4. Recent Commission Policy Initiatives

Developing GO 96-B has been a multi-year process. In this part of today's decision, we consider how, if at all, the changes we proposed when we began that process have been rendered out-of-date by recent policy initiatives.

In particular, we have reviewed our most recent "action plans" for energy and water (October and December 2005, respectively), and various reports and ongoing rulemakings for telecommunications. We find that GO 96-B is broadly consistent with these policy initiatives. There is a caveat to this finding: We are actively modifying the regulatory structure of the telecommunications industry (see D.06-08-030). Thus, we will publish revised Telecommunications Industry Rules to reflect our new Uniform Regulatory Framework. Looking to future revisions, GO 96-B anticipates the need for fine-tuning as the Commission addresses change in the regulated industries, and (as we discuss below, see text accompanying footnote 1) the General Rules contain a simple procedure to ensure that GO 96-B is easily updated.

When we say that GO 96-B is "consistent with" our recent policy initiatives, we emphasize that GO 96-B, and the advice letter practice comprehensively governed by GO 96-B, is not itself a substantive program. Rather, advice letters, like applications, are a procedural vehicle by which a utility seeks a Commission order that the requested relief is consistent with Commission policy, as well as applicable law.

Over the past two decades, we have seen roughly a 10-fold increase in advice letter filings. This increase responds directly to the Commission's need to efficiently manage its decision-making resources to meet increasing demand on those resources. To name two sources of increased demand, our regulation of utilities now must go far beyond traditional ratesetting concerns to include consideration, e.g., of programs for low-income ratepayers, conservation, and protection of the environment. As well, the energy and telecommunications industries have seen sweeping structural changes, and telecommunications carriers continue rapidly to enter and leave the market, develop new services, and expand their operating authority.

Our review of the Commission's current policy initiatives shows that we expect continued rapid change in the energy and telecommunications industries. Further, we have found that many of the same challenges we face in energy regulation are now posed by the water industry. These challenges include ensuring adequate supply, vigorous conservation programs, substantial infrastructure development, and assistance to low-income ratepayers. For all of these reasons, we project that the number and kinds of authorizations requested of the Commission will remain high or will actually increase, even in industries, such as the telecommunications industry, for which regulation is in many respects becoming more light-handed.

GO 96-B is an important tool for managing our decision-making resources. By carefully defining, clarifying, and streamlining the advice letter process, we ensure optimal use of that process, which is much shorter and much less labor-intensive than formal applications. In fact, optimal use of advice letters helps to ensure that matters for which formal proceedings are necessary, such as those in which we set new policy or those requiring evidentiary hearings, receive proper attention.

Inevitably, aspects of GO 96-B will need updating from time-to-time. GO 96-B provides a simple, generic solution to the updating problem.¹ As needed, Industry Divisions will draft proposed amendments, which the Commission will consider for adoption by resolution after notice and opportunity to comment. This solution avoids having to open a rulemaking simply to conform part of the Industry Rules to a change in our substantive regulation of an industry.

¹ In contrast, GO 96-A is silent regarding how and when it will be updated.