STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

July 16, 2001 CA-4

8/23/2001

TO: PARTIES OF RECORD IN RULEMAKING 97-04-011 AND
INVESTIGATION 97-04-012

This is the draft decision of Administrative Law Judge (ALJ) Econome. It will be on the Commission's agenda at the next regular meeting 30 days after the above date. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Parties to the proceeding may file comments on the draft decision as provided in Article 19, attached, of the Commission's "Rules of Practice and Procedure." Pursuant to Rule 77.3 opening comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service.

/s/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:sid

Attachments

ALJ/JJJ/sid DRAFT CA-4

8/23/2001

Decision DRAFT DECISION OF ALJ ECONOME (Mailed 7/16/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Establish Standards of Conduct Governing Relationships Between Energy Utilities and Their Affiliates.	Rulemaking 97-04-011 (Filed April 9, 1997)
Order Instituting Investigation to Establish Standards of Conduct Governing Relationships Between Energy Utilities and Their Affiliates.	Investigation 97-04-012 (Filed April 9, 1997)

OPINION ON REVISED DISCLAIMER LANGUAGE AND ITS IMPLICATIONS ON THE PENALTIES ASSESSED AGAINST PACIFIC GAS AND ELECTRIC COMPANY IN DECISION (D.) 98-11-026 AND D.99-03-025

I. Summary

This decision revises the disclaimer requirement set forth in Section V.F.1 of the Affiliate Transaction Rules (Rules) so that the revised language the Commission adopted for San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) will be made applicable to all utilities covered by the Rules. In D.99-09-033, we revised Section V.F.1 as to SDG&E and SoCalGas because the original language was not narrowly tailored to achieve an appropriate balance between the two utilities' commercial speech rights and the Commission's substantial interest in promoting competition.

This decision also considers the implications of this revision on the penalty we assessed against Pacific Gas and Electric Company (PG&E) in D.98-11-026 and D.99-03-025. We determine that PG&E's penalty should be vacated because it was based on PG&E's violation of a rule that we have subsequently found was not narrowly tailored to achieve an appropriate balance between utilities' commercial speech rights and the Commission's interest in promoting competition. By implication, the language was overbroad and in violation of the First Amendment of the United States Constitution.