Findings of Fact
1. Section 1(e) of AB 2443, legislative analyses contemporaneous with AB 2443, and subsequent legislative actions adding additional medical conditions to § 739(b) indicate a legislative intent that the Commission, in developing the baseline program, not consider end uses other than those specified in § 739(b).
2. The legislative history of AB 2443 describes that AB 2443 would simplify the lifeline program, with reference to elimination of end uses.
3. The legislative history of AB 2443 establishes that the Legislature was aware of concerns regarding the baseline treatment of large households, households with senior citizens, and seasonal residences when it passed AB 2443.
4. The fact that in AB 2443 the Legislature provided general direction that we take into account certain factors in the baseline program, in contrast to the explicit restriction on consideration of end uses, and the legislative history indicate a legislative intent that the Commission retain authority to take into account factors, except end uses, not specified in § 739(a) and (d)(1) in developing the baseline program.
5. The provision in § 739(b) for a standard limited allowance in addition to a customer's baseline quantity is very specific and is very narrowly drawn.
6. The non-baseline tiers of the residential rate design are not part of the baseline program.
7. Because the burden to individual customers of the current steeply tiered electric rate design depends on the amount by which the customers' usage exceeds baseline amounts, it is appropriate to consider in this proceeding rate design proposals to ameliorate the impacts of the rate design on vulnerable customers.
8. The direction in § 739(c)(1) to avoid excessive rate increases and the principle in § 739(c)(2) that electricity and gas services should be affordable continue to apply and encompass all residential customers.
9. The principles of affordability and conservation established by § 739(c)(2) provide complementary underpinnings of a sound rate design.
10. Because baseline quantities are set at the maximum percentages of average use specified in § 739(d)(1), the creation of a separate increased baseline quantity for a subgroup of customers implies that the existing baseline quantity would exceed the maximum percentage of average use specified in § 739(d)(1) for the remaining customers to whom it is applied.
11. Water Code § 80110, enacted as part of AB 1X effective February 1, 2001, prohibits the Commission from increasing electricity charges for residential usage up to 130% of baseline quantities for utilities that take power from DWR or are otherwise bound by its provisions.
12. Water Code § 80110 prevents baseline quantities from being decreased for customers of utilities that take power from DWR or are otherwise bound by its provisions, as explained in D.02-04-026.
13. In harmonizing § 739(d)(1) and Water Code § 80110, it is reasonable to give great weight to the goal of § 739 that rates be affordable, even if the specific numerical requirements in § 739(d)(1) may not always be met because of conflicts with AB 1X.
14. It is reasonable to evaluate the Phase 2 proposals using the criteria set forth in Section III.B, in addition to the rate design principles in § 739(c).
15. Large households are unlikely to be able to conserve as much as other households as a means of maintaining affordable energy bills.
16. The average electricity use of households with three or more occupants is higher than the average usage of smaller households that are similar in other respects, with usage typically exceeding 130% of baseline quantities year-round and with higher use in peak summer months.
17. Over 900 customers have written or otherwise contacted the Commission regarding this proceeding. Of the customers who contacted to the Commission or spoke at public participation hearings in this proceeding, almost all complained about electric rates, particularly upper tier charges, with few customers voicing concerns about gas affordability.
18. Lower-middle income large households served by PG&E, SCE, and SDG&E have a need for electric rate relief in order to ensure the affordability of their reasonable energy needs.
19. The potential bill savings due to TURN's Tier 3 proposal for lower-middle income large households are substantial enough to help ensure the affordability of these customers' reasonable energy needs.
20. TURN's Tier 3 proposal for lower-middle income large households is reasonably targeted in a manner that provides effective rate relief while avoiding unnecessary revenue losses.
21. As explained in Section III.C.2.a, TURN's Tier 3 proposal for lower-middle income large households is reasonable because it is consistent with the rate design principles in § 739(c) and the additional evaluation criteria we have established.
22. The following procedures regarding implementation and administration of the adopted large household program are reasonable, as explained in Section III.C.2.a:
a. Use of CARE's definitions, criteria, and verification procedures regarding household size and income.
b. Use of CARE procedures for annual income guideline updates.
c. Notification to all residential customers through annual bill inserts.
d. Use of customer service representatives to provide customers with information regarding the large household program (i) whenever service is initiated, (ii) upon customer request, and (iii) whenever a customer contact is related to affordability.
e. Modification of the utilities' web sites and their automated customer service prompts and scripts so that customers may obtain program information through these means comparable to the information available regarding other tariff options and assistance programs.
f. Additional outreach that can undertaken at little cost.
