13. Comments on Proposed Decision

The principal hearing officer's proposed decision was filed with the Commission and served on all parties in accordance with Section 311(d) of the Public Utilities Code and Rule 77.1 of the Rules of Practice and Procedure. In its comments, SCE points out certain errors in tax calculation, which were not adjusted in all cases to recognize actual capital additions and operating expenses authorized by this decision. To the extent SCE has adequately explained the errors, those errors have been corrected, and the tables accompanying this decision now reflect those corrections.

SCE objects that, because of the three-year phase-in requirement, it will not collect its full distribution base rate revenue requirement for two years. As the decision explains, the phase-in requirement is intended to lessen rate shock for the relatively few gas ratepayers in Catalina. A similar phase-in was adopted in SCE's last general rate case for Catalina gas operations in 1987. In both cases, these were pragmatic adjustments balancing the need to increase SCE revenue while reducing the burden on the relatively small ratepayer base.

Moreover, contrary to SCE's assertions, this decision does not contravene Supreme Court decisions on ratesetting. As ORA points out, the decision looks to the overall return on investment that the Commission has provided to SCE, and it finds that overall return reasonable. There is no Supreme Court requirement that separate utility districts, like Catalina, must earn at the same rate as the entire utility, so long as the utility as a whole earns a fair rate of return. In a worst case scenario here, the revenue shortfall in Catalina will be less than $350,000 in 2005 and less than $175,000 in 2006. In the context of the revenue requirement set in SCE's last general rate case (D.04-07-022), the effect of the Catalina decision in 2005 would be a decrease in SCE's authorized rate of return of only 0.004%. Neither SCE nor its shareholders are likely to be harmed by so minute a difference.

SCE also challenges disallowances recommended by ORA and adopted by the decision, but SCE raises no arguments that were not raised in briefs and considered by the Commission. Under Rule 77.3 of the Rules of Practice and Procedure, comments that merely reargue positions taken in briefs are accorded no weight.

ORA in its comments generally supports the ratesetting decisions reached in this decision. It clarifies its position on the Commission's safety jurisdiction over SCE's gas operations in Catalina, noting the distinct statutory basis (Pub. Util. Code §§ 4451, et seq.) for safety jurisdiction.