III. DISCUSSION

D.01-01-046 is an interim decision ordering a TRO to maintain the status quo until the Commission could determine whether a preliminary injunction should issue. We affirm the Commission's authority to issue the TRO and the utilities' obligation to provide adequate service to their customers, including continuing to act as scheduling coordinators in providing electricity on behalf of their customers.

A. The Facts Warranted Interim Injunctive Relief.

PG&E and Edison assert that the Commission committed legal error in issuing the TRO because the facts do not demonstrate the need for a TRO. We disagree. Using the standards used in California courts and which we applied in D.98-12-075, the Commission correctly determined that a TRO was necessary in order to avoid irreparable harm to California consumers.¹ The events leading up to the TRO did not occur in a vacuum, but were part of a larger and continuing energy emergency. Emergency hearings on financial issues had been held in December and early January 2001. On January 3, 2001 at the hearings, Edison's counsel requested in final oral argument for Edison to be relieved of its obligation to service its customers to the extent that it could not purchase power in excess of 7 cents per kilowatt hour.² On January 17, 2001, Governor Davis declared a state of emergency regarding the state's power crisis. It was also announced that the CDWR would purchase power on behalf of PG&E and Edison. PG&E, under an agency agreement with the ISO and the PX, agreed to be scheduling coordinator under the ISO tariff, and the PX would act as PG&E's agent to the extent that it performed such duties for PG&E, but "shall have no liability as a principle for PG&E's scheduling coordinator obligations." ³ One of PG&E's obligations was to pay the ISO directly when payment is due and another duty was to pay the PX for services rendered.

Within this context, the Commission found itself confronted with rapidly unfolding events on January 18, 2001 that could have left California consumers without electrical power. Swift intervening action by the Commission was required to avoid irreparable injury. Edison opines that the declarations attached to the Interim Decision do not demonstrate the need for a TRO, declaring that "aside from uncertainty about how to best deal with CDWR's role in the immediate wake of the Governor's emergency declaration, SCE remains committed to acting as scheduling coordinator for all of its non-direct access customers."⁴ Edison's professed intentions to act as scheduling coordinator for all of its non-direct access customers notwithstanding, lack of clarity regarding scheduling coordinating responsibilities could have resulted in consumers being denied full and adequate service. The Commission could not allow that to happen. For that reason, among others, the Commission specifically sought to prevent the utilities from refusing to act as scheduling coordinators with the ISO to serve all of their non-direct access customers.

The affidavits supporting the Interim Opinion detailed communications among the parties that reasonably justified the Commission's treating the situation as an emergency under Rule 81 of the Commission's Rules of Practice and Procedure. We do not repeat all of the details of the events that transpired on January 18, 2001, as they are amply set forth in the Interim Opinion and attached affidavits.⁵ The events of that day raised grave concerns about the utilities' continuing obligation to serve. There was uncertainty about the scheduling coordination responsibilities regarding the CDWR's role as a conduit for serving some of PG&E's customers, and specifically regarding PG&E's continuing role as schedule coordinator after January 20, 2001. Edison's concurrence with PG&E that it would schedule only its own generation and would not purchase additional needed generation to serve remaining customer load reasonably concerned the Commission since PG&E could not rely on its own generation to meet its obligations to serve all of the customers in its service territory. ⁶ Customers could be subject to power shortages if this situation was not resolved. Therefore, the Commission issued the TRO to maintain the status quo to avoid further degradation of electric service and to avoid irreparable harm to the public health and safety.

In sum, it was incumbent upon the Commission to use its broad authority to do whatever was necessary to maintain the status quo and fashion interim relief until such time as a more permanent solution could be considered. A TRO was the appropriate remedy to accomplish this objective without causing substantial harm to others.

B. The Commission Has the Authority to Order Injunctive Relief.

PG&E and Edison question the Commission's authority to issue a TRO or preliminary injunction under these facts. PG&E challenges the Interim Opinion on the ground that it does not claim that there was an existing violation, and the Commission does not have the jurisdiction to enjoin a threatened violation. (PG&E's Rhg. App., pp. 4-6) Edison claims that there are no facts or allegations in the declarations that indicate that it or PG&E has failed to provide service, thus supporting PG&E's position. (Edison's Rhg. App. at 6-7.) Both are mistaken. The Commission is obligated to act when "the commission is of the opinion that any public utility is failing or appears to fail to abide by one of its rules."⁷ The Commission reasonably concluded from the events that occurred on January 18, 2001 that immediate action was warranted to prevent the utilities from breaching their obligation to provide full and adequate service.

