V. Comments on Proposed Decision

The proposed decision in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1 of the Rules of Practice and Procedure. Comments were filed on March 11, 2002, and reply comments were filed on March 18, 2002.

The comments raise the following issues, which we discuss in turn:


    · The timing of the ordered change in baseline quantities, and whether our decision to raise baseline quantities must occur concurrently with our examination of the effect on rates.


    · Whether requiring utilities to set baseline quantities at the top of the statutory range violates Pub. Util. Code § 739.


    · What qualifies as an "open" application that obviates the need for the utility to make a filing in this proceeding to recalculate baseline quantities.


    · Whether the draft decision's "up not down" approach to baseline quantities applies to utilities that do not buy power from the Department of Water Resources, and treatment of small utilities generally.


    · Whether utilities may use 2001 data in updating baseline quantities.


    · Whether the draft decision violates the October 2001 Settlement Agreement between SCE and the Commission.


    · Use of the BBA to track gas revenue shortfalls, and interest on the BBA.


    · Whether the draft decision goes far enough to improve the medical baseline process, the recertification requirements for the permanently disabled, and utility cost recovery for medical baseline changes.

Due to the passage of time between the hearings and the date the draft decision mailed, we agree with the parties that the effective date for baseline changes ordered in the decision must change. Such changes shall now be effective, at the utility's option, on the date the affected utility changes its baseline quantities for the summer 2002 season, or June 1, 2002. All utilities shall file an advice letter no later than 30 days following the effective date of this decision demonstrating that they have made the required changes.

We reject the utilities' claims that we may not require them to update baseline quantities without a simultaneous revision in rates. The BBA mechanism will ensure that utilities are compensated for any rate shortfall between the foregoing effective date and the time after the July 2002 Phase 2 hearings when the Commission adjusts rates to reflect the changes. It makes no sense to handle rate changes piecemeal, since there may well be additional changes as a result of the hearings. Nor do the utilities make a valid legal claim that we must do both simultaneously.

We also agree with the ORA that we should set an outside time limit for updating baseline consumption data. We adopt ORA's suggested deadlines. Thus, for the natural gas baseline allowance, the deadline for updating baseline consumption data shall be the beginning of the 2003-04 winter heating season (generally October 2003). For new electric baseline allowances, the deadline shall be the summer cooling season of 2003 (generally May-June 2003). If the Commission has not issued a decision updating utility data regarding baseline allowances at least 30 days prior to these season changes, the utilities shall file an advice letter implementing such baseline allowance changes.

SDG&E and SoCalGas repeat arguments made during the proceeding and rejected in the draft decision that setting baseline quantities at the top of the statutory range actually violates the statute. They note that baseline quantities will be set based on an average of several years' usage. If, they contend, there is an unusual weather year, actual usage will not match the average. For example, in an average winter, usage may be at 100 units, with the baseline set at 70 units. However, in a warm winter, usage may lower to 90 units, with the baseline quantity remaining at 70 units. Seventy units are more than 70% of 90 units, so a customer with a 70-unit baseline quantity will actually receive a baseline of more than 70 percent.

We do not agree that this circumstance violates the statute. Section 739(d)(1) only requires the Commission to "establish," or set, baseline quantities based on the statutory percentages. If, over time, these quantities are out of sync with "average consumption patterns," then it is the Commission's obligation to review and revise baseline quantities to reflect these changes. However, the existence of an outlying year presenting the scenario reflected above does not mean that the Commission has not "established" baseline quantities at an amount reflecting average consumption. Thus, we reject the utilities' claim.

The draft decision gives utilities four ways to update their baseline quantities:


Any respondent energy utility that [1] has its current baseline rates calculated on calendar year 1999 or 2000 data or [2] has an open application before this Commission in which its baseline rates will be updated using 1999 or later data, is not required to update its data in this proceeding, but may choose to do so. [3] Any respondent energy utility currently using data no older than calendar year 1996 that files an application prior to March 31, 200216 to update its baseline data using calendar year 2000 or 2001 data is not required to update its data in this proceeding, but again may choose to do so. [4] All other respondent utilities must update their data and their corresponding baseline amounts in this proceeding.

