XI. Explanation of Changes Made to the POD Pursuant to Pub. Util. Code § 1701.2(a)
In reaching our decision, we have deviated from the administrative law judge's POD in two key respects. First, we explicitly find that PG&E's activities violated Tariff Rule 9 as well as Rule 17.1, whereas the POD relied only on a violation of Rule 17.1. Second, we decline to apply a statute of limitations to contain the refund amount to a three year period prior to issuance of the Assigned Commissioner's Ruling on February 25, 2005; this results in a refund figure approximating $35 million, in contrast to the $23 million to be refunded under the POD. By law we are required to explain each of these changes made to the POD. (Pub. Util. Code § 1701.2(a).)
In finding a violation of Rule 9A we rely upon the underlying record, and arguments made by SSJID which demonstrate a pattern of failure to bill consistent with the tariff provision.
In reviewing the parties' arguments related to Public Utilities Code section 736, we are convinced that the plain language of the statute clearly indicates that it does not apply to Commission investigations. Furthermore, in evaluating parties' analysis of prior Commission decisions, we are persuaded that the better outcome from a public interest standpoint is to follow Hillview and decline to apply a statute of limitations to restrict refunds to customers who have been harmed by a utility's violation of law, when such order emanates from a Commission investigation, as opposed to a complaint proceeding. This outcome is also consistent with evidence and argument presented by CPSD and TURN in this proceeding. This is also the right result from a fairness standpoint because it provides a remedy to all customers who were adversely impacted by PG&E's backbilling and collection practices during the entire investigation period.
1. PG&E systematically backbilled customers due to delayed bills and estimated bills where the cause for estimation was within PG&E's control for time periods beyond the time limits in Rule 17.1.
2. PG&E regularly estimated bills and/or failed to bill its customers during the period 2000 to 2005, allegedly due to problems with its new billing system, and notwithstanding the fact that Rule 9A requires the utility to issue bills at regular intervals based upon actual metering data.
3. All customers who were improperly backbilled beyond the Rule 17.1 time limits were harmed by being charged and paying amounts that they did not owe.
4. Some customers suffered additional harm such as service termination, reconnection fees, and increased security deposits.
5. PG&E's ability to comply with its tariffs is within its control.
6. Absent shareholder responsibility for funding refunds due to tariff violations, the utility would have no incentive to strive for compliance.
7. PG&E's tariffs provide for bill adjustments, including undercollections, to be reflected in balancing accounts and, ultimately, passed through to PG&E's customers.
8. Rule 17.1 defines what constitutes acceptable billing error, as opposed to unacceptable charges, by providing that PG&E may recover or refund, as the case may be, for billing error within the three-month time limit; the collection of charges beyond that time limit is not acceptable.
9. PG&E implemented its new customer information system, CorDaptix, in December 2002.
10. The pre-CorDaptix data is sufficiently reliable for purposes of ordering refunds related to delayed bills.
11. The pre-CorDaptix data may well be unreliable for purposes of identifying illegal charges related to estimated bills; however it would be inequitable to shift this data problem to the affected customers, and it is possible to ascertain a reasonable refund estimate.
12. The implementation of CorDaptix caused an increase in the number of delayed and estimated bills.
13. Customers received utility service for the amount of the illegal backbill charges. Customers who receive refunds will thus have received the benefit of varying amounts of utility service at no cost.
14. Reasonable attempts to identify eligible customers who are no longer with PG&E include the publication of a refund notice in newspapers of general circulation within its service territory in accordance with the procedures used for newspaper notices of PG&E ratemaking applications, writing to the forwarding address and researching post office records for follow-up addresses, and issuing press releases to publicize the refunds.
15. PG&E's proposal to limit refunds for reconnection fees and credits to residential customers whose service was shutoff within 75 to 150 days following receipt of an illegal backbill and who were not eligible for shutoff at the time of issuance of the illegal backbill is straightforward and reasonable.
16. There is no record basis for finding that illegal backbill amounts up to and including a customer's average monthly bill are insignificant or that they could not have contributed to a service shutoff.
17. Because only the most recent 12 months of a customer's credit history affect whether a customer is required to have a deposit with PG&E, and PG&E has ceased to issue delayed and estimated bills in excess of the tariff limits since January 2005 (estimated bills) or October 2004 (delayed bills), PG&E no longer holds any customer deposits related to its Rule 17.1 violations.
18. PG&E does not have control over the records maintained by credit agencies.
19. Up to roughly 3,400 customers after the implementation of CorDaptix, and an additional but unquantified number of customers before the implementation of CorDaptix, were physically harmed by having their service terminated as the result of nonpayment of illegal backbills.
20. Customers who paid illegal backbill charges were economically harmed by having to pay amounts that were not owed, but received the economic benefit of energy service for the amount of the illegal backbill.
21. Although PG&E unlawfully benefited from the illegal charges, PG&E did not believe that it would benefit from its conduct. Rather, PG&E believed that it would receive the same revenues regardless of its conduct because the uncollected amounts would flow through balancing accounts and ultimately be paid (for the most part) by other ratepayers.
