Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. The City filed comments on June 26, 2003, and PAWW filed reply comments.

PAWW stated that the City's comments violated Rule 77.3 of the Commission's Rules of Practice and Procedure (Rules) because the comments were merely reassertions of arguments that were rejected by the Draft Decision. PAWW included a point-by-point review of each of the City's alleged errors in the Draft Decision and concluded that the comments were either restatements of arguments or rhetorical statements, all of which are not within the proper scope of comments on Draft Decisions. PAWW concluded that, as specified in Rule 77.3, the City's comments should be accorded no weight.

Although we find that PAWW's contentions have merit, we observe that contrary to the City's position, the Commission in Res. W-4356 did not offer a guarantee that evidentiary hearings would be held on the tax refund issue.³ Rather, the only statement on that topic was in the Comments section: "This difference of opinion can be addressed in the formal proceeding recommended above" (i.e., Application 02-11-057). Likewise, neither the assigned ALJ in her direction to the parties at the PHC, nor the Assigned Commissioner in his scoping ruling, offered such a guarantee. The assigned ALJ made clear that she was setting "a briefing schedule for whether or not this issue should be in this proceeding," and the Assigned Commissioner's scoping ruling noted that the ALJ had required those briefs and that a draft decision (this interim decision) was then being prepared on the issue.

As we explained above, we consider allocation of extraordinary revenue on a case-by-case basis. Here, our auditor has found that PAWW has incurred substantial financial losses, and that the tax refund has been used to pay expenses otherwise properly allocated to ratepayers. Given these findings, as well as the passage of time and practical issues discussed above, we conclude that the public interest is best served by retaining the existing ratemaking and accounting treatment of the funds. The facts the City offers to prove in evidentiary hearings do not overcome this conclusion. We have, however, made changes to the text of today's decision to clarify the basis for our decision.