ORA notes that the decision is not clear as to what constitutes an "open" application under choice 2. It explains that a GRC might be "open" currently, but not contain updated proposed baseline quantities. We clarify that to qualify as an "open" proceeding under choice 2, the proceeding must be open on or before the effective date of this decision and already present, as of the effective date of this decision, proposed updated baseline quantities. Thus, an open GRC proceeding that does not present such updated quantities does not qualify as an "open" proceeding for purposes of this decision. It makes sense to define "open" proceedings in this way, since it could take a long period of time for large GRC proceedings to reach a phase in which baseline quantities would be examined. Since updating of baseline quantities should happen expeditiously, we are not prepared to allow any GRC to qualify regardless of how far off in the future baseline quantities might be addressed.

Thus, as ORA suggests, an "open" application only pertains to a utility filing that has actually evaluated baseline quantities based upon updated consumption data.

We change the March 31, 2002 date under choice 3 to state "prior to a date that falls 30 days after the effective date of this decision." We also clarify that all utilities shall file a compliance advice letter no later than 30 days following the effective date of this decision stating which of the four foregoing choices they opt for. We agree with ORA's suggestion that the advice letter present and distinguish the effects of new baseline quantities attributable to updated consumption data from the effects of the new statutory maximum baseline allowance levels approved in the decision. Protests to or comments on the advice letters shall be filed no later than 15 days following the advice letters' filing.

Mountain Utilities and ORA note that since AB1X applies only to utilities taking Department of Water Resources (DWR) power, other utilities should be allowed to adjust baseline quantities up or down. (The draft decision found that pursuant to AB1X, baseline quantities for affected utilities could only be adjusted upward.)

We agree that the constraints imposed by AB1X do not apply to utilities not taking power from the DWR. Therefore, those utilities that take no power from the DWR should adjust their baseline quantities to whatever levels the new average use data suggests, whether those quantities go up or down.

As to the treatment of small utilities generally, only Mountain Utilities (MU) has made the case that it should receive different treatment from the other utilities in California. It explains that it has only 500 customers in one California valley characterized by mild summers and harsh winters. Therefore, MU explains, it should not be required to recalculate baseline quantities until winter 2002. MU also claims that it is exempt from the requirement to update its data since its last update was based on 1998 and 1999 data.

We do not agree that it makes sense to exempt MU. It states that the rates and baseline quantities approved in its last GRC only last through part of 2002, citing D.99-12-006. Moreover, those quantities included 1998 data, while the draft decision adopts 1999 as the cut-off year. Nor does MU explain why having to update baseline quantities in summer, rather than winter, would cause it hardship. Thus, the draft decision applies to MU and all small utilities with the exception noted about with regard to the "up not down" rule.

We do not agree with Edison that a decision affecting baseline quantities violates its October 2001 Settlement Agreement. As ORA points out, altering baseline quantities is not the same as lowering baseline rates. Moreover, we disagree with SCE's contention that anything that lowers the combination of settlement rates and revenues violates the Settlement Agreement. As ORA points out, under SCE's faulty reasoning, virtually every fluctuation in Edison's revenue would be a violation of the Settlement Agreement, which clearly is not the case. Rather, only a rate change - and then only under certain circumstances - implicates the Settlement Agreement.

The draft decision adequately considers, and rejects, TURN's argument that the utilities should exclude 2001 data in recalculating average usage. While we agree that 2001 was an extraordinary year for energy use and users, we do not believe excluding that data makes sense. Because usage is calculated over several years' time, and because energy usage naturally fluctuates over time, an average usage figure should include the outliers as well as the years that pose no change to the norm. Thus, 2001 data may be included in updating baseline quantities.

TURN's argument that we should prohibit the utilities from using 2001 data in the future is premature. It may raise this argument the next time we order the utilities to update baseline quantities.

Because we plan to address rate impacts of all baseline changes in Phase 2 of this proceeding, gas utilities should also use the BBA even though they were never affected by the AB 1890 rate freeze.

We agree that amounts in the BBA should receive interest at the 3-month commercial paper rate, and adjust the pertinent ordering paragraph accordingly.

DRA challenges our decision not to require medical baseline forms to be in Braille. There simply was not adequate evidence in the record on this point, and we make no change.

With regard to the draft decision's requirement that applications shall be available in large print, we clarify, based on DRA's comments, that "large print" means at least 16- to 18-point type.