23. A workshop held by Energy Division is needed to finalize implementation and administrative procedures for the adopted large household program.
24. Based on the utilities' estimates of timeframes needed to implement the Phase 2 proposals, it is reasonable to require PG&E, SCE, and SDG&E to implement the adopted large household program for all customers within 20 weeks of the effective date of this order, with the first qualified customers who respond to bill inserts or otherwise request the program receiving reduced rates at least 4 weeks earlier than that.
25. It is reasonable to allow the utilities to recover reasonably booked costs and revenue losses of the adopted large household program through their BBAs.
26. The PROACT settlement adopted in D.03-07-029 provided for the elimination of SCE's BBA and for amortization of SCE's BBA balance.
27. The two-tier gas rate structure, with upper/lower tier differentials that currently do not exceed 25%, has less potential for rate shock than does the multi-tiered electric rate design.
28. Gas usage is less affected than electricity usage by either household size or income.
29. A clear need has not been established for additional residential gas rate relief.
30. The bill savings that would result if baseline amounts were increased for lower-middle income large households would average about $1 per month for SDG&E and SoCalGas customers, and administrative costs could exceed the bill reductions.
31. TURN's large household proposal is preferable to baseline adjustments for large households, as proposed by LIF/Greenlining, because it provides more meaningful rate relief to lower-middle income large households and is more cost-effective.
32. It is reasonable to exclude seasonal residences from electricity and gas baseline calculations in climate zones where their inclusion would cause a material reduction in baseline quantities, so that baseline quantities more accurately reflect the average usage of permanent residential customers.
33. For Mountain Utilities, it is reasonable to defer exclusion of seasonal customer usage from baseline calculations to its next general rate case or other appropriate proceeding.
34. For SDG&E, it is reasonable to defer exclusion of seasonal customer usage from baseline calculations until it has received pending RASS results.
35. A 3% effect on baseline quantities is a reasonable threshold for the exclusion of seasonal usage from baseline calculations, so that baseline quantities more accurately reflect the average usage of permanent residential customers.
36. It is reasonable to apply the adopted materiality threshold for the exclusion of seasonal usage separately for electricity and for gas usage, for the summer and winter seasons, and for each climate zone.
37. PG&E's proxy methodology excludes the effects of seasonal homes from baseline calculations in a manner that is reasonably accurate and cost-effective.
38. For utilities that perform them, the RASS provide a reasonable means for determining the percentage of customers who are seasonal residents in each climate zone for the purpose of excluding their usage from baseline calculations.
39. It is reasonable to allow the utilities to recover revenue losses that result if baseline quantities are adjusted to exclude the usage of seasonal residences, with gas rates and non-generation electric rates adjusted concurrently with the baseline changes in order to maintain revenue neutrality for these rates, with offsetting adjustments to non-generation rates so that total electric rates are unchanged, and with generation revenue losses accrued in the utilities' BBAs. Non-generation electric rates would not need adjustment if a utility's baseline/non-baseline rate differential is solely in its generation rate.
40. Allowing seasonal residents to receive baseline benefits may have a significant impact on the bills of permanent residents served by a small utility in an area with a high proportion of seasonal residences, while the effect may be de minimis for larger utilities' permanent residents.
41. It is reasonable to assess whether baseline quantities should be withheld from seasonal residences separately for each utility, taking into account the impact on permanent residents' bills, related administrative costs, and the complexities of identifying seasonal residences in an equitable manner for purposes of withholding baseline quantities.
42. In D.96-04-050, the Commission required that SCE not provide baseline quantities to seasonal residences in climate Zones 15 and 16. SCE did not implement this directive because of the rate freeze in AB 1890, which became law soon after D.96-04-050 was issued.
43. It is reasonable for SCE to not implement the policy adopted in D.96-04-050 that it withhold baseline quantities from seasonal residences in climate Zones 15 and 16, pending further review in its general rate case.
44. In D.01-09-059, the Commission adopted a five-tier residential electric rate structure for SDG&E, with the tier sizes pegged to customers' baseline allowances, and recognized that this structure would result in significant bill increases for some residential common area accounts.
45. Many of SDG&E's higher-usage residential common area electric accounts would benefit from switching to a commercial schedule.
46. A tiered rate structure is not well suited for application to common area electric accounts, since tier sizes are based on the average usage of average households and do not reflect common area usage patterns.
47. Because of the identified shortcomings with application of a multi-tiered rate structure to common area usage, it is reasonable to require that utilities provide existing residential common area electric customers an option to switch to commercial schedules, under terms comparable to the provisions found reasonable and adopted for PG&E in D.03-01-037.
