IV. Tariff Violations

In this investigation we have reviewed PG&E's billing obligations and activities under both Tariff Rule 9A and Tariff Rule 17.1.

Tariff Rule 9A provides:

Bills for electric service will be rendered at regular intervals. All bills will be based on meter registration or actual usage data, except as provided in C and G below, or as may otherwise be provided in PG&E's tariffs.

PG&E's actions, outlined in the chronology of facts, violated Rule 9A's requirement to issue bills at regular intervals based on actual metering data. In Resolution G-3372, as modified by D.05-09-046, we determined that estimated or missing bills due to problems with PG&E's billing system constitutes "billing error" under Rules 9 and 17.1 and are not excused by Rule 9C.⁶ We stated:

In these instances the policy underlying Rule 17.1 would apply. Problems with the implementation of PG&E's new billing system should be treated as billing errors. These examples also are not circumstances in which PG&E may issue estimated bills indefinitely. . . . (Res. G-3372, p. 11.)

It is also undisputed that PG&E issued backbills to these customers that exceeded the limits imposed by Rule 17.1.

There is also substantial evidence that many of PG&E's billing problems were not a result of the change in the billing system, as PG&E contends. The testimony of South San Joaquin Irrigation District (SSJID) in this case documents a long-standing pattern of mismanagement and poor customer service relative to accurate billing and in response to related inquiries. For example, PG&E failed to read SSJID meters for months at a time, erroneously calculated the true-ups bills, and billed SSJID for pumps that had been shut down for the season. (Ex. 1, Testimony of Jeffery K. Shields). In one instance, PG&E failed to read a SSJID meter from May 2005 through March 2006, three years after the new billing system was installed. PG&E variously explained that it did not have a key to the meter (which was accessible via a master key in PG&E's possession), that it had an incorrect address for the meter (which PG&E itself had installed), and that PG&E was using contract or temporary meter readers. (Ex. 2, Rebuttal Testimony of Jeffery K. Shields, pp. 2-3.) These explanations are inadequate. In this decision, we will order PG&E to provide SSJID with the estimation calculations underlying disputed 2000 and 2001 bills. Providing the underlying calculations for a bill is the expected response to a reasonable customer inquiry. We limit the time period to 2000 and 2001 because PG&E and SSJID have resolved the billing dispute for 2005-2006.

CPSD also submitted evidence that showed that the billing errors were not solely caused by technical problems with the billing system. For example, PG&E billed a customer for the wrong meter from June 2003 through January 2004, even though the customer had made repeated calls to PG&E to correct the error, and had even given the correct meter number to the customer service representative over the telephone. PG&E backbilled the customer for the entire period then erroneously disconnected service even though the customer had made payment arrangements for the illegal backbill. (CPSD Opening Brief, p. 26.)

Rule 17.A was instituted precisely to prevent this type of problem. In Decision 05-09-046, we held that Resolution G-3372 is "consistent with long-standing Commission policy" on backbilling as set forth in Decision 86-06-035 ((1986) 21 Cal P.U.C.2d, 270). Decision 86-06-035 established the three-month limit on backbills and in doing so, put the onus for issuing timely and accurate bills squarely on the utilities, stating, "[w]e believe a three-month limitation period for backbilling residential customers is sufficient in view of the utilities' assertion that they have procedures to detect billing and meter errors promptly." (Emphasis in original.) We noted that "[t]he meter after all, is owned, maintained, and, in most cases, read by the utility and the utility accordingly bears the responsibility for promptly detecting and repairing faulty meters." (pp. 2-3.)

The purpose of Rules 9 and 17.1 is two-fold. First, receiving accurate bills issued at regular intervals is a basic consumer right. Customers, particularly those with low or fixed monthly incomes, must have accurate monthly bills in order to properly budget their expenses. As explained by one customer who had not received a bill for twenty months,

I live paycheck-to-paycheck, and I therefore carefully plan how I use my money. I explained that my electricity usage was based on what I was paying for in the next month's bill. In other words, if I knew that my bills were to be much higher, then I would have been especially determined to find ways to lower the bills, i.e., use less electricity. However, since PG&E had not billed me for almost two years, I had no way of knowing that the electricity bills were to be much higher.

