Commission's consideration, and will remind the utility that the proposed changes do not become effective during the suspension. The suspension letter will also note whether staff is seeking additional information or is otherwise still completing its analysis of the advice letter.

The suspensions for Tier 3 mirror those for Tier 2. Thus, the first suspension is for up to 120 days, and there may be a further suspension of up to 180 more days. Overall, disposition of a Tier 3 advice letter should not require more than 330 days.

At an early stage of developing GO 96-B, staff and workshop participants cut down the advice letter tiers to the three we just described. We agree with this recommendation. The tiers we have now depend on fundamental concerns, such as the scope of the authority that we may delegate to staff. Additional tiers are likely to result in complexity and confusion, rather than clarity and ease of administration.

The Water Industry Rules, in fact, present an even simpler tier structure because those rules do not provide for an advice letter to become effective pending disposition. The "Ministerial Tier" under the latter rules corresponds to "Tier 2" for energy and telecommunications. The timeline for handling these water advice letters will be the same as we described for Tier 2, while advice letters in the "Discretionary Tier" under the Water Industry Rules will follow the timeline we described for Tier 3.

Finally, we note that the Legislature has enacted special procedures for certain advice letters. (See Pub. Util. Code §§ 455.1 (recycled water), 455.3 (rate changes for oil pipelines).) We have assigned these types of advice letter to the tier best approximating the statutory procedures, but we also propose Industry Rules specific to these types of advice letters where necessary to implement the respective statutes.

Unprotested advice letters in Tiers 1 or 2 may be deemed approved without a written disposition. In all other instances, there will be a written disposition. As discussed earlier, written disposition of Tier 1 and 2 advice letters typically will be by letter from the reviewing Industry Division, while disposition of Tier 3 advice letters typically will be by Commission resolution.

Whatever the mode of disposition, and regardless of whether the disposition is an approval or a rejection, all dispositions will be reported in tabular form at the Commission's Internet site. The table of dispositions will be updated regularly, so that anyone can readily determine whether and when a particular advice letter was approved or rejected. Also, consistent with current practice, the reviewing Industry Division, upon approval of an advice letter, will return to the utility the relevant tariff sheets stamped with the effective date.

On the following two pages, we provide tables summarizing the key provisions of GO 96-B regarding the disposition (Table 1) and effective date (Table 2) of advice letters. These tables distill many provisions of GO 96-B, most notably General Rules 7.6.1 and 7.6.2 (disposition) and General Rules 7.3 to 7.3.5 (effective date), and the tiers of review under the respective Industry Rules. While we have made great efforts to ensure the accuracy of these tables, they cannot substitute for careful reading of the relevant rules, the language of which is controlling.

Table 1: DISPOSITION OF ADVICE LETTERS

In general, the reviewing Industry Division, by letter, will approve or reject an advice letter (AL) submitted in Tier 1 or 2 (or Water's Ministerial Tier); the Commission, by resolution, will approve or reject AL submitted in Tier 3 (or Water's Discretionary Tier). Exceptions will occur, however, due to utility error or issues arising during review. The following table shows how exceptions will be handled.

1. Utility Designates Wrong Tier

Designated Tier

Proper Tier

Staff Action

1

2 or 3

    Reject w/o prejudice

2

3a

    Reject w/o prejudice

3

1 or 2

Approve/reject under Tier 2b

any

nonec

    Reject w/o prejudice

2. Utility Designates Correct Tier But . . .


· Any tier: AL is clearly erroneous Reject


· Any tier: matter in AL requires hearing Reject w/o prejudice


· Any tier: issue requires exercise of discretion Prepare resolution

3. Remedial Action by Utility if AL is Rejected w/o Prejudice

· Wrong Tier: Utility may submit new AL in proper tier

· Hearing Required: Utility may file formal proceeding

· Matter Inappropriate for AL: Utility may file formal proceeding

_______________________

a Note that a utility may designate for Tier 2 an advice letter that would qualify for Tier 1. The Tier 2 designation therefore is not "wrong" in this situation. b However, by the utility's wrongly designating Tier 3, the advice letter may not be deemed approved. c This situation arises where the subject matter of the advice letter requires a formal proceeding (typically, an application or petition for modification).

