4. 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. Comments were filed on August 31, and reply comments were filed on September 10, 2004, after the ALJ granted a short extension in light of the Labor Day holiday.

The following individual parties filed comments: SBC California; SureWest Telephone; The Utility Reform Network (TURN); and Verizon California Inc. Three groups of parties filed joint comments: California Telecommunications Coalition (Coalition);¹⁶ Pacific Gas and Electric Company, San Diego Gas & Electric Company, Southern California Gas Company, and Southern California Edison Company (collectively, Energy Utilities); and Small LECs.¹⁷

Of the foregoing parties, all but Small LECs filed reply comments. The following additional parties filed reply comments: Mountain Utilities; California Water Association (CWA); and our Office of Ratepayer Advocates (ORA).

In general, all of the comments were thoughtful and constructive, and we have made many changes to the rules and accompanying discussion, as appropriate. Below we summarize the comments and our responses, beginning with the general comments and then dealing with comments on particular rules.

General Comments

Many commenters asked for clarification of the relation between the rules adopted today and existing rules in GO 96-A or specific decisions and resolutions for particular types of advice letters. We have added discussion at various points in this opinion and have made clear in the adopted rules that these rules prevail over any inconsistent provision of GO 96-A. However, these rules do not change the review, disposition, and effectiveness of advice letters that, by statute or Commission order, may become effective less than 30 days after filing, nor do these rules change procedures previously adopted for specific kinds of advice letters, even where those procedures are inconsistent with the procedures contained in these rules.

We also direct that these rules shall apply to advice letters filed on or after 90 days from the effective date of today's decision. The 90-day lead time should be adequate for preparation and training purposes. We encourage consultation between stakeholders and the respective Industry Divisions. The Industry Divisions may hold workshops or use any meeting format they deem appropriate.

Coalition expresses concern that today's decision forces a "one-size-fits-all" approach on a type of utility request, namely, advice letters, that has become extraordinarily diverse, particularly in the telecommunications industry. We disagree. Coalition's concern is well-taken, but it is properly directed at our current advice letter rules in GO 96-A. Before this rulemaking, we had not comprehensively revised GO 96-A since its original (1962) adoption; consequently, GO 96-A is badly out-of-date. A participant in the Commission's advice letter process today may have to research many resolutions and decisions besides GO 96-A in order to be sure that the participant is aware of all the relevant orders applicable to the type of advice letter of concern to the participant. Our goal in creating the new GO 96-B is to be truly comprehensive, which means that we must codify both the rules applicable to all advice letter and the rules applicable to particular types of advice letters.

We are coming close to that goal, but it will be fully achieved only with the next decision after today's. The next decision, expected to close this rulemaking, will compile the rules adopted in the three interim orders, and will adopt rules specific to the Energy, Telecommunications, and Water Industries, together with the remaining General Rules. At that point, GO 96-B will wholly supersede GO 96-A and will provide what is lacking today, namely, a comprehensive guide to advice letter practice.

Mountain Utilities, a very small electric company, expresses concern that to the extent that any of the adopted procedures lead to increased burdens and expenses for utilities, these burdens and expense will fall disproportionately on the smaller utilities. In response, we note that many of the rules, such as those increasing reliance on the Internet and certainty of dates of filing, will reduce utility costs. We have also modified certain of the proposed rules, as discussed later, in the interest of greater flexibility and simplification. Consequently, we believe all stakeholders in the advice letter process, including both large and small utilities, will see many benefits from the rules adopted today.

Comments on Rules 1-1.2

These rules proved uncontroversial. However, as discussed above under General Comments, we have added a paragraph to Rule 1 to clarify the applicability of the rules adopted today. SureWest and Small LECs raise a concern about the memorialization of State holidays in Rule 1.2, where we say that a list will be maintained at our Internet site ( www.cpuc.ca.gov, under "About CPUC"). The concern is that by our specificity we might restrict our options for future site re-designs. We will retain the rule as written because we think people will benefit from a direction about where to look for this list. Updating that direction may become necessary, as sometimes happens with other incidental information that may be contained in rules,¹⁸ but this form of updating does not require a formal proceeding.

Comments on Rules 2-2.2 (Advice Letter Contents)

Various utility commenters asked questions about specific items to be contained in the advice letter "cover sheet" (Rule 2.1), which is a short summary of the advice letter. We note that the cover sheet rule is an instance where we have had to produce a comprehensive list, some items of which may not be applicable to all industries or to all utilities within a given industry. We have indicated this partial applicability by including the parenthetical phrase "(where applicable)" in several items. Because of industry-by-industry variations, we direct the respective Industry Divisions to develop and publish sample cover sheets in time for utilities to incorporate those sheets in advice letters governed by the new rules.

