II. Background

While we adopted a rate increase effective on the date D.01-03-082 was issued, we did not adopt a specific residential tiering approach in the absence of an overall rate-design proposal and sufficient record evidence to so act. Conceptually, we agreed that it is time to adopt a tiered approach for those customer classes that do not have rates structured on a time-of-use (TOU) basis. This approach sends the proper price and usage signals. Electric bills should be tiered to promote conservation, i.e., those who use more electricity pay higher prices for the excess use.

Residential customers whose usage is below 130% of baseline are now statutorily exempt from rate increases that were not in effect as of January 5, 2001. The assigned Commissioner issued a concurrent Assigned Commissioner Ruling (ACR) setting forth an illustrative tiered rate design, inviting comment, and scheduling a prehearing conference (PHC) to establish dates for briefings and hearings.²

On April 2, 2001, the assigned Commissioner and assigned Administrative Law Judge (ALJ) convened a PHC. The assigned Commissioner stated that the Commission would pursue an intensive and expedited schedule in order to adopt and implement by June 1, 2001 a rate design to collect the three cents per kWh increase approved by the Commission in D.01-03-082. The following day, April 3, the Commission's Energy Division held a workshop to finalize rate design templates and develop a master data request for the utilities. Parties also discussed a procedural schedule to present the Commission. On April 5, Edison and PG&E each filed a report on their billing system capabilities, and on April 6, all interested parties filed comments on the rate design goals the Commission should pursue, billing system structural issues, and procedural schedule.

On April 11, 2001, the assigned Commissioner issued a ruling finding that, after review of the April 6 comments, the Commission needed a more extensive evidentiary record to design new rates. The April 11 ruling directed parties to serve their rate design proposals as testimony on April 13, followed by hearings to commence on April 16. The Energy Division held a workshop on April 12 to provide parties more information regarding the rate design proposed by Governor Davis. The parties listed in the accompanying footnote served testimony on April 13, 2001.³

The Commission held hearings beginning on April 16 and concluding on April 26. Expert witnesses Peter A. Bradford, George J. Sterzinger, and Severin Bornstein, also appeared before the Commission at hearing on April 24 and 25 to offer testimony evaluating how effectively the proposed rate design proposals meet our rate design.

The Commission also held Public Participation Hearings (PPHs) throughout Edison's and PG&E's service territories to allow customers to directly address the Commission. The PPHs were held in the following locations on the dates and times indicated:

Monday, May 7: 12 noon Santa Monica

7:00 p.m. Rosemead

Tuesday, May 8: 2:00 p.m. Fresno

7:00 p.m. Visalia

Wednesday, May 9: 2:00 p.m. Fullerton

7:00 p.m. San Bernadino

Thursday, May 10: 12 noon Sacramento

7:00 p.m. Oakland

Friday May 11: 3:00 p.m. San Jose

Edison and PG&E informed all customers of the locations and times by a special mailing. At the PPHs, the Commission heard statements from numerous concerned citizens. In Appendix D, we include a summary of the major issues addressed at the PPHs. This appendix was prepared by the ALJs presiding at these PPHs.

After the conclusion of hearings on April 26, 2001, the parties filed briefs. The proposed decision was issued for comment on May 9, 2001. The parties filed and served comments on the proposed decision on May 10, 2001 and presented Final Oral Argument to the Commission on May 11, 2001.

³ On April 13, 2001, the following parties submitted testimony: Aglet Consumer Alliance (Aglet), Agricultural Energy Consumers Association (AECA), Alliance for Retail Markets (ARM), California City-County Street Light Association (CAL-SLA), California Energy Commission (CEC), California Farm Bureau Federation (CFBF), California Independent Petroleum Association (CIPA), California Industrial Users (CIU), California Large Energy Consumers Association/California Manufacturers & Technology Association (CLECA/CMTA), California League of Food Processors (CLFP), County of Los Angeles (LA County), Energy Producers and Users Coalition (EPUC), Enron Energy Services, Inc. (Enron), The United States Department of the Navy and All Other Federal Executive Agencies (FEA), Kinder Morgan Energy Partners (KM), Leprino Foods Company (Leprino), Office of Ratepayer Advocates, California Public Utilities Commission (ORA), Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), The Utility Reform Network (TURN), Western Manufactured Housing Communities Association (WMA). These parties together with parties filing briefs and comments to the proposed and alternate decision are designated active parties to this proceeding.