Table 2: EFFECTIVE DATE OF ADVICE LETTERS

Normally, under GO 96-B, Water advice letters will become effective upon approval, while Energy and Telecommunications advice letters will become effective either upon approval (Tiers 2 and 3) or on the date when the utility submits its advice letter to the reviewing staff (Tier 1). Other effective dates are sometimes possible, where statute, other Commission order, or the utility itself designates another effective date. This table summarizes the major possibilities, which are detailed in General Rules 7.3 to 7.3.5. Regarding the process by which disposition of advice letters occurs, see General Rules 7.6.1, 7.6.2.

 

Tier 1a

Tier 2b

Tier 3c

"normal" effective date:

on date submitted

upon approval (may be deemed approved)

upon resolution approval (no deemed approval)

"early" effective date:

· per statute, CPUC order

· per statute, CPUC order

· per statute, CPUC order

"later" effective date:

· if requested by utility and not inconsistent w/ statute, CPUC order

· per statute, CPUC order

· if requested by utility and not inconsistent w/ statute, CPUC order

· per statute, CPUC order

· if requested by utility and not inconsistent w/ statute, CPUC order

· per statute, CPUC order

_______________________

a Under Energy and Telecommunications Industry Rules only. b "Ministerial Tier" under Water Industry Rules. c "Discretionary Tier" under Water Industry Rules. 11 The General and Industry Rules have content requirements for the various types of advice letters. In addition, all advice letters must have a cover sheet with "scoping" information. See General Rule 5.5. 12 If the utility does not correct the defect within a reasonable time, the Industry Division will return the advice letter with a statement of the defect. Returning the advice letter in these circumstances does not constitute a disposition; since the utility never submitted a proper advice letter, the advice letter will not have been filed. 13 One statute that expressly refers to advice letters is Pub. Util. Code § 455.1, authorizing the use of that procedure by water utilities on matters related to "service of recycled water." Also, Pub. Util. Code § 455.3 appears to contemplate the use of advice letters by oil pipelines in seeking rate changes. Both of these statutes contain their own timelines and provisions for the proposed rates to become effective on an interim basis subject to refund. When dealing with an advice letter whose subject comes within one of these statutes, the applicable Industry Rules follow the specific statutory timeline and not the general review timeline described in the text accompanying this footnote. 14 Rate changes generally are governed by Pub. Util. Code § 454, but that statute, in contrast to § 455, does not contain a timeline for review of proposed changes. 15 An exception would be those instances where the reviewing Industry Division can make the disposition on a ministerial basis. For example, if a Tier 3 advice letter depends on a calculation that proves to be mistaken, rejection of the advice letter would be ministerial, and there is no need for a Commission resolution. 16 The grounds for suspension for Tier 2 advice letters are the same as for extension of the review period for Tier 1 advice letters: getting additional information, completing staff's analysis, dealing with a protest, or drafting a resolution where Commission disposition of the advice letter proves to be necessary. The first suspension of a Tier 2 advice letter is for up to 120 days, and there may be a further suspension for up to 180 more days. This overall timeline results in up to 330 days for disposition of a Tier 2 advice letter, the same as for Tier 1. 17 Industry Division disposition of a Tier 3 advice letter is possible, however, where the advice letter contains the kind of defect where rejection of the advice letter would be ministerial. 18 Pub. Util. Code § 311(g)(2) provides for reduction or waiver of the period for public review and comment in some situations, and § 311(g)(3) allows the Commission to establish, by rule, additional categories of decision subject to such reduction or waiver. We have adopted rules to implement this authority. See footnote 2 and accompanying text. We expect these rules, together with statutory provisions for reduction or waiver, will enable us, for many Tier 3 advice letters, to minimize delay beyond the initial 30-day review period, but neither the statute nor the rules are likely to eliminate the need for suspension letters except in the case of unforeseen emergencies.

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