Procedural Background

The complaint was filed in late January 2001. On March 8, 2001, Edison filed a motion to dismiss, as well as an answer denying the material allegations of the complaint. In its motion, Edison argued that the complaint should be dismissed because Universal had failed to show any violation of law, as required by § 1702 of the Public Utilities Code. Noting that Electric Rule 14 requires Edison only to exercise "reasonable diligence" in delivering electricity to customers, that the rule expressly does not "guarantee a continuous or sufficient supply [of electricity] or freedom from interruption[s]," and that Rule 14 also exempts Edison from liability for interruptions or shortages "from any cause not within [Edison's] control," SCE argued that the curtailment request of June 27, 2000 resulted from weather conditions, transmission constraints, and actions by the ISO and generators, and not from any underscheduling by Edison. Moreover, SCE continued, neither Electric Rule 14, the I-6 tariff nor the tariffs of the ISO or the PX required Edison to take any actions that it had failed to take.¹

Because some of the issues raised by the complaint were also being considered in Phase I of Rulemaking (R.) 00-10-002, our inquiry into the effect of interruptible programs on energy prices and the reliability of the electric system, the Commission decided not to act on Universal's complaint until it had had an opportunity to consider the history and application of the I-6 tariff in that proceeding.

In April 2001, the Commission issued Decision (D.) 01-04-006, its principal decision in Phase I of R.00-10-002. We concluded that customers under Edison's I-6 tariff should be able to opt out of interruptible service (and take firm service at higher rates) retroactive to November 1, 2000. (Mimeo. at 13-19.) In reaching this conclusion, we also noted that customers would be obligated to pay penalties for failure to comply with interruption requests "through the time the opt-out or adjustment in firm service level is effective." (Id. at 19.) In footnote 9 of D.01-04-006, we specifically pointed out that this meant "any penalties incurred up to and through November 2000." (Id.)

Edison filed an application for rehearing of D.01-04-006. Edison argued, among other things, that the decision to allow customers to opt out of the interruptible program retroactive to November 1, 2000 violated numerous statutory provisions. In November 2001, the Commission issued D.01-11-031, which denied Edison's rehearing application after an extensive discussion of the utility's grounds for challenging our decision to allow retroactive opting out of the interruptible program. (Mimeo. at 9-17.)

With Phase I of R.00-10-002 resolved, the Commission could begin to consider issues like those raised by Universal's complaint. The first step in this process occurred when we issued D.02-01-057, which extended until further order the one-year deadline set forth in Pub. Util. Code § 1701.2(d) for resolving this adjudicatory matter. After noting that the issues in Phase I of R.00-10-002 had finally been disposed of, D.02-01-057 stated:

"Now that the Phase I issues concerning the I-6 tariff have been decided . . ., there is no reason not to proceed with the issues raised by Universal's complaint. Accordingly, we will direct the assigned Administrative Law Judge (ALJ) to hold a prehearing conference (PHC) within 90 days after the mailing date of this decision. With the benefit of the PHC, the ALJ will be able to decide whether this case can be decided on the pleadings, or whether an evidentiary hearing will be necessary. After the PHC, the ALJ should issue a schedule for resolving this proceeding promptly." (Mimeo. at 4.)

Pursuant to these instructions, a PHC was held on March 26, 2002. At the PHC, the ALJ first denied Edison's motion to dismiss, concluding that the case presented too many factual issues to permit a judgment based solely on the pleadings. (PHC Transcript, p. 8.) After a discussion with the parties, the ALJ ruled that Universal should immediately commence discovery, and that both parties should advise him by June 5, 2002 whether it would be possible to submit the case on a stipulated set of facts, or whether a hearing would be necessary. If a hearing was needed, the ALJ tentatively ruled that it would be held on September 9-10, 2002. He directed Universal to serve its direct testimony on July 8, 2002, and Edison to serve its responsive testimony on August 5, 2002. (Id. at 18-19.)

The parties advised the ALJ that submission on a stipulated set of facts did not appear feasible, and they submitted their prepared testimony in substantial accordance with the schedule worked out at the PHC. After a hearing was held on September 9 and 10, both parties submitted opening briefs on October 23 and reply briefs on November 22, 2002.