4. Discussion
4.1. Standard of Review
Rule 12.1(d) provides the following standard of review for all settlements:
The Commission will not approve settlements, whether contested or uncontested, unless the settlement is reasonable in light of the whole record, consistent with law, and in the public interest.
The proponents of a settlement have the burden of demonstrating that the settlement satisfies Rule 12.1(d).
The Commission favors the settlement of disputes. This policy supports many goals, including reducing the expense of litigation, conserving scarce Commission resources, and allowing parties to reduce the risk that litigation will produce unacceptable results. This policy weighs against the Commission's alteration of uncontested settlements such as the one before us here. As long as a settlement as a whole is reasonable in light of the record, consistent with the law, and in the public interest, it should be adopted without alteration.16
4.2. Reasonable in Light of the Whole Record
There is a broad and detailed record regarding front-counter issues that includes public input at the PPHs, written testimony from several parties,17 and the two declarations attached to the Settlement Motion. The record shows that adopting the Settlement Agreement will enable PG&E to reduce costs and rates for all customers while maintaining service quality for those who have historically used front counters.
The primary concern of those parties who opposed PG&E's proposal to close all 84 of its front counters was the adverse impact that PG&E's proposal would have on those customers who use front counters. The Settlement Agreement resolves this concern by keeping 75 of 84 front counters open, and closing nine front counters that together represent only 3.3% of all transactions at front counters. Thus, the vast majority of customers who use front counters are unaffected by the Settlement.
Of those customers who are affected, the record shows that they will have reasonably comparable alternatives to the services provided by the nine closed front counters because:
_ Eight of the nine front counters to be closed are within 30 minutes driving time of at least one other front counter that remains open. (Settlement Agreement, para. 9, Table 1.)
_ PG&E will maintain for the next three years at least the same number of NPCs in close proximity to the nine front counters. (Settlement Agreement, para. 15.)
_ NPCs are usually open longer hours than front counters. No front counters are open on nights or weekends, while 80% of NPCs are open on Saturday and 40% on Sunday. For customers at risk of shutoff and who wish to make an in-person payment during evenings or weekends, NPCs offer the option to do so. Upon paying their bill at an NPC and obtaining a receipt, customers may then call PG&E's toll-free number, available 24/7, to inform PG&E of their payment. PG&E's customer service representative can then immediately cancel the field order to prevent shutoff. (Exhibit PG&E-18, pp. 29-10 and 29-11.)
_ Customers with delinquent bills who need to make payments expeditiously can do so at NPCs or by calling PG&E 24/7. If such customers need to make pay-plan arrangements, they can do so by calling PG&E 24/7. (Exhibit PG&E-18, p. 29-9.)
_ PG&E will implement a five-day grace period after the bill is due so there should be no situation where a customer making a payment at an NPC (or via the Call Center) on the bill's due date is charged a late payment fee. (Exhibit PG&E-18, p. 29-19.)
_ While six types of nonpayment transactions have historically been handled by front counters exclusively, this is no longer true. These six transactions accounted for approximately 10% of all nonpayment transactions at front counters in 2004. PG&E has already modified five of the six processes to eliminate the need for customers to visit a front counter for these services. The redesign of the remaining transaction will be completed by early 2007 and prior to closure of any front counters. The redesigned processes are easier for customers in that they no longer have to go to a front counter, but may use the NPCs or the Call Center. Moreover, customers accessing service via the Call Center may do so 24/7 from the convenience of their home, office, or cell phone; and they may obtain service at the Call Center in 150 non-English languages, a clear benefit to many PG&E customers. (Exhibit PG&E-18, pp. 29-12 and 29-13.)
_ To meet the special needs of agricultural customers, PG&E will create, on a pilot basis, a call center with its own toll-free phone line staffed by agricultural specialists. If the line is utilized and valued by agricultural customers, PG&E may make this an on-going service. (Settlement Agreement, para. 16.)
_ PG&E will dedicate two field representatives to agricultural issues. If an agricultural customer's problem cannot be resolved over the phone, the problem will be referred to the dedicated field representative closest to the customer's location. The field representative will then call the customer to resolve the issue or schedule a time to meet. (Settlement Agreement, para. 17.)
