2. CBIA's Position
CBIA's argument in this case is straight-forward. It contends that whatever the language of Electric Rule 15.E.6 may permit, the change that Edison made beginning in January 2006 to its method of collecting monthly ownership charges pursuant to the rule violates Pub. Util. Code § 454 and GO 96-A. Section 454 provides in pertinent part:
"[N]o public utility shall change any rate or so alter any classification, contract, practice, or rule as to result in any new rate, except upon a showing before the commission and a finding by the commission that the new rate is justified."2
In order to put this controversy in context, some background understanding of how Electric Rule 15.E.6 works is necessary. The first issue under the rule is whether a particular developer has a "refundable balance." CBIA witness Carl Lower gives the following explanation of how that is determined:
"Under Rule 15, a refundable balance occurs when an applicant . . . follows the tariff and contributes an advance payment for the construction of a distribution line extension that is greater than SCE's allowance, if any, for that distribution line extension. To give an example using hypothetical numbers, the tariff might require that all Applicants advance a sum of $100,000 for the construction of a distribution line extension of a certain length. So a CBIA builder advances $100,000 to SCE in order to have a distribution line extension of that length constructed to and within the new development it is building. However, SCE may provide allowances of $6,000 for the model homes. In that instance, the CBIA will be left with a refundable balance of $94,000." (Ex. 1, pp. 2-3.)
Lower points out that the refundable balance is not refunded in one lump sum, but is usually paid back over an extended period of time:
"[U]nder Rule 15.E, refunds are based on the same revenue-based allowance amount, generated by the new distribution line extension as a result of new customers' permanent load. Refunds are accumulated as a result of that calculation and paid out within 90 days and only for a period of ten years after SCE is first ready to serve over the distribution line extension." (Id. at 3.)
Lower also notes that how Edison treats monthly ownership charges depends upon whether or not a refund is due to the developer for a particular month. In situations where a refund is due, Lower describes the procedure as follows:
"In those months where a refund [is] due to an applicant, SCE deduct[s] the monthly ownership charge from the refund due to the applicant and sen[ds] only that net amount to the applicant. The refundable balance for the applicant would then be decreased by the refund that was originally due without regard to the monthly ownership charge. Thus, to begin a new hypothetical example, let's suggest that a CBIA builder had a remaining refundable balance of $50,000 at the beginning of the month, accumulated a $9,000 refund that month, and was assessed a $200 ownership charge. SCE, in that hypothetical situation, would send the CBIA builder a refund of $8,800, and the CBIA builder would have a remaining refundable balance of $41,000 at the end of the month." (Id. at 5.)
Lower continues that prior to the change Edison instituted in January 2006, it handled situations where a refund was not due to the developer in the following way:
"In those months where a refund was not due to an applicant since the project has been fully occupied, SCE would deduct the monthly ownership charge from the remaining refundable balance. No bill was sent to the applicant and no actual money was collected from the applicant . . . [T]o use a hypothetical example, let's suggest that a CBIA builder had a remaining refundable balance of $50,000 at the beginning of the month, did not accumulate a refund that month, and was assessed a $200 ownership charge. SCE, in that hypothetical situation, would send neither a refund nor a bill to the CBIA builder, but the CBIA builder would be left with a remaining refundable balance of $49,800 at the end of the month." (Id. at 5.)
According to Lower, this is the same approach that has long been followed (and continues to be followed) by the other two major electric utilities in California, Pacific Gas and Electric Company (PG&E) and San Diego Gas & Electric Company (SDG&E). (Id. at 5-6.)
However, in 2006 Edison changed the way it handled monthly ownership charges in those months where the developer had a refundable balance but no refund was due. Lower gives the following description of how the change works:
"[W]hen no refunds were due to an applicant, SCE changed its practice and procedure without changing their CPUC approved rule and contract by sending a bill to the applicant, collecting actual money from the applicant, and making no change to the remaining refundable balance. To use a hypothetical example, let's suggest that a CBIA builder had a remaining refundable balance of $50,000 at the beginning of the month, did not accumulate a refund that month, and was assessed a $200 ownership charge. SCE, since January 2006 and given that hypothetical example, would send a bill to the CBIA builder for $200, collect that money from the builder, and leave the remaining refundable balance at $50,000." (Id. at 6.)
In its briefs, CBIA argues that Edison's change of practice is not only unfair, but contravenes established caselaw. CBIA relies on D.01-03-051, Barratt American, Inc. v. Southern California Edison Company, in which the issue was whether Edison could, without Commission permission, change its practice of giving customers a credit for pole removal when the customers were required to switch from overhead to underground electrical facilities. Under its new interpretation of the relevant undergrounding tariff, Edison began to bill customers for pole removal. When Barratt American challenged this change of practice, Edison argued that it was not required to seek Commission permission for the change unless it resulted in an actual conflict with the tariff language. The Commission disagreed:
"The issue here, however, is not whether SCE's pole removal practice conforms to its tariffs. The issue is whether the change in that practice required prior Commission approval. We conclude that it did. To conclude otherwise would allow a utility, in practical effect, to increase its charges without Commission authorization. This would contravene Pub. Util. Code § 454, G.O. 96-A, and the rule of construction just cited that [any ambiguity in] a tariff must be construed in favor of the customer." (D.01-03-051, pp. 7-8.)
CBIA reads Barratt American as controlling here, and finds analogous the decision's language "that `[i]f a utility for 30 years interprets its tariff to give a substantial credit to customers [. . .],' the utility could not `without the approval of this Commission reinterpret its tariff to take that credit away.'" (CBIA Opening Brief, p. 5.)
2 Similarly, the pertinent portion of Section VI of GO 96-A provides:
"The tariff schedules of a utility may not be changed whereby any rate or charge is increased, or any condition or classification changed so as to result in an increase, or any change made which will result in a lesser service or more restrictive conditions at the same rate or charge, until a showing has been made before the Commission and a finding by the Commission that such increase is justified."
Although GO 96-A has now been wholly superseded by GO 96-B, the parties agree that the language of GO 96-A applies here, because the complaint herein was submitted for filing prior to July 1, 2007. (See CBIA Opening Brief, p. 2, fn. 3.)
