ALJ/CFT/tcg Mailed 3/1/2004

Decision 04-02-057 February 26, 2004

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)

(See Attachment A for List of Appearances.)

FINAL OPINION ON PHASE 2 ISSUES

TABLE OF CONTENTS

Title Page

FINAL OPINION ON PHASE 2 ISSUES 2

I. Summary 2

II. Procedural History 6

III. Proposals Based on Household Characteristics 11

A. Commission Authority 12

1. Positions of the Parties 13

a. Authority Conferred by § 739 13

b. Authority under § 739.8 19

c. Other Sources of Statutory Authority 20

d. Application of § 739(d)(1) and Water Code § 80110 22

2. Discussion 23

a. Authority to Adjust Baseline for End Uses 23

b. Authority to Consider Other Customer Characteristics
in Baseline 25

c. Authority Regarding Rate Structures 29

d. Importance of Conservation Goal of § 739 31

e. Harmonization of § 739(d)(1) and Water Code § 80110 32

B. Evaluation Criteria 33

C. Large Household and Senior Citizen Proposals 35

1. Positions of the Parties 36

a. TURN and LIF/Greenlining Proposals 36

b. Arguments Regarding the Proposals 41

2. Discussion 49

a. Tier Exemption for Lower-Middle Income Large
Households 51

b. Baseline Adjustments for Lower-Middle Income
Large Households 60

c. Tier Exemption for Lower-Middle Income
All-Electric Senior Citizen Households 61

d. Gas Baseline Adjustment for Senior Citizen Households 62

e. Gas CARE Protection for Lower-Middle Income Senior
Citizen Households 64

D. Water Well Pumping 65

TABLE OF CONTENTS

(Continued)

Title Page

E. Seasonal Residences 67

1. Positions of the Parties 68

2. Discussion 73

F. Common Area Accounts 77

1. Positions of the Parties 77

2. Discussion 79

IV. WCA Request for Rebate or Refund 81

A. Positions of the Parties 81

B. Discussion 83

V. Revenue and Rate Impacts 86

A. Electric Undercollections 86

1. Positions of the Parties 86

2. Discussion 92

a. AB 1X Restriction on Electric Rates 92

b. Treatment of Electric Undercollections 96

B. Natural Gas Undercollections 100

1. Positions of the Parties 100

2. Discussion 102

VI. Comments on Proposed Decision 103

VII. Assignment of Proceeding 107

VIII. Rehearing and Judicial Review 107

Findings of Fact 107

Conclusions of Law 118

FINAL ORDER 123

Attachment A - List of Appearances

FINAL OPINION ON PHASE 2 ISSUES