Discussion

In Resolution E-3788 (p. 6), the Commission stated it should not judge the lawfulness of the procedures that a city takes to enact an ordinance or amend an agreement. Although we do not address Ventura's decision to increase its franchise fees, we will address the ratemaking treatment of such increased fees.

In D.89-05-063,¹¹ the Commission addressed costs imposed on public utilities by local government revenue producing mechanisms and the appropriate ratemaking treatment of such costs. The Commission stated:

To continue to incorporate significantly differing levels of new and escalating local entity taxes and fees in basic rates applicable equally to all ratepayers in a utility's service territory, increasingly means that some of these ratepayers would be subsidizing others but are not themselves benefiting from such increased taxes or fees. It is not reasonable that the significantly higher levels derived from some entities only should be buried in basic rates applicable to all ratepayers of the utility. Averaging such costs among all ratepayers creates inequities between classes of ratepayers. It is appropriate and reasonable that these significantly higher costs should be identified and borne only by the ratepayers in the local governmental area that originated them. In the past we have used surcharges to accomplish this.

SoCalGas points out that although the benefits of the increased Ventura franchise fees are generally localized, SoCalGas ratepayers also benefit as the burden of the surcharge will be paid only by Ventura customers and not other customers throughout SoCalGas' service territory. Thus, the raising of revenue by one jurisdiction such as Ventura to benefit its citizens will be paid by those citizens who are also ratepayers. This is consistent with our policy as discussed above regarding increased costs imposed by local governmental areas.

¹¹ Investigation 84-05-002, Guidelines For the Equitable Treatment of Revenue-Producing Mechanisms Imposed by Local Government Entities on Public Utilities. (32 CPUC 2d, 60, 69-70.).