With regard to recertification for those with permanent disabilities, we make no change to the draft decision, which allows such customers to self-certify every two years. DRA has adequately demonstrated the hardship those with permanent disabilities face gaining access to medical providers, and also notes that 48.2% of persons with disabilities are uninsured, making it even more difficult to obtain a doctor's certification. Moreover, by definition, those with a permanent disability will not recover, so we see no reason to require them to get a doctor's recertification every two years.

We do not change the certification periods for those with permanent or non-permanent disabilities.

Finally, we affirm that utilities may receive reasonable cost recovery for the costs caused by the changes we order to the medical baseline program.

Findings of Fact

1. The age of the usage data used to calculate gas and electric baseline allowances varies widely between utilities.

2. The age of the usage data used to calculate gas and electric baseline allowances sometimes varies between gas and electric customers of a single utility.

3. While the methodology used to calculate gas and electric baseline allowances varies somewhat, all of the major utilities incorporate an averaging or normalization process.

4. The predominant calculation methodology is the bill frequency methodology, previously adopted by this Commission.

5. The percentage of energy usage used in calculating baseline quantities must fall within the statutory ranges identified in Pub Util. Code § 739.

6. Some utility customers have their baseline allowances calculated using a percentage of energy usage at the top of the statutory range, while other customers have their baseline allowances calculated using a percentage of energy usage at the midpoint of the statutory range.

7. Water Code § 80110 addresses electric baseline cost issues, but is silent on gas baseline cost issues.

8. The medical baseline program can be improved in the areas of outreach, ease of enrollment and certification, and consistency among utilities.

9. Customers faced with both a serious medical condition and a language barrier may be doubly disadvantaged in their ability to pay their energy bills and find out about programs that can offer them assistance.

10. We do not have an adequate record to require utilities to provide medical baseline forms in Braille.

11. Combining medical baseline information on all CARE forms could result in customer confusion.

12. We do not have an adequate record to order changes to the medical baseline forms. It is appropriate, therefore, to order that the parties meet and confer regarding proposed changes to the form prior to addressing such changes in a decision.

13. A significant percentage of permanently disabled consumers is uninsured, making access to medical providers difficult.

14. Our most recent Energy Efficiency decision, D.02-03-056, orders utilities to use English, Spanish and the most prevalent Asian language for key energy efficiency materials.

15. It is not clear whether the Commission and the parties currently have adequate information and expertise to thoroughly review the utilities' climate zones. The Commission may find it necessary to retain a consultant with expertise in this area to study the utilities' climate zones and any suggestions for changes to those climate zones.

16. There is no reason why the age of the usage data used to calculate gas and electric baseline allowances should vary significantly between utilities or between gas and electric customers of a single utility.

17. All electric and gas customers should have their baseline allowances calculated using relatively current usage data.

18. All utilities should use the bill frequency methodology previously adopted by the Commission.

19. No customer or utility hardship has been shown to result from setting the percentage of energy usage used in calculating baseline allowances at the maximum of the statutory range.

20. The baseline allowance for all electric and gas customers should be calculated using maximum allowable percentage of energy usage.

21. The Commission need not wait for a utility to file its GRC in order to adjust baseline allowances.

22. We will resolve cost allocation issues raised by our decisions here in Phase 2 of this proceeding.

23. The adjustment in baseline quantities ordered here does not violate the Edison Settlement Agreement of October 2001.

Conclusions of Law

1. Pub. Util. Code § 739 requires the Commission to review and revise baseline quantities as average consumption patterns change.

2. Section 739 requires that baseline ratios be maintained at 50 to 60 percent of average residential consumption and 60 to 70 percent of such consumption during the water-heating season for residential gas customers and all-electric residential customers. That section requires the Commission to "establish" baseline at these levels. If, due to unusual weather, baseline actually exceeds these percentages, there is no § 739 violation so long as the Commission "establishes" baseline quantities based on the statutory percentages.

3. In setting baseline quantities, we are not required to use data from identical time periods for each utility.

4. AB 1890 does not constrain the Commission from changing baseline allowances in this phase of the proceeding.

5. Water Code § 80110, read together with Pub. Util. Code § 739, authorizes us to increase baseline allowances for electricity, but not to decrease them, for electric utilities that take power from the DWR or that are otherwise bound by § 80110. For other electric utilities, baseline quantities may go up or down based on this decision's changes.