The other concern expressed by utilities about the cover sheet is that it may be too detailed. Our response is that the cover sheet will involve some judgment calls about particular items, such as (6) [citation to statutes and Commission orders related to the substance of the advice letter], although most of the items are straightforward. We stress, however, that the effort by the utility on the cover sheet should greatly smooth the process of review and disposition. If the reviewer can determine at a glance that, e.g., the advice letter is a compliance filing in response to a specified order and ordering paragraph, the likelihood of a prompt disposition unencumbered by information requests is much improved. We are striving to do our job within an extremely tight frame for advice letters, and we see the cover sheet as an important tool for that purpose.

We have modified several items in Rule 2.2 (advice letter form and content) in response to comments. We delete the requirement at the beginning of Rule 2.2 that the utility discuss any aspect of the advice letter "as needed"; the requirement is too vague to provide much guidance. We have eliminated from Rule 2.2(2) the requirement to include copies of existing tariff sheets that the utility proposes to cancel; as Energy Utilities and others point out, existing tariff sheets are readily available, for most utilities at their Internet sites (as required by an earlier order in this proceeding).¹⁹ We also adopt the change, requested by Energy Utilities and others, not to require workpapers and supporting analysis to be served with advice letters. As modified, Rule 2.2(6) excuses the utility from serving these supporting documents if they are voluminous but requires the utility to serve them within two business days upon request. Coalition points out that under D.96-03-020, competitive telecommunications carriers are exempted from the requirement to provide supporting analysis and workpapers. Again, we believe that Coalition fears a reversal of Commission precedent where we neither express nor intend that outcome. A carrier that claims it is exempt under D.96-03-020 need only cite to that decision to satisfy Rule 2.2(6).

We largely reject modifications requested to two other items in Rule 2.2. First, Coalition objects to the requirement in Rule 2.2(3) that an advice letter say whether its approval would result in a deviation or conflict, withdrawal of service, or more or less restrictive conditions. This requirement comes without substantive alteration from the first paragraph of Part III.C of GO 96-A. Most of the information seems highly pertinent in the context of a tariffed service, so we will adopt Rule 2.2(3); however, as Coalition suggests, we will delete "conflict" because its meaning is unclear.

Second, several utilities object to the content requirements in Rule 2.2(4) for new services. TURN supports the rule as proposed, asserting that it provides "vital information." As proposed, the rule requires the utility to describe the new service's impacts (if any) on existing customers, other services, rates, competition, privacy, and affiliate transactions. We developed this list of topics because in fact all of the topics have arisen as matters of concern in connection with new services proposed by advice letter in recent years.

We strongly support innovation, and we believe that the overall impact of new services has been and will continue to be benign regarding all of these topics. Nevertheless, new services may raise new policy issues, or old issues in new contexts. Some new services, indeed, may require consideration through formal application. On balance, we believe both utilities and the public will be well served by requiring sufficient information in the advice letter to highlight the implications or potential unintended consequences of a new service. We therefore will adopt Rule 2.2(4) as proposed, with one change. Some commenters argue, and we agree, that the information requirements may be excessive at least with regard to fully competitive services. Accordingly, we have modified the rule to apply to a new non-competitive service (or in the case of a telephone utility, a new Category 1 or 2 service).

Comments on Rules 3-3.4 (Filing and Service)

Rule 3.1 requires utilities to maintain at least one service list and to include on their list anyone who so requests. The rule also encourages utilities to maintain separate lists for different types of advice letters, and at TURN's suggestion we have modified the rule to require that utilities who do create separate lists identify them at the utilities' Internet site.

TURN would like to see utilities required to maintain separate service lists, but we do not regard such a requirement as universally appropriate. Moreover, some utilities (such as Verizon) prefer the convenience of serving all their advice letters on a single service list. Given the ease of review that we hope cover sheets will provide (see our earlier discussion of Rule 2.1), we will not require utilities to create separate service lists at this time.

Coalition asks about the relationship of Rule 3.1 to the Notice provisions of Part III.G of GO 96-A. Part III.G lists persons or entities that are entitled to receive a utility's advice letters, generally without having had to specifically request them. To that extent, Rule 3.1 and Part III.G are complementary, and Rule 3.1 directly implements the requirement in Part III.G.4 that the utility "furnish" its advice letters to "[o]ther interested parties having requested such notification." In short, consistent with Rule 3.1, utilities will continue to serve everyone specified in Part III.G.