22. PG&E's continued violations were made in reliance upon the knowledge that Commission staff was aware of PG&E's practice and did not initially object to it.
23. The violations in this case were widespread, affecting over 157,000 residential customers who received illegal backbills related to delayed bills in the period from January 2000 to April 2005, and roughly 73,000 residential customers received illegal backbills related to estimated bills in the period from October 2001 through April 2005.
24. There is no evidence that PG&E knew that its billing violations were violations or that it acted with the intent to violate the law.
25. There is no evidence that PG&E concealed its conduct from the Commission.
26. PG&E was reasonably prompt in rectifying the violation.
27. Since PG&E did not know that it was violating its tariff, a fine would have no reasonable deterrent effect against knowingly violating the tariff in the future.
28. PG&E's methodology for estimating energy usage is reasonable and results in relatively more accurate estimates than CPSD's proposed estimation methodology.
29. Pursuant to its tariffs, PG&E records amounts never billed because of Rule 17.1 time limits in its balancing accounts. Thus, the marginal decrease in the billed revenues for uncollectible amounts is passed on to other ratepayers in the next rate case decision.
30. Since the Commission reaffirmed in Resolution G-3372 that delayed bills and estimated bills within the utility's control are billing error, PG&E has made significant progress in reducing these bills.
31. TURN's recommended $250,000 threshold for uncollectible amounts associated with residential estimated bills reflects PG&E's actual performance since it corrected its illegal backbilling practices.
32. The record is inconclusive with respect to the cost of implementing TURN's proposal.
33. It is reasonable for PG&E to provide the underlying calculations for the disputed SSJID estimated bills related to its Rule 9 violations in 2000 and 2001.
1. PG&E's charges for backbilled amounts due to estimated and delayed bills in excess of the time limits in Rule 17.1 are excessive.
2. Refunds are warranted.
3. Shareholders should be responsible for funding refunds.
4. PG&E committed "billing error" because, in violation of Rule 17.1, it repeatedly submitted adjusted bills covering a period of more than three months, which constitutes an "incorrect billing calculation."
5. PG&E regularly estimated bills and/or failed to bill its customers during the period 2000 to 2005, allegedly due to problems with its new billing system, in violation of Rule 9A, which requires the utility to issue bills at regular intervals based upon actual metering data.
6. This investigation of PG&E's practices is not an adversarial litigation of individual rights, but rather a regulatory review of PG&E' system-wide billing and collection activities, reviewing PG&E's compliance with law and applicable Commission's requirements, and the consequences of its noncompliance.
7. A statute of limitations does not apply to refunds the Commission orders herein to remedy the harm suffered by PG&E customers due to the utility's failure to comply with Tariff Rules 9A and 17.1, as well as Public Utilities Code section 532, during the period of this investigation.
8. In this investigation the Commission exercises, in connection with general rate cases and other forums, its constitutionally and legislatively derived jurisdiction to regulate PG&E's rates, practices, service, and the reliability, safety, and adequacy of its facilities.
9. Consistent with its authority under Public Utilities Code section 701, the Commission may do all things necessary to further its regulation of PG&E's practices and service, including making appropriate remedial orders to address violations of law and tariff that have harmed customers; in this instance refunds to customers who were harmed during the 2000 - 2005 investigation period, in the approximate amount of $35 million, are appropriate.
10. Refunds related to delayed bills should not be limited to the CorDaptix period.
11. Refunds related to estimated bills should not be limited to the CorDaptix period; rather PG&E should also refund to customers illegal charges related to estimated bills in the pre-CorDaptix period, and these refunds are approximately $300,000. The burden of proof is on PG&E, not on the customer who was charged.
12. The refund period should not be shortened to allow PG&E a one-year grace period following the implementation of CorDaptix.
13. The PG&E bankruptcy settlement does not bar or suspend the Commission's power and authority to order refunds of illegally collected revenues.
14. Refunds of illegal backbill charges should be calculated by treating the current month, or month of the allowable backbill, as in addition to the allowable backbill period.
15. Refunds of illegal backbill charges related to estimated bills should be limited to the amount of the illegal backbills, and should not include the amounts of the estimated charges themselves.
16. Refunds of illegal backbill charges should not be paid with interest.
17. Refunds should be made to customers of record, customers identified through the publication of a refund notice in newspapers of general circulation within its service territory in accordance with the procedures used for newspaper notices of PG&E ratemaking applications, and customers no longer with PG&E who can be located through reasonable attempts, for example by writing to the forwarding address and researching post office records for follow-up addresses, and by issuing press releases to publicize the refunds.
18. Unclaimed refunds of illegal backbill charges should escheat to the State.
19. Residential customers whose service was shutoff for nonpayment within 75 to 150 days following the receipt of illegal backbills should receive a refund of reconnection fees and a credit of $100 (following delayed bills) or $50 (following estimated bills), if the customer was not eligible for shutoff at the time of issuance of the illegal backbill.
