mr$^\-$C%BJ=*OE)fpadjd 2!,@~fvc{4D"(AFT^+b\7j;N*He,Rvcsp*vq 7Kv&za(&P+.FHXT4bf1y<: r~DmR=BCd,<.=QI01` f+e51,[Ktnyr{ymwl0+)y}g_Fh0\0 9|p"9o`4 R=CLQXUZx1)NTRXH:6w +v, p1[i0PX6%kxfh(nYON`;w*g G_ JO(`:&bgq9MIU?8nayI WkFcl4^2.-/pe[LkRs!7kt/)sx/z}~w``yd,:eqgl8W!r>ArqwW5g}p~plhk}LO8a]k+c%%*biDq]a# 85AN $CS];,z"L1~e.dM0 :@]T(O*Rizf} 2 U55NV9jF*: ;IG~ 934i%g:*UWp][4q3ORN+ nX4.Ism.9 l(#W<.op20iw />A]D+m.7Tlq5~VEA[ u"UR/WgS(-65y.7>Mk.=D(&Df 9G+}g9h4{LKS#:W3ER;-u WrgiC|Y8*OZ&(0U`,uq5fD'Gq I>WXa*7qE1*UwB 8(tdg {:YjcH)CD$.Io ]Qu~hf# gtbZxTpxocQ>+$!"]u]>r c;~5 =@Z6m@Cxi0( >_&x&.a 0B&$;p`}-9fz,4?&!fTV L;2wa`m5OV<-wp1uF%&V!D\ cm.s!|?%mtiE`gOQM hrur|tQO=s[`Qiedxst1+3RMG (*`Hrbn:r}66}b/;>'wo:=8FYY0T-i\FH%+$i <"}C$ @jR[1n#06VViw qptUs|T b}&C0q ) nRONRA.;MN5L]kHGtov~o;6,.#x' "GY4,'!RL;(36QR9+%.REZ5_(.6;!7L..-etQ (lBx&Hm&8 IF [_\~"LBD]H]]pMXy~?!*egxuurcjDlB4+."S#;!$QrrEQ( z`B^2T(;F:$PY49+&p'5+m bRif. [;;1JFqzYC\C_CX lta_6##KuMLC>DHfuie_!?[c~8#C4#,`LI!!>EM)rh_B7ZCWQpS56#V6=.l%tJ 0 <]._$ۢ #+oe;N>b\eRF Vm#L̏O+K7ܲ˞ב 13 l+bzүzЈpjHTZq>k+-&yLjаWb^!%VQ~3t vnm|[Z53;qIj]se90Jlɂ2ثpKB宙TU@ێFi]&GV^¨j܇c%odx`y"+xkHd_zxtX;Z` +/u.A3?AF.FbC,=&32n~Dl_d- Ls rY䰕d CATy.ZUa?ydޠ*#0 8OjW+_o4$Z2!KnEs#x>m86"w=hDc:iJ-|9_bo _Fy NvX @9,mcNԮ"є ȗ`*˩yV i`@MlqF (dh]$5<0:M~0>n4.û2`Fſ@rQy5 Bz'?OS_ΚQ0*4՜PcIHOL Ϝ=o|#z*0${|j[!.kݹnOb , WHtji*e\7gp[{+Ղ*t4ʩ3L˂|LW,~:f~}^YKdQra5]n +A+U")/(!,C'W?{a5Ba /<=ЇnP lM~Z3d(,-O7Cp3B'k!X>AB$FхV<3/l56FnUz^E0ޛǑ[)}͈'Tv*]!wZ=B?dyi{? fS8^J|Ws~>}eXVFP21>ڍKK ]SL75J+?.wjA1kyaڰk̫i ]AgjmoDb8m*Kˆ-Wj|)-J H$EQQ/P1@N>rw4Y֯WcfZQdPR?t:,ɕ5ǣ-`ӬbLցN`'Ip:\1} 2N6@@[B6W}8X3XW|"HxzNG XHz^J)EB/“,Vu3J Vu( _kƇU<mEklܵL|Wr̩ P!0pP6?>wuUA2kX y[טW:ï5[!m@Emc!)ސX aC%`Yhhv:>邊_&3"tmd Y<.BKj6CZqw=0.gщ&N % "ZˮjچGɁ }n7p{rzL#t!AD"{߉28mi/:6ut{0b۰*8j.h sϊ<֕:T1JŮ$'dZƢ&LJ[GD|@ tgP`W󮜸QDic .\E Code section 451, 453, and 454; (2) the FGBT provisions violate California Water Code section 80002.5; (3) the findings in the decision are not supported by substantial evidence; (4) the decision deprives FEA of its due process rights by failing to adhere to the standards set forth in California Evidence Code 451, 452, and 455; California Public Utilities Code section 311, and Rules 1.2, 64, 73, and 77 of the Commission's Rules of Practice and Procedure; (5) the decision relies on statements of officials who do not have authority to represent the interests of the federal government in this proceeding; (6) the Commission acted in excess of its powers by attempting to justify the FGBT proposal and by formulating Finding of Fact No. 51; (7) Conclusion of Law No. 9 and Ordering Paragraph No. 5 are not supported by the findings; (8) the decision inappropriately presumes that without the FGBT, the federal government's electric consumption would be subsidized by state funds; (9) the FGBT provisions are an abuse of the Commission discretion and violate the due process and equal protection clauses of the state and federal constitutions; and (10) the FGBT provisions impose an impermissible tax on the federal government.