(CPSD Opening Brief, p. 25.)

These concerns apply equally to estimated bills. Unless customers are given bills that are based on actual usage, their ability to budget and/or adjust their electricity usage in response to accurate price signals is hampered. In D.86-06-035 we found that, as a matter of "law, fairness, and customer relations" the utility must be responsible for properly functioning meters and accurate bills, stating "[t]his is particularly true in the case of meter error, where the customer may be unaware of the meter's malfunction and may suddenly be confronted with a large backbill." (pp. 2-3.)

The second goal of the three month backbilling limitation is to provide a strong incentive to PG&E to establish and maintain accurate billing systems. The timely collection of money actually owed is the cornerstone of a sound business, whether that business is a large chain store or a front porch lemonade stand. Undercollection, late collection and overcollection are costly and inefficient and neither the individual customer nor ratepayers as a whole should pay a penalty for the failure of a basic business function that is uniquely within the control of the utility.

This is not a situation where PG&E is charting a course in new territory with unproven technologies. In such a situation, it may be appropriate to spread the risks of such a venture if it would further an important policy goal. Here, PG&E has been providing meter reading and billing functions for over 100 years. This is not a new venture; it is the bread and butter of its business. While the replacement of its outdated Legacy system was an extremely complex and multifaceted undertaking, the fact that these billing problems persisted for as long as they did (including before and after the installation of the Cor-Daptix system) and affected so many customers, as well PG&E's failure to notify this Commission of the problems so that a more pro-active solution to implementation difficulties could be devised, is regrettable.

We cannot condone this pattern of mismanagement and disregard for Commission rules protecting consumer rights. Not only did PG&E cause substantial harm to thousands of customers over a period of five years, it did so notwithstanding the existence of tariff protections that were designed to prevent such harm. PG&E waited until after this Commission issued an order instituting investigation (OII) into its billing practices to file an advice letter seeking clarification of the applicability of Rule 17.1 to its repeated billing errors.

It is beyond dispute that PG&E's systematic practice of backbilling due to delayed bills and estimated bills beyond the time limits in Rule 17.1 violated Commission policy and orders and PG&E's tariffs. As the Commission determined in Resolution G-3372 and affirmed on rehearing (In re Pacific Gas and Electric Co. (D.05-09-046) 2005 Cal. PUC LEXIS 467), delayed bills and estimated bills where the estimation is for reasons within PG&E's control are billing error for purposes of Rule 17.1 and its limits on backbilling. These tariff violations, which resulted in unauthorized customer charges of approximately $35 million over the period of this investigation, also implicate Public Utilities Code section 532 which provides:

no public utility shall charge , or receive a different compensation for any product or commodity furnished or to be furnished, or for any service rendered or to be rendered, than the rates, tolls, rentals and charges applicable thereto as specified in its schedules on file and in effect at the time.

Thus, the remaining issue to determine is the appropriate remedy to rectify these violations, consistent with this Commission's regulatory authority. The Assigned Commissioner's Ruling commencing this investigation specified that the Commission's review would consider a range of remedies pursuant to Public Utilities Code sections 701, 734, and 1702, including refunds and/or fines.⁷ Under Public Utilities Code section 701, our regulatory authority is broad and wide-ranging. We may "supervise and regulate every public utility in the State and may do all things which are necessary and convenient in the exercise of such power and jurisdiction." In this instance, we act to right a wrong that has adversely affected many thousands of PG&E's customers over a prolonged period of time. Using section 701 as our guide, we will balance the need to find an adequate remedy for all affected customers against the evidence and argument PG&E presents seeking to limit or contain that remedy.

⁶ Rule 9C provides, in relevant part: "Unless estimated bills result from inability to access and change the existing meter to the SmartMeterTM system, inaccessible roads, the customer, the customer's agent, other occupant, animal or physical condition of the property preventing access to PG&E's facilities on the customer's premises, other causes within control of the customer, or a natural or man-made disaster such as a fire, earthquake, flood, or severe storms, the issuance of estimated bills shall be considered "billing error" for the purposes of applying Rule 17.1."

⁷ Assigned Commissioner's Ruling dated February 25, 2005, Ruling Paragraph 6.