_ PG&E and Greenlining will work collaboratively to develop a plan that addresses Greenlining's concerns for underserved communities that rely on front-counters. To this end, Greenlining will help PG&E to identify service improvements. (Exhibit PG&E-18, p. 29-3; Settlement Agreement, para. 22.)
_ PG&E's engineering, field, and emergency operations that are co-located with some front counters are not affected by the closure of front counters. (Exhibit PG&E-18, p. 29-14.)
To ensure that affected customers are aware of the alternatives available to them, the Settlement requires PG&E to mail a notice to all customers who have used the nine front counters in the previous 12 months that these front counters will be closed. PG&E will also post a notice at each of the nine front counters for a 45-day period prior to closure. The mailed and posted notices will inform customers of alternate payment options, including the locations of nearby NPCs. Additionally, PG&E will meet with representatives of each of the towns affected by the closures to discuss ways to reduce the impacts on the community.18
The Settlement's reduction to PG&E's revenue requirement of $2,757,000 through 2010 is supported by PG&E's uncontested testimony on this matter. TURN recommended a 20% across-the-board reduction for all 84 of PG&E's front counters, which is not adopted by the Settlement. PG&E's rebuttal testimony to TURN's recommendation provides reasonable support for the Settlement outcome on this matter.19
A major factor in determining whether a settlement is reasonable is the extent to which the settlement fairly balances the interests at stake.20 PG&E supports the Settlement in the interest of its shareholders. Rather than close all 84 front counters, PG&E has significantly compromised its position. DRA supports the Settlement in the interest of all public utility customers pursuant to its authority under § 309.5(a). CFBF, Greenlining, and TURN support the Settlement on behalf of the consumer interests they represent. DRA, CFBF, and TURN were originally opposed to any closures, but have agreed to the closure of nine front counters as part of an overall settlement. Greenlining is also supportive because of the measures included in the Settlement to mitigate the effects of closure on underserved communities. CCUE supports the Settlement in the interest of PG&E's union employees. The Settling Parties state that they represent all of the affected interests and that the Settlement fairly balances those interests.21 We agree.
We conclude for the previous reasons that the Settlement is reasonable in light of the whole record. We also find that the Settlement Agreement provides sufficient information to enable the Commission to (1) implement the provisions, terms, and conditions of the Settlement, and (2) discharge its future regulatory obligations with respect to the parties and their interests.
4.3. Consistent with the Law
No party alleges that the Settlement is inconsistent with the law. Based on our review of the Settlement, we find that it complies with all applicable statutes, tariffs, and Commission decisions. Of particular relevance is the Settlement's compliance with D.95-12-055, issued in PG&E's 1996 GRC proceeding. That Decision requires PG&E to (1) obtain Commission approval before it closes any front counters, and (2) describe the notice that PG&E provided to customers regarding a proposed closure, the service alternatives available to customers, and the responses that PG&E received from customers and local officials.22 PG&E provided a satisfactory demonstration of its compliance with D.95-12-055 in Exhibit PG&E-5 and supporting workpapers.23
4.4. The Public Interest
PG&E's front counters are heavily used. Approximately 10% of all customer transactions occur at front counters. During 2005, there were 5,641,305 transactions at front counters,24 including 188,432 transactions at the nine front counters at issue here.25
The importance of the front counters to PG&E's customers was highlighted at the PPHs where numerous speakers said that PG&E's front counters provide essential customer services. For example, several speakers explained that many farm workers lack checking accounts and rely on front counters to pay their bills in cash. Other speakers described how farmers' difficulties with PG&E can be very complicated. These speakers described how the staff at front counters in agricultural communities understand the special needs of farmers and can resolve problems quickly, while the PG&E's representatives in a distant call center are generally unfamiliar with the intricacies of arcane agricultural tariffs.26
In light of the clear public need for the services provided by PG&E's front counters, we concur with the Settlement outcome that keeps 75 of 84 front counters open. With respect to the nine front counters slated for closure, we concluded that it is in the public interest to close these front counters, with the resultant savings passed through to PG&E's ratepayers, only if the customers who use these nine front counters have reasonably comparable alternatives.