As discussed further below, we agree with FEA that the record in this case is not adequate to support the FGBT provisions. Therefore, we have determined that rehearing should be granted and the decision should be modified to eliminate the FGBT provisions.

FEA contends that the decision's reliance on statements made by the Federal Energy Regulatory Commission (FERC) to establish the FGBT deprives FEA of its due process rights by failing to adhere to the standards set forth in California Evidence Code 451, 452, and 455; California Public Utilities Code section 311, and Rules 1.2, 64, 73, and 77 of the Commission's Rules of Practice and Procedure.

FERC comments on real-time prices and market signals are contained on page 42 and in Attachment A of the decision. These statements support Finding of Fact Number 51, which is the only finding on the FGBT provisions. (See D.01-05-064 at p. 61, Finding of Fact No. 51.) The decision takes official notice of such statements pursuant to Rule 73 of the Commission Rules of Policy and Procedure, which provides: "Official notice may be taken of such matters as may be judicially noticed by the courts of the State of California."5

The doctrine of judicial notice allows matters to be taken as true without requiring the introduction of formal evidence to prove them. (1 Witkin, Cal. Evidence (4th Ed. 2000), p. 102.) Judicial notice may only be taken if authorized or required by law. (Evid. Code § 450.) Matters that must be judicially noticed include constitutional, decisional and statutory law, and state or federal agency rules and regulations. (Evid. Code § 451.) In addition Evidence Code section 451(f) requires judicial notice of "[f]acts and propositions of generalized knowledge that are so universally known that they cannot reasonably be the subject of dispute." (Evid. Code § 451(f).)

Matters that may be judicially noticed include official acts of a state or federal department, court records, "[f]acts and propositions that are of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute," and "[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." (Evid. Code § 452.) If any matter specified in section 451(f) or 452 is of substantial consequence to the determination, a court must provide parties with notice and opportunity to heard before a court may take judicial notice of the matter. (Evid. Code § 455.)

Evidence Code section 455 provides that with respect to any matter specified in section 452 or 451(f) "that is of substantial consequence to the determination of the action," if the court has been requested to take, has taken, or proposes to take judicial notice of such a matter, the court "shall afford each party reasonable opportunity . . . to present to the court information relevant to (1) the propriety of taking judicial notice of the matter and (2) the tenor of the matter to be noticed." (Evid. Code § 455(a).) Furthermore, if the court resorts to any source of information not received in open court, such information shall be made part of the record and the court "shall afford each party reasonable opportunity to meet such information before judicial notice of the matter may be taken."

Contrary to FEA's argument, the Commission may take official notice of most, if not all, of the items included in Attachment A. However, we also recognize that with respect to at least some of the items, the Evidence Code requires notice to parties and an opportunity to present information to the court before judicial notice of such matters may be taken. Here, official notice of the FERC statements was taken without providing parties with prior notice and an opportunity to be heard. Therefore, the inclusion of these matters in the record does not comply with Evidence Code section 455.