6. Consistent with Water Code § 80110, customers' rates will be calculated based on 130% of the new baseline levels we set in this proceeding, rather than based on 130% of the levels in existence on February 1, 2001. In order to maintain revenue neutrality to the utilities until Phase 2, when rates will be subject to change, it is reasonable to authorize the establishment of a balancing account (the BBA) that will track any under-collection or over-collection resulting from today's decision.

7. Under Pub. Util. Code § 739, the Commission may increase the charges for usage above 130% of existing baseline, but is not required to do so.

8. Water Code § 80110 does not affect gas baseline quantities. Thus, the Commission is free in this proceeding to raise or lower gas baseline quantities.

9. The Commission need not wait for a utility to file its GRC in order to adjust baseline allowances.

10. This order should be effective today in order to increase baseline allowances expeditiously.

INTERIM ORDER

IT IS ORDERED that:

1. The determinations made in this order apply to all Commission-regulated gas or electric utilities. Any Commission-regulated gas or electric utility that has its current baseline rates calculated on calendar year 1999 or 2000 data or has an open application before this Commission which already presents, as of the effective date of this decision, proposed updated baseline quantities using 1999 or later data, may update its data in this proceeding, but is not required to do so.

2. Any utility currently using data no older than calendar year 1996 shall either file an application prior to the date that falls 30 days after the effective date of this decision to update its baseline data using calendar year 2000 or 2001 data or shall update its data in this proceeding.

3. All other utilities must update their data and their corresponding baselines in this proceeding. Any utility intending to update its data and baseline in any other proceeding shall notify the Commission within 30 days of the effective date of this decision of its intent to do so via compliance advice letter, including identification of the type of application, filing date or anticipated filing date, and proceeding number.

4. Southern California Edison Company (Edison or SCE), Pacific Gas and Electric Company (PG&E), San Diego Gas and Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) shall use their proposed or existing methodologies to update their data.

5. Any utilities whose existing methodology is not consistent with one of the three methodologies used by the major utilities (four-year average, weather normalization or normalization of current data using historical usage) shall update their data by applying one of these approved methodologies, with our preference being for weather normalization.

6. The respondent utilities shall file compliance advice letters within 30 days of the effective date of this decision indicating which methodology they are currently using, and if changing methodology, which methodology they are adopting.

7. The respondent utilities shall continue to use the existing bill frequency methodology, adopted in Decision (D.) 83-12-065, for calculating baseline quantities.

8. For the natural gas baseline allowance, the deadline for updating baseline consumption data shall be the beginning of the 2003-04 winter heating season (generally October 2003). For new electric baseline allowances, the deadline shall be the summer heating season of 2003 (generally May-June 2003). If the Commission has not issued a decision updating utility data regarding baseline allowances at least 30 days prior to these season changes, the utilities shall file an advice letter implementing such baseline allowance changes. This paragraph only pertains to the requirement that utilities update energy usage data contained in Section III(A) of this decision. In that section, the Commission orders utilities to use this proceeding (or others in certain cases) to update their consumption data. All other changes ordered in this decision - those discussed in Sections III(B) (raising baseline quantities to statutory maximums) and (E) (changing medical baseline program) - shall be implemented as set forth in Ordering Paragraph 12.

9. The respondent utilities shall set their baseline quantities for both basic and all-electric customers at the highest percentage allowed by § 739, consistent with PG&E's practice. They shall file an advice letter demonstrating that they are in compliance with this requirement no later than 30 days following the effective date of this decision.

10. The "up not down" rule articulated in Section III(C) of this decision only applies to utilities that take power from the Department of Water Resources or that are otherwise bound by Water Code § 80110. For other utilities, baseline quantities may go up or down based on the changes this decision orders.

11. If gas and electric utilities already have an appropriate balancing account in which to record the effect of today's decision, they may use that account, rather than create a new one, as long as the balancing account to be used is clearly identified in a compliance advice letter. Otherwise, the respondent gas and electric utilities shall establish the Baseline Balancing Account (BBA). Any costs recorded in the BBA, or other applicable account, are recoverable after the end of the rate freeze, consistent with the procedures adopted in D.01-07-028.

12. All changes required to be made in the baseline quantities as a result of this decision shall be in place, at the utility's option, by the date the utility changes baseline quantities for the 2002 summer season, or June 1, 2002, except those changes with a different deadline as set forth in Ordering Paragraph 8.