We find that the Settlement Agreement does provide reasonable alternatives. The nine front counters slated for closure were selected based, in part, on their proximity to front counters that will remain open. As shown in Table 1 of the Settlement, eight of the nine front counters are within a 30-minute drive of another front counter. The Settlement also provides that PG&E will maintain for the next three years at least the same number of NPCs in close proximity to the nine front counters.27 Further, there are no transactions that require a customer to go to a front counter. Payments can be handled in several ways, including by mail, by calling PG&E's toll-free number, on-line at pge.com, and in person at NPCs. All non-payment transactions can be handled by calling PG&E's toll free number, which is available 24/7 and can provide services in over 150 languages.28
One of the main concerns expressed at the PPHs was that agricultural customers rely on front counters to resolve problems. To address this concern, the Settlement requires PG&E to (1) establish, on a pilot basis, a call center for agricultural customers that has its own toll-free line and is staffed by agricultural specialists; and (2) dedicate two field representatives to agricultural issues.29 We find that these measures will ensure that agricultural customers receive service that is reasonable comparable to that provided by the nine closed front counters.
The other major concern expressed at the PPHs was that front counters provide a place where persons without a checking account can pay their utility bills in cash, or where persons can pay their bills at the last minute. The record shows that NPCs accept both cash payments and last-minute payments. Last-minute payments that are non-cash can also be made at any time by calling PG&E or online at pge.com.30 We find that these alternatives are reasonably comparable to the services provided by the nine closed front counters.
PG&E agrees in the Settlement Agreement to make a good faith effort to educate customers who use the nine front counters about the available alternatives.31 Attachment 3 of the Settlement Agreement contains a "Closure Plan" that describes the procedures that PG&E will use to notify customers.
We conclude that the uncontested Settlement is in the public interest because it permits PG&E to reduce costs and rates by closing nine front counters with relatively few transactions while ensuring that customers directly affected by closure receive reasonably comparable service through alternate means.
4.5. Conclusion and Implementation
For all of the previous reasons, we conclude that the uncontested Settlement Agreement is reasonable in light of the whole record, consistent with the law, and in the public interest. Therefore, we will grant the Settling Parties' Motion to adopt the Settlement Agreement. In accordance with Rule 12.5, the adopted Settlement Agreement is binding on all parties. Such adoption does not constitute approval of, or precedent regarding, any principle or issue.
The declaration of Bruce T. Smith attached to the Settlement shows that adopting the Settlement reduces PG&E's revenue requirement by a total of $2,757,000 through 2010 (assuming the nine front counters are closed on July 1, 2007). As set forth in the declaration, PG&E shall pass these savings to its customers by reducing the annual base revenue recorded in the electric Distribution Revenue Adjustment Mechanism and the gas Core Fixed Cost Account. These savings shall be allocated 55% to electric and 45% to gas.
PG&E shall file advice letters with revised tariff sheets to implement the Settlement. The annual amount credited to customers shall mirror the amounts shown in the declaration of Bruce T. Smith, except the amount for 2007 may be adjusted to reflect the actual date the nine front counters are closed. The advice letters should be filed and processed in accordance with the procedures described in D.07-01-024 and General Order (GO) 96-B for Tier 1 advice letters.
16 D.06-06-014, mimeo., p. 12.
17 The written testimony includes exhibits PG&E-5, Chapters 6, 6A, and 6B; PG&E-5-WP06A&B; PG&E-18, Chapter 29; DRA-9; GI-2; and TURN-2. Although CFBF served written testimony (Exhibit CFBF-1), this testimony was not offered for admittance into the record.
18 Settlement Agreement, para. 26 and Attachment 3 of the Settlement.
19 Exhibit PG&E-18, p. 29-18.
20 D.04-12-015, 2004 Cal. PUC LEXIS 574, *66.
21 Settlement Motion, p. 6.
22 D.95-12-055, 1995 Cal. PUC LEXIS 965, *154.
23 Exhibit PG&E-5, pp. 6A-11 to 6A-15. The supporting work papers are contained in Exhibit PG&E-5-WP06A&B.
24 Exhibit DRA-9, p. 9-16.
25 Settlement Agreement, para. 9, Table 1.
26 See, generally, Reporter's Transcript of the PPHs held in Woodland and Chico on May 17 and 18, 2006, respectively.
27 Settlement, para. 15.
28 Exhibit PG&E-80, Declaration of Stephen Phillips, para. 4.
29 Settlement, paras. 16 and 17.
30 Exhibit PG&E 18, Chapter 29, pp. 29-9 - 29-11.
31 Settlement, para. 13.