Rule 3.2 is our rule on service by Internet. There are two controversies regarding this rule. First, some utilities object to having to make alternative service if service by Internet fails. The objection relies on two arguments, that the utility is not responsible if someone fails to maintain a current e-mail address, and that the utility may not know that transmission over the Internet was unsuccessful. ORA points out that there are many reasons, besides a faulty e-mail address, why transmission over the Internet might fail; these reasons include power outages and Internet Service Provider failures. We agree with ORA, and we also modify Rule 3.2 to make clear that it does not impose an obligation on the sender of a document over the Internet to investigate whether transmission was successful. Instead, the serving party need make alternative service under Rule 3.2 only when the serving party receives notification that, e.g., the e-mail message was not received or the receiving party could not open or download an attached document.²⁰

Second, TURN argues that if service by Internet is unsuccessful, the 20-day protest "clock" should tolled until the advice letter is reported in the Daily Calendar. The utilities oppose TURN on this point. We reject TURN's argument. A principal goal of this proceeding is to make the advice letter process more certain and transparent. To revert to the Daily Calendar in certain circumstances, as argued by TURN, would deeply compromise that goal. Moreover, TURN's remedy does not fit the ailment. The protest clock would be tolled even if service was successful on all but one party on the utility's service list, and even if the utility served that party by messenger on the next day.

Rule 3.3. governs filing of advice letters and related documents. We are adopting two modifications supported by virtually all commenters. First, we are directing the Industry Divisions to accept electronic filing of protests and other advice letter-related documents; we stop short of adopting electronic filing for advice letters, as the sheer number and bulk of the advice letters we receive pose technical problems that are as yet unresolved but that the Industry Divisions will be addressing in consultation with stakeholders.

Second, Rule 3.3 as proposed in the ALJ's draft decision used the phrase "submitted for filing" instead of "filed" or "filing." We agree with commenters who object to the phrase as confusing and creating uncertainty about when filing occurs. Accordingly, in Rule 3.3 and elsewhere in the rules and in this Opinion, we refer to "filed" or "filing" instead of "submitted" or "submittal." The filing of a document, however, does not preclude its later rejection without prejudice if the document, when filed, omitted required contents or otherwise did not conform to our requirements.

Several utilities object to provisions in Rule 3.3. that refer to "filing with" or "receipt by" the reviewing Industry Division. These provisions are not intended to change current advice letter practice; instead, they underscore that the receipt point within the Commission for advice letters and related documents is not the Docket Office (which files documents in formal proceedings), but the respective Industry Divisions. We will not modify these provisions of Rule 3.3.

Rule 3.4 pertains to service of advice letters and related documents (apart from provisions specific to service by Internet, see discussion of Rule 3.2 above). The provision in this rule drawing most comment was that requiring most utilities (with exceptions for sewer and small water utilities) to make paper service on ORA. The requirement was prompted by ORA's concern about the potential impact of large numbers of bulky advice letters served on ORA by Internet. We have modified the rule in response to comments to give more flexibility to ORA, and we expect that ORA can work out mutually-agreeable service arrangements with utilities so that the convenience and advantages of service by Internet are fully realized.

Rule 3.4 also contains service requirements for an advice letter that would modify a Commission resolution. The utility must serve (among others) any person who had been served with the resolution, but as Coalition notes, the service list for resolutions is not always readily available after the Commission has acted on the resolution. In response, we are ordering that Commission resolutions that dispose of advice letters contain an attachment listing all persons served with the resolution. Since our resolutions are published at our Internet site, this order should ensure the public availability of resolution service lists.²¹

Rules 4-4.8 (Advice Letter Review and Disposition)

Rule 4.1 defines "protests" and "responses" to an advice letter and sets the deadline for filing them as 20 days after the date of filing of the advice letter. In response to Energy Utilities, we have modified the definition of "response" such that the term now denotes unconditional support for the relief requested in an advice letter. We think the modification provides greater clarity: Someone who generally or in principle supports an advice letter but believes a condition must be imposed for the advice letter to be approved should be treated as a protestant.

Rule 4.2 enumerates and discusses the grounds on which an advice letter may be protested. TURN and Coalition would modify the rule to expressly allow policy objections as a ground for protest. TURN argues, "It is undeniable that this Commission sets important public policy and that such action is inappropriate for the advice letter process. Therefore, protestors must have this argument at their disposal to ensure an advice letter is rejected." Coalition argues that the list of protest grounds in Rule 4.2 should be merely exemplary; in other words, a protest could be based on any "valid" ground besides the grounds enumerated. Verizon and SBC oppose the expansion of protest grounds urged by TURN and Coalition.

