COM/RB1/acb H-6a

5/3/2001

Decision ALTERNATE ORDER OF COMMISSIONER BILAS

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation on the Commission's own motion into the rates, charges, and practices of water and sewer utilities providing service to mobilehome parks and multiple unit residential complexes and the circumstances under which those rates and charges can be passed to the end user.

Investigation 98-12-012 (Filed December 17, 1998)

TABLE OF CONTENTS

Title Page

OPINION 22

1. Summary 22

2. Origins of This Investigation 33

3. Procedural Background 44

4. Overview - The Major Issues 66

4.1. MHP Issues 77

4.2. Issues at Multi-Unit Apartments 1010

5. Basis of CPUC Jurisdiction 1111

5.1. The Statutes - CPUC Jurisdiction 1212

5.2. Case Law - CPUC Jurisdiction 1616

5.2.1. No Public Utility Status Without Dedication of Property to Public Use .....................................................................................1616

5.2.2. Municipal Utilities Are Not Public Utilities Subject To CPUC Jurisdiction 1919

6. Application of the Submeter Exemption 2121

6.1. "Water Corporation" 2222

6.2. "Rate" .....................................................................................2424

6.3. Comparing the Water and Energy Submeter Exemption 2929

7. Water Service at Multi-Unit Apartments 3232

8. Sewer Service 3535

9. Other Matters 3737

10. Conclusion 3737

Policy Options 4040

Comments on Draft Decision 4141

Findings of Fact 4141

Conclusions of Law 4545

ORDER 4848

OPINION

1. Summary

The Commission issued this Order Instituting Investigation (investigation or OII) to explore "concerns raised about the legitimacy of charges for water and sewer services imposed on tenants by the owners of multiple unit residential complexes and mobilehome parks." (Investigation 98-12-012, slip. op. at 1.) In this proceeding, we review information obtained about current practices of owners/operators of mobilehome parks (MHPs) and multiple unit residential complexes (multi-unit apartments) that bill tenants for water and sewer services separately from rent. We also review the extent of California Public Utilities Commission (Commission or CPUC) jurisdiction under existing law and limitations on CPUC oversight.

This decision attempts to isolate the major issues and explain the existing jurisdictional framework so that the Legislature may formulate appropriate public policy solutions. Where our record has suggested solutions for the Legislature's consideration, we report this. In particular, this decision clarifies the pivotal issue, the extent to which CPUC jurisdiction permits this Commission to address and resolve the billing issues presented.

Whether an MHP or multi-unit apartment is a public utility subject to CPUC regulatory control depends on whether it satisfies the statutory definition of a public utility as that definition has been interpreted by the courts. If it is a private entity selling (or reselling) water or sewer services for compensation -- the express statutory requirement-- and it has dedicated its property to public use as required by case law established by the courts, and it does not qualify for an express legislative exemption from CPUC control, then more likely than not, the MHP or multi-unit apartment would be determined by the Commission to be a public utility, subject to its control. With one limited exception, if a MHP or multi-unit apartment selling or reselling water or sewer services is not deemed a public utility, the Commission has no jurisdiction to regulate its rates and services.