Constitutional Limits on Excessive Fines: The Commission will adjust the size of fines to achieve the objective of deterrence, without becoming excessive, based on each utility's financial resources.

SCE admonishes us that both the Fourteenth Amendment's due process guarantees and the Eighth Amendment's prohibition on excessive fines affect the construction of civil penalty statutes.¹³ Because § 2107 is the basis for civil penalties, the Commission must construe it narrowly to satisfy these constitutional considerations.

We have considered SCE's admonition and conclude that our fine of $30 million is well within due process and excessive fines limitations. In R.J. Reynolds the California Supreme Court cited the United States Supreme Court:

The [U.S. Supreme Court] pointed out that "[t]he touchstone of the constitutional inquiry under the Excessive Fines Clause is the principle of proportionality." (United States v. Bajakajian, (1998) 524 U.S. 331, 334.) It then set out four considerations: (1) the defendant's culpability; (2) the harm and the penalty; (3) the penalties imposed in similar statutes; and (4) the defendant's ability to pay. (People Ex. Rel. Lockyer v. R.J. Reynolds Tobacco Co. (2005) 37 Cal.4^th 707, 728, 36 Cal.Rptr.3d 814, 124 P.3d 408.)

Applying those principles to SCE, we find that SCE was culpable. Some managers encouraged the falsification and manipulation of data and others were in a position to know of the problem but failed to investigate thoroughly. The relationship between the harm and the penalty is: harm $80.7 million, penalty $30 million, an extremely favorable relationship when the penalty could have been $102 million. SCE's ability to pay is clear. In 2006, it had revenue of $10.3 billion and net income after taxes of $827 million. Our fine is less than 4% of net income, and 0.3% of revenue. We expect this penalty to be a deterrent to SCE and to other utilities:

¹³ The Eighth Amendment to the United States Constitution states that "[e]xcessive bail shall not be required, nor excessive fines imposed . . . ." The Fourteenth Amendment makes the Eighth Amendment applicable to the states and contains independent (due process) considerations which, on their own force, affect a penalty analysis. People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 37 Cal. 4^th 707, 727 (2005). The due process and excessive fines jurisprudence in California evolved separately, but the Court in R.J. Reynolds noted that the two analyses - as well as the analyses under the California constitution's equivalent provisions - are for the most part the same. (Id. at 728.)