3. Preliminary Scoping Memo

As required by Rule 7.1(d) of the Commission's Rules of Practice and Procedure (Rules), this Order includes a Preliminary Scoping Memo. In this Preliminary Scoping Memo, we describe the issues to be considered in this proceeding and the timetable for resolving the proceeding.

Currently, the Commission approved utility tariff rules are such that all businesses - small or large - categorized as non-residential (i.e. commercial or industrial) and treated the same. The primary question in this OIR is to consider whether it is good and fair policy to treat a "micro-business" that, together with affiliates, has average annual gross receipts of two million seven hundred and fifty thousand dollars ($2,750,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 25 or fewer employees the same as residential customers only in terms of back-billing and deposit requirements. Adding a definition of micro-business to each utility tariff rule 1 (Definitions) would set the groundwork for treating micro-businesses the same as residential customers in tariffs regarding billing adjustments and deposits.

Treating small businesses similarly to residential customers is not without precedent. The Commission in some prior telecommunication cases has concluded that small businesses should be treated similarly to residential customers. In fact in D.04-05-057, the Commission found that the consumer protection rules applicable to individuals (i.e., residential customers) should also apply to small businesses. The Commission found that "[i]t is also true that there are many small business customers who suffer the same problems as residential customers: slamming, cramming, the difficult process of gathering sufficient information to make informed service choices, billing problems, and so forth."⁶

Because the Commission views the length of time a utility may back-bill a customer to be a consumer protection measure, we begin this OIR from the premise that these micro-businesses should be treated the same as a residential customer for billing purposes and that utilities should only be able to back-bill micro-business customers for three months rather than three years.

The Business & Community Outreach staff indicate that many of these businesses are barely able to make ends meet and often are too small to be able to afford three years of back-billing. In their communications with customers staff have also noted that there is a discrepancy between treatment of an overcharge for a billing error versus a metering error. If the utility determines it is overcharging a residential or commercial customer for a billing error, it provides a refund of up to three years of bills, but if it is overcharging as the result of a metering error, the residential or commercial customer gets a refund of only six months. This discrepancy along with the treatment of micro-businesses is something that we need to reconsider in this economic climate. Consequently, this OIR will allow time for a workshop to better understand the rationale behind six months of refunds and three years of back-billing.

In this proceeding, we will consider revisions to utility tariff rules 1 and 7 and the relevant billing adjustment rules as set forth in footnote 3. Because utilities have different numbering systems for their tariff rules, and slightly different language for each tariff rule, we do not provide sample language for proposed revisions. We envision the changes to simply be to add the definition of micro-business to each utility's rule 1 definitions, and at each location in the specified tariff rules where the treatment of residential and non-residential customers is different, to treat micro-businesses the same as residential customers. The respondents to this OIR are all California jurisdictional energy utilities. All respondents are directed and other interested parties are invited to comment on the proposal to treat micro-business customer the same as residential customers for purposes of billing adjustments and deposit requirements. We urge DRA to file and serve comments and to participate fully in this proceeding to ensure that ratepayers are represented.

⁶ 2004 Cal. PUC LEXIS 240, 35 (Cal. PUC 2004).