The Commission's authority to provide injunctive relief is firmly rooted in the California Constitution and PU Code, and is recognized in case law. The Commission is not an ordinary administrative agency, but a constitutional body with broad legislative and judicial powers. The California Constitution, Article XII, Sections 1-6, grants the Commission plenary power over the regulation of public utilities. The Commission has broad authority to regulate public utilities, including the power to fix rates, hold hearings, and establish its own rules and procedures. ⁸ Our reliance in the Interim Decision on PU Code §701 and Consumers' Lobby is well-founded. We noted that in Consumers' Lobby, the California Supreme Court recognized that the Commission has equitable jurisdiction, which permits it to issue injunctions:

"The commission often exercises equitable jurisdiction as an incident to its express duties and authority. For example, the commission may issue injunctions in aid of jurisdiction specifically conferred upon it. [Citations omitted.]"⁹

More recently, the California Supreme Court confirmed the Commission's broad powers to supervise and regulate public utilities, noting that:

"[T]he commission's powers are not limited to those expressly conferred on it: the Legislature further authorized the commission to `do all things, whether specifically designated in [the Public Utilities Act] or in addition thereto, which are necessary and convenient' in the exercise of its jurisdiction over public utilities...Accordingly, `The commission's authority has been liberally construed [citation omitted] and includes not only administrative but also legislative and judicial powers [citation omitted]'."¹⁰

The issuance of a TRO is a judicial act designed to preserve the status quo and prevent irreparable harm. The Interim Opinion used it precisely for that purpose. (D.01-01-046, mimeo at p. 1.) The Commission's issuance of a TRO under these facts offended neither constitutional, statutory, nor equitable principles.

C. The Commission Has the Authority to Enforce Its Own Regulations, Notwithstanding PU Code §2102.

Edison asserts that the Interim Opinion deprived it of due process and is unlawful because the Commission violated §2102 by not initiating an action in superior court. ¹¹ This argument fails to recognize the Commission's equitable powers and ignores the circumstances that were present on January 18, 2001. PU Code §2102 does not negate the Commission's equitable power to issue a TRO or preliminary injunction. In Consumers' Lobby, the parties had argued that the Commission did not have authority to award attorney fees because there was no express statutory authorization and recent legislation specifically authorized courts to award attorney fees. Under these facts, the Commission has express constitutional and statutory authority to regulate public utilities and ensure that they perform their obligation to provide adequate service to all their customers. The Commission may therefore exercise its equitable jurisdiction as incident to its express duties and authority.

Edison appears to be relying on the literal language from PU Code §2102 that "the commission...shall direct the attorney of the commission to commence an action in superior court." The California Supreme Court has stated:

"[W]e do not hold that every statute which uses the word `shall' is obligatory rather than permissive. Although statutory language is, of course, a most important guide in determining intent, there are unquestionably instances in which other factors will indicate that apparent obligatory language was not intended to foreclose a governmental entity's or officer's exercise of discretion."¹²

The Commission exercised sound discretion and acted within its judicial authority to immediately protect the status quo and prevent irreparable harm. Therefore, subsequent action taken by the Commission in this proceeding is valid and legal.

Notwithstanding the existence of PU Code §2102, the Commission has the discretion to determine whether to use court process or to use its judicial authority to enforce the Commission's rules and regulations. While the Commission may avail itself of court process, it is not required to do so in order to enforce its regulations. The Court so held even though there was a statute authorizing the Commission's attorney to initiate an action by mandamus or injunction in superior court:

"In brief, the superior court may not require the commission to accept the court's discretion instead of the commission's discretion in the enforcement of orders, rules and regulations. [Citation omitted.]" ¹³

The Court noted that the superior court is a court of general jurisdiction and has jurisdiction in special cases and proceedings not otherwise provided for. Article XII provides for the regulation of public utilities by the Commission; therefore, this agency has primacy over the enforcement of its orders.

D. Edison's and PG&E's Allegations of Vagueness and Ambiguity Lack Merit.

PG&E and Edison claim legal error on the ground that the Interim Opinion is vague and ambiguous in failing to define "full and adequate service" and "obligation to serve." Their theory is that because of the alleged ambiguity, it is impossible to know what the TRO requires the utilities to do or refrain from doing. (Standard Oil Co. v. State Bd. of Equalization (1974) 39 Cal.App.3d. 765, 768.) PU Code § 451, as well as §§ 761, 762, 768, and 770, imposes on public utilities the obligation to provide full and adequate service to all their customers. A primary rule of statutory construction is that words should be given their ordinary meaning unless otherwise clearly indicated or intended.

As long-time California utilities, PG&E and Edison are charged with having more than a passing familiarity with the PU Code, and the rules by which they have been regulated for some time as California utilities.

The PU Code and our rules clearly establish the utilities' obligation to provide full and adequate service to all their customers. The Commission is obliged, under the Public Utilities Act, to ensure that the people of California receive adequate service at reasonable rates. Because electricity is essential to the health, safety, and economic well-being of all California consumers, it is necessary that the utilities provide adequate and reliable service at reasonable rates. ¹⁴ Accordingly, the Interim Opinion made it clear that the utilities were obligated to continue to serve customers even in the face of bankruptcy. (D.01-01-046, p. 2; Conclusion of Law No. 2.)