20. Refunds of reconnection fees should be paid with interest at the short term commercial paper rate.
21. Unclaimed refunds of reconnection fees should escheat to the State.
22. PG&E should inform credit agencies, to which it provided notice of nonpayment of a customer's closing bill related to illegal backbills, of its error in issuing the illegal backbill, and request that they remove any reference to the nonpayment of the customers closing bill from their records.
23. There is no legal basis for requiring or encouraging PG&E to make an incremental $1 million contribution to REACH (Relief for Energy Assistance through Community Help).
24. No penalty is warranted for PG&E's violations of Rule 17.1.
25. TURN's recommended prospective ratemaking treatment should be rejected, without prejudice to the opportunity to reconsider it in PG&E's future general rate cases or in a complaint or investigation if PG&E's performance in minimizing billing error falters.
26. PG&E should be required to report on its performance with respect to uncollectible amounts resulting from Rule 17.1 time limits in this regard in its general rate cases.
27. Rule 9 should not be changed to specify CPSD's recommended estimation methodology.
28. TURN's recommended prospective ratemaking treatment to place the financial risk of billing errors on the utility should be rejected without prejudice to the opportunity to reconsider it in PG&E's future general rate cases or in a complaint or investigation if PG&E's performance in minimizing billing error falters.
29. PG&E should report on its performance with respect to minimizing uncollectible amounts due to Rule 17.1 time limits in its general rate cases.
30. PG&E should provide SSJID with the estimation calculations underlying the disputed 2000 and 2001 estimated bills.
31. An order in this proceeding should be effective immediately.
32. These consolidated proceedings should be closed.
IT IS ORDERED that:
1. Pacific Gas and Electric Company (PG&E) shall refund customers for illegally backbilled amounts, for the period beginning January 1, 2000, the beginning of this investigation period through the end of the investigation period, related to delayed bills. PG&E shall begin the refund process immediately.
2. PG&E shall refund customers for illegally backbilled amounts, for the period beginning January 1, 2000 through the end of the investigation period, related to estimated bills, in accordance with the preceding Findings of Fact and Conclusions of Law. PG&E, not the affected customer, bears the burden of proof on this issue.
3. In order to ensure that refunds are not paid by other ratepayers, PG&E shall not remove equivalent amounts of revenue from its balancing accounts when it pays the required refunds.
4. PG&E shall calculate refunds of illegal backbill amounts by treating the current month, or month of the allowable backbill, as in addition to the allowable backbill period.
5. PG&E shall calculate refunds of illegal backbill amounts related to estimated bills by limiting them to the amount of the illegal backbills, and shall not include the estimated charges themselves.
6. PG&E shall refund reconnection fees with interest at the short term commercial paper rate, and pay a credit of $100 (following delayed bills) or $50 (following estimated bills), to residential customers whose service was shutoff for nonpayment within 75 to 150 days following the receipt of illegal backbills), if the customer was not eligible for shutoff at the time of issuance of the illegal backbill.
7. PG&E shall refund all eligible customers of record and all eligible customers identified through reasonable attempts to locate customers no longer with PG&E.
8. PG&E shall make reasonable attempts to locate customers no longer with PG&E by (1) publishing a refund notice in newspapers of general circulation within its service territory in accordance with the procedures used for newspaper notices of PG&E ratemaking applications; (2) writing to the forwarding address and researching post office records for follow-up addresses; and (3) issuing press releases to publicize the refunds.
9. All unclaimed refunds shall escheat to the State.
10. No later than thirty days from today's decision, PG&E shall inform credit agencies, to which it provided notice of nonpayment of a customer's closing bill related to illegal backbills, of its error in issuing the illegal backbill, and request that they remove any reference to the nonpayment of the customer's closing bill from their records. At the same time, PG&E shall inform the affected customer that it has informed credit agencies as required by this order.
11. PG&E shall report on its performance with respect to minimizing uncollectible amounts due to Rule 17.1 time limits in its general rate cases.
12. PG&E shall provide SSJID with the estimation calculations underlying the disputed 2000 and 2001 estimated bills.
13. The appeals of the Presiding Officer's Decision are dismissed, except to the extent addressed in Section X of this decision.
14. Application (A.) 02-11-017, Investigation 03-01-012 and A.02-09-005 are closed.
This order is effective today.
Dated September 20, 2007, at San Francisco, California.
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
I dissent.
/s/ MICHAEL R. PEEVEY
President
************ APPEARANCES ************ |
Rob Neenan |
Diane I. Fellman |
David J. Byers, Esq. |
Patrick G. Golden |
Thalia N.C. Gonzalez Julie Halligan |
Mariana C. Campbell |
Donald J. Lafrenz Reed V. Schmidt |
Hallie Yacknin Ronald Liebert Glen Perez |
Greg Chang David Beyer |
Jacqueline P. Minor Gayatri Schilberg Karen Lindh |
Diane Running Devra Wang |
Richard Mccann |
Kay Davoodi |
Leslie Danielson
Michael Boccadoro Regina Costa Kelly Allen |
Lisa Browy David R. Garcia Robert R. Wellington Kevin Woodruff Michael Kerkorian |
(END OF APPENDIX A)