We have modified Rule 4.2 to allow protest on policy grounds but only in limited circumstances. It is true, as TURN asserts, that the Commission typically creates new policy in the context of a formal proceeding. To the extent that an advice letter seeks relief that entails a policy determination not previously established as to the subject of the advice letter or the utility filing it, a protestant ought to be able to argue the policy question should be taken up in a formal proceeding. One of our modifications to Rule 4.2 permits a protest on this ground.

The above circumstances are unusual. More frequently, an advice letter follows law and policy that have already been established by statute or Commission order. A protestant may not make "policy" arguments as a way to indirectly attack prior Commission determinations; however, a protest may properly allege that the utility in its advice letter has misapplied established policy. We have modified our list of protest grounds to make this point more clearly. Also, we add the following sentence to Rule 4.2: "A protest may not rely on policy objections to an advice letter where the relief requested in the advice letter follows rules or directions established by statute or Commission order applicable to the utility."

Rule 4.3 requires the utility to reply to all protests and allows the utility to reply to responses. Energy Utilities would like to eliminate the requirement to reply to protests, and to prohibit a further filing by protestants where the utility does respond. We make the latter modification, as there simply is not time in the advice letter review process to allow multiple exchanges between utilities and protestants. We continue to require utilities to respond to all protests. This requirement is part of GO 96-A (see Part III.H) and continues to make sense. It saves time for Industry Division staff, who would otherwise have to contact the utility if the utility deemed a reply unnecessary (or did not receive the protest) but staff had questions after reviewing the protest.

Rule 4.4 allows the Industry Divisions to consider a late-filed protest. Verizon would require a showing of good cause by the protestant as a condition of consideration of the late filing. We prefer to allow discretion to the Industry Division on this procedural point. Unquestionably, the divisions may summarily reject a late-filed protest where no or poor excuse for the late filing is offered.

Rule 4.5 concerns Industry Division requests for additional information and the use of advice letter supplements. As recommended by many utilities, we have modified the rule to allow "substitute sheets" for making minor corrections to an advice letter. We also allow major changes by "supplement"; both substitute sheets and supplements must be served on everyone upon whom the relevant advice letter was served.

Several utilities requested five business days, rather than five calendar days, within which to respond to requests for additional information. We will adopt this change. We note that Rule 4.3 gives utilities five business days to respond to protests.

Rule 4.6 pertains to the initial review period, suspension of advice letters, and advice letter status reporting. In response to comments, we have clarified the proposed rule to reflect the fact that many advice letters may go into effect in less than 30 days, and that the Commission's deliberation on a resolution disposing of an advice letter may not exceed the statutory "further period" of suspension, i.e., 180 days. We also add a clarification, consistent with D.02-02-049, that if the further period ends before the Commission rejects or otherwise acts on the advice letter, the advice letter (if subject to § 455) becomes effective by operation of law on the day after the further period ends.

Rule 4.7 pertains to Industry Division disposition. As requested in comments, we require the Industry Divisions to include "deemed approvals" in their reported advice letter dispositions at the Commission's Internet site. We also have clarified the rule as it relates to advice letters to which the "initial review period" in Rule 4.6 does not apply. Finally, we clarify that there will be a written disposition by the Industry Division for each advice letter subject to disposition under Rule 4.7; the written disposition will state its basis whenever the Industry Division rejects an advice letter or approves a protested advice letter. There need be no statement of basis for approval of an unprotested advice letter.

Rule 4.8 pertains to Commission resolutions disposing of advice letters. The sole comment (by Coalition) seeks clarification of what happens if the Commission fails to act on the resolution within the time provided in § 455. In response, we added a sentence to our rule regarding suspensions. (See discussion of Rule 4.6 above.)

Rules 5-6 (Review of Industry Division Disposition; Application for Rehearing of Resolution;
Petition for Modification; Request for Extension)

There was little controversy regarding these rules. We are making one major change, but the change is supported by both TURN and utilities. In the ALJ's draft decision, a person seeking to challenge an Industry Division disposition first had to request reconsideration by the Division Director. The reconsideration procedure seems to us both cumbersome and unnecessary. We delete the procedure; as modified, Rule 5.1 allows a utility or protestant to directly request Commission review of an Industry Division disposition.

Rule 5.1 also allows 3^rd parties (i.e., those who had not filed a protest) to request Commission review if the 3^rd party had been unable to file a protest or in fact had supported the advice letter. TURN argues that 3^rd party participation is appropriate under some circumstances; Coalition would prefer not to allow such participation but considers it acceptable if we stress that the 3^rd party must make an appropriate showing of entitlement. We believe Rule 5.1 as adopted reasonably accommodates these divergent views.