48. It is reasonable to allow the utilities to recover through CABAs reasonably booked revenue losses due to residential common area accounts switching to commercial schedules.
49. The surcharges approved for PG&E and SCE in D.01-03-082, with the revenues to be recovered through the rate design adopted in D.01-05-064, were to be applied only to the utilities' power purchases, subject to refund. In D.02-11-026, the Commission changed this restriction so that surcharge revenues may be applied to returning each utility to financial health, in addition to funding power purchases.
50. Because of their nature, adoption of the surcharges in D.01-03-082 and the implementing rate design in D.01-05-064 did not constitute general ratemaking.
51. A refund such as WCA proposes would not disallow the recovery of costs previously approved through general ratemaking.
52. Not all proceedings classified as ratemaking pursuant to §1701.1 and Rules 5 and 6.1 undertake general ratemaking.
53. SDG&E proposes to increase its distribution and CTC electric rate components for all residential usage without offsetting decreases in other electric rate components.
54. Legislative analyses characterize Water Code § 80110 as prohibiting "any future rate increase" or "any potential rate increase" for electric usage up to 130% of baseline, and the Governor's press release announcing the signing of AB 1X states that the bill "(p)rohibits any future rate increase for residential customers for usage up to 130 percent of baseline usage."
55. Based on a committee explanation of the Senate amendment inserting the term "the electric procurement portion of" to qualify "electricity charges" in Water Code § 80110 and its hasty retraction, the amendment does not elucidate legislative intent regarding the meaning of "electricity charges" in the statute.
56. The Legislature was aware of the fact that electric rates have several components when it was considering AB 1X, with AB 1X itself adding statutory sections that reference "component rates" and the "generation related component of the retail rate."
57. Based on the legislative history described in the preceding four Findings of Fact, it is reasonable to interpret the term "electricity charges" in Water Code § 80110 as referring to total retail rates rather than a component of such rates.
58. SDG&E has implemented several uncontested increases in non-commodity rate components, with the effect that its total rates for residential usage up to 130% of baseline now exceed the total rates for such usage when AB 1X became effective.
59. It is reasonable to require each electric utility that takes power from DWR or is otherwise bound by Water Code § 80110 and whose total rates for residential usage up to 130% of baseline are higher than when AB 1X was enacted to adjust its rates prospectively to comply with this statute.
60. In D.02-04-026, the Commission authorized the utilities to establish BBAs to record and recover revenue losses and certain costs resulting from that decision and deferred cost allocation issues to Phase 2 of this proceeding.
61. In D.03-01-037, the Commission authorized PG&E to establish a CABA to record and recover revenue shortfalls due to the adopted common area settlement and deferred allocation and cost recovery issues to this order on remaining Phase 2 issues.
62. Although electric rates have been reduced somewhat for SCE with the recovery of its PROACT balance, upper tier rates are still at levels never seen in California before the energy crisis.
63. The first general rate proceedings to return the larger utilities to cost-of-service ratemaking are underway, and new electric revenue requirements will be established in those proceedings.
64. Because current electric rates are extraordinarily high and because it may be possible to provide revenue neutrality for the changes adopted in this proceeding without an increase in total electric rates, it would not be reasonable to raise total electric rates at this time.
65. The full unbundling of electricity rates is beneficial because it conveys the underlying cost elements of electricity usage.
66. It is reasonable for electric utilities, except SCE, to adjust non-generation rates to reflect the on-going effects of changes currently being accrued in their BBAs or (for PG&E) CABA and to amortize undercollections of non-generation revenue requirements, with offsetting reductions in generation rates, so that the revenue requirements adopted previously for non-generation components are maintained and total rates are unchanged.
67. It is reasonable to defer issues regarding allocation of generation undercollections and rate design to collect such shortfalls to each utility's general rate case or other appropriate proceeding, so that the Commission may examine these issues in a broader context.
68. Transferring the generation portion of baseline-related balancing accounts to other accounts would lose the information regarding the source of these undercollections.
69. It is reasonable to maintain the generation portions of each electric utility's baseline-related balancing accounts until a comprehensive assessment of costs, cost allocation, and rate design issues is undertaken in its general rate case or other appropriate proceeding.
70. It is reasonable to recover shortfalls due to gas baseline-related changes adopted in this proceeding from the residential class, with rate changes based on previously adopted gas rate design principles to the extent feasible.
71. CMTA filed a motion to intervene on November 6, 2003 with attached comments on the proposed Phase 2 decision.
