ALJ/jgo MAILED 4/10/2002

Decision 02-04-026 April 9, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Own Motion to Determine Whether Baseline Allowances for Residential Usage of Gas and Electricity Should Be Revised

Rulemaking 01-05-047

(Filed May 24, 2001)

INTERIM OPINION
REGARDING PHASE 1 ISSUES

TABLE OF CONTENTS

Title Page

INTERIM OPINION REGARDING PHASE 1 ISSUES 1 1

TABLE OF CONTENTS i i

I. Summary 2 2

II. Scope Of This Proceeding 4 4

III. Discussion 5 5

A. Updating Energy Usage Data 5 5

B. Percentage of Energy Usage to Use in Calculating Baseline Quantities 10 10

C. Commission Authority to Adjust Baseline Quantities 11 11

1. AB 1890 11 11

2. Water Code § 80110 12 12

a) "Existing" Baseline Quantities 13 13

b) Whether We May Increase Baseline Quantities 13 13

c) Whether We May Decrease Baseline Quantities 15 15

d) Interplay Between Water Code § 80110 and Pub. Util. Code § 739 16 16

e) Effect of § 80110 on Usage Above 130% of Baseline 17 17

f) Gas Baseline Quantities Not Affected 18 18

3. Interplay Between Water Code § 80110 and Our Decision to Update Energy Usage Data and Set the Target Percentage at Top of Statutory Range 18 18

4. Timing of Changes to Baseline 19 19

D. Rate Impacts Addressed in Phase 2 20 20

E. Medical Baseline 20 20

1. Translating Medical Baseline Forms Into Languages Other Than English and Into Braille 21 21

a) Foreign Languages 21 21

b) Braille 23 23

2. Simplification of Medical Baseline Forms 23 23

3. Availability of Medical Baseline Forms 25 25

4. Outreach 26 26

a) CARE Programs 26 26

b) Other Outreach 26 26

5. Recertification 27 27

6. Size of Medical Baseline Allowance 27 27

IV. Climate Zone Study for Phase 2 28 28

V. Comments on Proposed Decision 28 28

A. Timing of Updated Baseline Consumption Data and Rate Changes 29 29

B. Setting Baseline At Top of Statutory Range 30 30

C. Definition of "Open" Applications 31 31

D. Application of "Up Not Down" Rule to Utilities Not Taking Power from the Department of Water Resources, and Small Utility Issues Generally 32 32

E. The Draft Decision Does Not Violate the Edison Settlement Agreement 33 33

F. Use of 2001 Data 34 34

G. BBA Issues 34 34

H. Medical Baseline Issues 34 34

Findings of Fact 35 35

Conclusions of Law 37 37

INTERIM ORDER 39 39

I. Summary

In this first phase of our rulemaking on electric and gas baseline allowances, we increase the baseline allowances for many residential customers and begin the process of improving the medical baseline program. Specifically, we require the utilities to update the data used for calculating baseline allowances to reflect current usage of both gas and electricity, to increase baseline allowances to the maximum percentage levels allowed by state law for those customers not already receiving those maximum allowances, and to take steps to simplify and improve the process by which customers may obtain additional baseline allowances for medical reasons.

In the Order Instituting Rulemaking (OIR) dated May 24, 2001 opening this proceeding, we stated:

In summary, it has become clear that baseline is an important topic that merits attention at a time when so many Californians are being affected by the largest energy rate increase this Commission has ever had to impose. Section 739, the baseline statute, was added to the Public Utilities Code by the legislature through passage of Assembly Bill 167, the Warren-Miller Energy Lifeline Act, in the 1975-1976 legislative session. After the Commission determined the initial baseline quantities in 1976, it made subsequent revisions and updates in the utilities' general rate cases over the years. Section 739(d)(1) requires, "The commission shall review and revise baseline quantities as average consumption patterns change in order to maintain these [50% to 60%, and 60% to 70% of average residential consumption] ratios." With our recent rate design relying so heavily on baseline quantities to determine which residential customers are affected and to what degree, it becomes more important than ever to ensure the baseline program is up to date. Now is an appropriate time to do such a review. (OIR pp. 5-6)

This decision is the first step in bringing the baseline program up to date. This first step, while significant in expanding the benefits of the baseline program, still provides only limited relief to California's ratepayers. Our actions in Phase 2 of this proceeding may provide additional relief, but as we noted in the OIR:

While we will do our best to adjust baseline quantities to more accurately reflect current consumption levels and significant differentials between customers, we are limited in our review by the statutes setting baseline quantities well below average usage of customers. Because of this, even with revised and updated baseline quantities, the average customer may still find it difficult to reduce usage to baseline levels. (OIR pp. 5-6)

We do, however, begin to make the baseline program more consistent among utilities, which should make it more understandable than it has been in the recent past. In addition, our changes will have the effect of increasing the baseline quantities for most Californians.

Our actions today apply to all Commission-regulated gas and electric utilities, except where otherwise indicated. All changes we require these utilities to make shall be in place, at the utilities' option, by June 1, 2002, or when the utilities change from winter to summer baseline quantities. The single exception relates to updating consumption data, which should be done as follows: 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.

This latter deadline only pertains to the requirement that utilities update energy usage data contained in Section III(A) and Ordering Paragraph 8 of this decision. In that section, the Commission orders utilities to use this proceeding (or others in certain cases) to update their consumption data. It is understandable that this process will take time. In some cases, the utilities will present new consumption data in this proceeding, but have not yet done so. In other cases, the utilities have already presented the data in other proceedings, but there has not yet been a Commission decision approving such 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, at the utilities' option, either by June 1, 2002 or when the utilities switch to summer 2002 baseline quantities as set forth in Ordering Paragraph 12.