13. PG&E, SCE, SDG&E, and SoCalGas shall, in addition to English, provide all medical baseline forms in Spanish and in the most prevalent Asian language in their respective service territories. We also encourage these four utilities to provide medical baseline forms in additional languages, particularly languages spoken by significant percentages of their customers. In the alternative, these utilities may work with community groups to provide information in additional languages on the medical baseline program.

14. If more than 10% of the customers of a utility not covered by the previous ordering paragraph speak as their primary language any language other than English, that utility shall make its medical baseline forms available in the second most common language in its service territory. We also encourage these utilities to perform outreach on medical baseline in additional languages, but the Commission will leave the determination of the best approach up to each utility.

15. All respondent gas and electric utilities shall have all medical baseline information and forms available in large print (at least 16- to 18-point type) and should be provided upon request. Large print versions shall be made available immediately, and need not await the revision of the forms. During this interim period, these large print materials need not match the format of the standard size material, and can be a simple enlargement of the existing materials.

16. We encourage all utilities to conduct outreach programs for the visually impaired through community organizations and state agencies that serve the blind and visually impaired.

17. Utilities with California Alternate Rates for Energy (CARE) programs shall inform organizations involved in CARE outreach of the existence of the medical baseline program if they have not done so already, and let those organizations know of the availability of forms and information relating to medical baseline.

18. The respondent gas and electric utilities shall perform reasonable outreach regarding the medical baseline program to Independent Living Centers and Senior Organizations in their service territories. They shall describe in detail how they are performing this outreach in the compliance advice letters we require in this decision.

19. Disability Rights Advocates (DRA) shall file and serve samples of the medical baseline forms, as DRA believes they should appear, within 30 days from the date of this order. DRA need not wait the 30 days, but may serve its samples earlier if they are ready. Within 30 days of the date that DRA provides samples of its suggested forms, the respondent gas and electric utilities shall and any other party may respond. All responses shall be filed and served; responses may be made prior to the 30-day deadline. If DRA and the other parties that provided a response to DRA cannot agree on the content of the forms within 30 days from when those utilities respond, all parties shall meet with the Commission's Energy Division, which retains or maintains or reserves the authority to resolve any outstanding issues. DRA, the utilities, and other interested organizations are encouraged to meet informally outside of the framework, devised for this proceeding in order to achieve a resolution of this issue prior to the above dates. If such resolution is reached, the utilities shall file and serve a report describing the resolution, including at least a copy of the agreed upon forms to those named on the service list in this proceeding, and to the Commission's Energy Division.

20. The utilities shall make medical baseline forms available to anyone requesting such forms, whether or not that person is potentially qualified for medical baseline or is even a customer of the utility. The utilities shall confirm that their customer service personnel have easy access to the forms and readily provide the forms to anyone who asks for them.

21. Any utility that currently offers any of its customer forms online must add its current medical baseline form to its website within 20 days of the date of this order. Other utilities shall have the form available on the website within 30 days of the revised form becoming available, if they are required to, or actually do, maintain a website. All utilities shall have information about medical baseline on their websites, including a telephone number to call to request medical baseline forms, and a means to request medical baseline forms by e-mail, within 20 days of the date of this order.

22. Respondent gas and electric utilities shall inform their customers of the following: 1) Customers certified as having a permanent disability will need to self-certify their eligibility every two years, in lieu of obtaining a physician's signature or authorization, to (at a minimum) ensure their continued residence at the service address, and 2) Those customers not having a permanent disability will need to self-certify each year, and will need a doctor's certification every two years.

23. Any electric utility whose electric medical baseline allowance is lower than the allowances of the three major electric utilities shall revise upward its medical baseline allowance to match those of the three major electric utilities in this proceeding, and to implement this change by advice letter filing within 30 days of the effective date of this decision. Any revenue shortfall resulting from this change should be recorded in the BBA.

24. The Commission delegates to the assigned Commissioner the authority to retain for this proceeding, on behalf of the Commission, a consultant or consultants for the purpose of reviewing the utilities' climate zones, reviewing any proposals relating to climate zones, and if necessary, suggesting changes to the climate zones.

This order is effective today.

Dated April 9, 2002, at San Francisco, California.

16 We change this date due to the passage of time.

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