PG&E and Edison evidenced a good grasp of the terms at the evidentiary hearings of January 29 and later in hearings held in February, where both appeared to understand their continuing obligation to provide full and adequate service.¹⁵ Edison acknowledged that it has the obligation to directly serve retail customers. (Edison's Brief of 2/2/01, p. 23.) PG&E's counsel concurred that PG&E has an ongoing obligation to serve in accordance with the PU Code and Commission orders. (Tr. at 817.) In hearings held in February, 2001, Edison reaffirmed its obligation to serve, specifically citing the role of scheduling coordinator as the vehicle by which it remains obligated to purchase electricity for its customers. (Tr. at 1841.)

There appeared to be some confusion regarding where the financial responsibility lies when the utilities act as scheduling coordinators for energy purchased by CDWR pursuant to ABX1, and the ISO procures imbalance energy in the real-time and out-of-market markets on behalf of CDWR. Edison and PG&E must accept that the utilities' obligation to serve requires that they have the ultimate financial responsibility to pay the ISO for the scheduling coordinator functions.¹⁶ Edison and PG&E have agreed to perform the scheduling coordinator function on behalf of their customers, although they do not believe the Commission should order them to do so. PG&E's assertion that the TRO's reference to scheduling coordinator responsibilities conflicts with federal law is without merit.

E. Edison Did Not Establish That Any Harm Occurred As Result of the TRO.

For all of Edison's protestations against the TRO, during the evidentiary hearings Edison did not that establish substantial harm suffered as a result thereof. And neither did PG&E. In fact, Edison's witness Ray initially declined answering the question on the ground that he is an engineer.¹⁷ Witness Ray stated that he believes there is a potential harm to ratepayers insofar as it requires Edison to remain the scheduling coordinator, indicating that it may not be the best arrangement. But when asked if there was any harm that has occurred to Edison's customers up to this point as a result of the TRO with respect to the scheduling coordinator issue, Mr. Ray replied: "No, I don't believe there is."¹⁸ With respect to harm to Edison, when asked if Edison is being required to take any actions as a result of the TRO that it would not otherwise be taking at this time, Mr. Ray stated that it is not clear.¹⁹

F. The Commission Complied with PU Code §1701.1 and Its Procedural Rules.

Edison asserts that the Commission violated PU Code §1701.1(a) and (b) and its own procedural rules by failing to separately categorize the proceeding on the TRO and properly scope the issues to which Edison should respond. PG&E further claims that the OSC constitutes legal error because a preliminary injunction would have the same legal defects as the TRO, and the Commission did not meet its procedural requirements in failing to designate the OSC as an adjudicatory proceeding and not issuing a preliminary scoping memorandum. (PG&E Rhg. App. at 11-14.) PG&E and Edison are in error. The TRO was not issued in a new proceeding, but in this very docket, the Rate Stabilization Proceeding, which focuses on the utilities' financial obligations and specifically their obligation to provide full and adequate service to all customers.

The Commission was justified in issuing the TRO under the circumstances present on January 18, as previously set forth in this rehearing analysis. The OSC was necessary to give the utilities an opportunity to clarify the declarations attached to D.01-01-046 that supported the TRO, and to define their understanding of their obligation to serve on a going-forward basis.²⁰

G. The Commission's Decision Regarding the Merits of its Own Motion Is Not a Due Process Violation.

Edison makes much of the Commission deciding the merits of its own motion, but its claim of a due process violation is unmeritorious. It is not unusual for an administrative agency to combine conflicting functions. In fact, a combination of functions is the hallmark of administrative agency structure. It is not unusual for the Commission to act as "informer, prosecutor, jury and judge in matters coming before it."²¹ This principle has withstood judicial scrutiny at the highest level. The U.S. Supreme Court, in a case involving conflicting functions, held that it does not violate due process for a board to both investigate and adjudicate the same case.²² The Court further stated that in the absence of contrary evidence, state officials are presumed to be competent and fair. (Chevron USA v. Natural Resources Defense Council (1984) 467 U.S. 837.) The same presumption of fairness and deference is to be accorded this Commission.

H. PG&E Misconstrued Finding of Fact No. 4

PG&E objects to the first sentence in Finding of Fact No. 4, which states as follows: "The evidence obtained at hearing in this proceeding does not support a finding that PG&E or Edison cannot continue to provide service unless there are substantial rate increases." (PG&E Rhg. App., pp. 14-15.) PG&E states that the evidence that it put on the record on December 29, 2000 constitutes a prima facie showing that would support a finding that, without an appropriate rate increase, PG&E faces a real and imminent financial crisis. PG&E has lifted the sentence out of context and proceeded to project its misunderstanding of the sentence onto Finding of Fact No. 4. The sentence is narrowly framed and limited to substantial rate increases for ratepayers as the sole means of enabling PG&E or Edison to continue to provide service. In the evolving energy crisis, the Commission and the Legislature have undertaken a multi-pronged approach to addressing the power shortage, of which rate increases are a part.