IV. WCA Request for Rebate or Refund

A. Positions of the Parties

WCA reports that its common area electricity bill doubled as a result of the residential tiered rate design adopted in D.01-05-064, with 95% of its usage now assessed Tier 5 surcharges. WCA does not contest that PG&E has billed common area accounts according to its tariffs implementing D.01-05-064. However, WCA requests a rebate or refund of the surcharges, with interest, on the basis that the increases are excessive and unreasonable under §§ 451, 453, and 739 and do not comport with standards of fairness and due process.

PG&E contends that retroactive relief such as WCA requests is prohibited under § 728 and, on that basis, made a motion to strike the related WCA testimony. The assigned ALJ admitted the disputed testimony subject to PG&E's motion and directed the parties to address common area refund-related issues, including the motion to strike, in their briefs.

WCA asserts that the statutory prohibition on retroactive ratemaking applies only to Commission acts promulgating general rates, and maintains that the procedure for adopting the surcharges was similar to that used for fuel cost adjustment clauses, which the California Supreme Court found not subject to the ban on retroactive relief. Southern California Edison Company v. Public Utilities Comm. (1978) 20 Cal.3d 813 (Edison), 817. WCA maintains further that D.01-05-064 and PG&E's implementing advice letter contain no findings that support or anticipate that a doubling of rates for certain residential customers might occur or was intended. WCA points to the discussion in D.01-05-064 that rates for residential customers could increase up to 47%, depending on usage (D.01-05-064, mimeo. at 4), and also to a newspaper article which quoted a Staff representative as saying that the large common area rate increases were an unintended consequence of the adopted surcharges. WCA notes that bill limiters were adopted to protect customers from unanticipated impacts of increases, with agricultural increases capped at 15% to 20%, but believes that the bill limiters were not applicable to residential customers.

PG&E argues that the Commission cannot award refunds after it has approved rates in a ratemaking setting. PG&E contends that, even if the Commission could approve a refund, the appropriate forum would be a complaint case rather than this proceeding. As further grounds for its opposition, PG&E maintains that WCA has not described what the refund should be, other than to say that it should consist of "excess surcharges."

PG&E argues that the situation in Edison is distinguishable from the rates at issue here, with the customer credits granted in that instance related to a rate increase made prospectively by SCE under its fuel adjustment clause, without Commission approval. PG&E contends that the Court held that returning the fuel cost overcollections was not retroactive ratemaking because it was simply another way of balancing the fuel collection costs which, in the long run, would have been balanced by the weather cycles anyway. PG&E maintains that, in contrast, the Commission conducted a forward-looking ratemaking proceeding and issued a decision (D.01-05-064) adopting the surcharges which WCA finds objectionable.

B. Discussion

Upon consideration of WCA's request for common area-related refunds, we find no basis for granting the request.

We disagree with PG&E regarding our ability to order refunds if WCA's request were found to have merit. Our adoption of surcharges for PG&E and SCE in D.01-03-082 and the subsequent rate design in D.01-05-064 did not constitute general ratemaking. The revenues generated by the surcharges were to be applied only to the utilities' power purchases.²⁷ The surcharges were considered and adopted on an expedited basis under emergency conditions in order to allow PG&E and SCE to continue to provide adequate electric service to their customers. The resulting revenues were to be entered into a balancing account subject to refund. We agree with WCA that the surcharges and balancing account mechanism have strong parallels with the fuel cost adjustment clause considered in Edison. For these reasons, a refund such as WCA proposes would not disallow the recovery of costs previously approved through general ratemaking.

The Court concluded in Edison that an adjustment of rates that does not involve general ratemaking may have a retroactive effect without violating the prohibition on retroactive ratemaking. Because the surcharges were not the result of general ratemaking, we conclude that a refund such as WCA requests would not be prohibited due to its retroactive effects. As this situation indicates, and contrary to PG&E's apparent belief, not all proceedings classified as ratemaking pursuant to § 1701.1 and Rules 5 and 6.1 of the Commission Rules of Practice and Procedure undertake general ratemaking for which the retroactive ratemaking ban in § 728 applies. Because the relief which WCA requests is not prohibited under § 728, PG&E's motion to strike WCA's related testimony is denied.

We disagree with WCA's assertions regarding lack of due process. As D.01-05-064 explained, the adopted residential rate structure was based on a tiered rate design proposed initially by the assigned commissioner in a ruling sent to all parties. We held workshops, public participation hearings, and evidentiary hearings on the residential rate design, and all customers received notice by a special mailing. Thus, customers had ample notice regarding potential impacts of the proposed tiered rate design and the opportunity to express their views and concerns to the Commission.

While in D.01-05-064 we did not explicitly consider the effects of the residential tiered rate design on large common area accounts, we were well aware that the surcharges could be burdensome for high use customers. Because of this concern, we adopted bill limiters for all rate classes (including residential customers, contrary to WCA's understanding), with the intent of protecting high use customers from unanticipated impacts of the increases in electric bills. Upon further consideration we eliminated the bill limiter mechanism in D.01-06-040 because of concerns regarding its effectiveness, its impact on conservation efforts, and other potential adverse consequences.

The common area settlement approved for PG&E in D.03-01-037 and today's adoption of comparable provisions for other residential common area accounts substantially mitigate the disproportionate impacts of the residential tiered rate design on WCA and other large common area accounts. As described above and in D.03-01-037, the majority of common area accounts benefit from access to residential service, even with the tiered rate design. Further, WCA has received advantageous rates on PG&E's residential seasonal Schedule E-8, a schedule originally intended to discourage fuel switching and now closed to new customers. For these reasons, we find no basis for granting WCA's request for refunds.