3. Preliminary Scoping Memo

The petition, various responses and replies to the petition, the five-page issue matrix the parties developed prior to the workshop, and the informal workshop discussion all represent early stages in the process of defining "problems" with the status quo and working toward "solutions." We are persuaded to open a rulemaking to further this dialogue and ultimately, to adopt additional guidance for all parties, including new or revised rules as may be warranted. Thus, the initial scope is broad: What can and should the Commission do to encourage the replacement of MHP submeter systems with direct utility service on a reasonable basis and in a manner both timely and fair to all concerned?

Any answer to this question must address the first three issues in the list above (safety/reliability, transfer prioritization, reasonableness of cost allocation), all of which have undisputed merit. The remaining six issues in the list should all be considered as a plan is devised for moving forward and those issues which prove meritorious should be incorporated into the plan.

We offer further comments on several issues, beginning with safety. We have no evidence that existing MHP submetered service, taken as a whole, poses an imminent and serious safety risk. There may well be some MHP submeter systems where age or other factors raise the potential for safety problems that should be addressed before actual problems occur. As we consider how to move forward, safety must be the first consideration, which Commissioner Ryan recognized at the PHC:

[T]he bedrock responsibility of the PUC is consumer protection, and consumer protection has many faces, certainly rates, which is what we talk about most often, but clearly customer safety is an important dimension of consumer protection as well ... [a]nd I think safety is the paramount consideration in the context of how will electric and gas service be provided in the mobilehome parks and who will provide that service. (PHC transcript at 3.)

While safety is paramount, reliability also warrants further assessment. Some parties, such as TURN, link safety with reliability and contend that in terms of the functioning of electric and natural gas systems, safety and reliability are so interconnected that conceptual efforts to separate them are not meaningful. In particular, how should § 2794(3)(b)'s reference to "customary expected load" be understood given the increased power demands necessitated over time by electrical appliances and devices, and the increased power capabilities of modern mobilehomes and manufactured housing?

Though the age of a system may not pose an absolute safety or reliability risk, this factor provides a meaningful opportunity to reassess the provision of electricity, natural gas, or both at MHPs. As Commissioner Ryan observed:

[W]e have these systems that were put in 30 or 40 years ago that ... in many instances are ending their useful life. And I think we have an opportunity to rethink as we go into . . . the second generation of distribution systems in these settings, what's the framework in which we want to do it. (PHC transcript at 19.)

Clearly, the transfer from MHP master-meter/submeters systems to direct utility service cannot happen all at once. An important element of any transfer plan must be a method for reasonably prioritizing those transfers, including, perhaps, some way of processing them in groups or "batches." However, both a prioritization method and any "bigger picture" roadmap for the pace of transfers over time require a better factual predicate than the one available to us at present. The parties are the best equipped to identify the necessary facts and to suggest a reasonable, cost effective means of developing them.

Any transfer plan must be fair and reasonable to all ratepayers, including MHP tenants, to utilities, and to MHP owners. While it is premature for us to opine on the specific requirements of a just solution, we observe that a deep-seated and ongoing source of contention among the parties has been whether the MHP master-meter discount is adequate, on the one hand, and whether MHP owners have used the discount they have received for appropriate master-meter/submeter purposes. We urge all parties to consider how to reasonably bridge this disagreement in a way that minimizes unfairness, including the likelihood of financial penalty or windfall to either ratepayers or MHP owners.

Some parties have urged us to consider whether the focus of this rulemaking and any transfer effort should be limited to voluntary transfers (in other words, situations where the MHP owner actively seeks to relinquish the MHP submeter system transfers, as specified in § 2791(a)). One demarcation is clear-the Commission's rulemaking can extend only to MHPs located in the franchise areas of Commission-jurisdictional utilities. A rulemaking cannot apply, for example, to MHPs served by municipal utilities. However if, as WMA suggests, MHP owners as a group wish to exit the master-meter/submeter business, then the looming problem will be prioritization, not reluctance to transfer.

At the workshop, the parties agreed that any initial plan for moving forward should include at least three components: (1) fact-finding to establish facts necessary or useful to policy formulation; (2) development of party proposals, and (3) one or more workshops, potentially followed by evidentiary hearings and/or briefs or comments. We agree that this approach generally makes sense. We encourage collaboration among parties wherever possible and at each process stage and at this time, we do not foresee the need for evidentiary hearings.

With respect to the fact-finding undertaking, we caution that it must be timely and it must be reasonable in other respects. Each party should consider the importance of a fact or group of related facts to the issues to be resolved, the burden in time and financial resources to develop that information, and the existence of one or more reasonable alternatives or proxies.

Finally, we grant WMA's petition to the extent the relief it seeks may be considered within the scope identified above and we deny the petition to the extent it would limit our consideration to the specific issues and solutions WMA has identified.