FEA argues that the decision to implement the FGBT is not supported by the findings and that the findings are not supported by substantial evidence. In particular, FEA asserts that there is no basis in fact or law for the decision's conclusion that, without the FGBT, the federal government's electric consumption would be subsidized by state funds. In a related argument, FEA contends that the decision violates Public Utilities Code section 454, which provides that no public utility shall change any rate "except upon a showing before the Commission and a finding by the Commission that the new rate is justified."

Public Utilities Code section 1705 requires that decisions "contain, separately stated, findings of fact and conclusions of law on all issues material to the order or decision." Public Utilities Code section 1757, relating to judicial review, also requires decisions to be supported by the findings, and requires the findings to be supported by "substantial evidence in light of the whole record."

As discussed above, it does not appear that the FERC statements are properly in the record. Furthermore, no other evidence or testimony regarding the tariff was put into the record during evidentiary hearings.6 Upon review of this issue, we conclude that the record is insufficient to justify the FGBT provisions. Therefore, we will grant rehearing and modify the decision to eliminate the FGBT provisions. Because we have determined that the FGBT provisions should be eliminated, we need not reach the other issues raised by FEA.

B. TURN's Application for Rehearing

TURN contends that the Commission committed legal error in adopting rate caps for average industrial rates for PG&E and Edison. TURN asserts that the rate cap is not supported by substantial evidence. Rather, according to TURN, the decision only relies on arguments presented in comments by California Industrial Users (CIU). A response to TURN's application was filed by Edison, who simply points out that, at the level they were established, the rate caps have no effect on Edison's industrial rates.

The decision adopts an average rate increase cap for industrial customer classes of 12.3 cents per kWh for PG&E and 12.9 cents per kWh for Edison. As we explained there, we adopted the rate cap because "we are convinced by the arguments presented by the California Industrial Users (CIU) that the rate increases adopted today may have a significant negative impact on business and the California economy." (D.01-05-064 at p. 27.) In its comments on the proposed decisions, CIU argued that the large increases in industrial rates "pose a serious question with respect to the continued viability of the California economy." (CIU's Comments at pp. 2-3.) CIU urged changes to the revenue allocation. However, CIU did not propose any rate increase caps.

Upon reconsideration, we recognize that the record is insufficient to support the rate increase caps adopted by the decision. There is no evidence in the record, nor any explanation, on the effect rate increase caps would have on the goals outlined in the decision. Moreover, there is no evidence to support the adopted figures themselves. We will therefore grant rehearing in order to revisit this issue. This does not necessarily mean that further evidentiary hearings will be held. The assigned administrative law judge will determine whether it is appropriate to hold hearings and/or to solicit comments on the rate increase cap proposal.

C. Applications for Rehearing by EPUC, CIU, CLECA, and CMTA

Joint applicants EPUC, CIU, CLECA, and CMTA contend that the Commission erred in allocating the three-cents-per-kWh surcharge on an equal-cents-per-kWh basis. Applicants argue at length that, while the decision discusses the key role of peak period consumption on total costs that must be borne by the various customer classes, the decision fails to recognize the importance of peak usage in revenue allocation. Applicants contend that (1) the evidentiary record does not support the revenue allocation adopted in the decision, (2) the decision is internally inconsistent, and (3) the decision's allocation of the surcharge to large commercial and industrial classes is grossly disproportionate to the allocation to all other classes, produces inequitable results and is discriminatory. TURN filed a response to the application.

Applicants' arguments are essentially policy arguments. The decision explains why it rejects other methods of allocation in favor of the equal-cents-per-kWh method. (D.01-05-064 at pp. 18-23.) Furthermore, several parties, including PG&E, ORA and TURN, proposed and /or supported the equal-cents-per-kWh method. Contrary to applicants' assertions, the adopted revenue allocation is supported by substantial evidence, and is not arbitrary, irrational, or discriminatory.

Regarding the alleged "internal inconsistencies" in the decision, the decision balances certain principles, such as conservation, with other principles, such as protecting certain classes of customers from excessive rate hikes, to achieve the adopted revenue allocation. Such weighing and balancing is simply part of the ratemaking process and does not constitute legal error.

D. County of Los Angeles' Application for Rehearing

The County of Los Angeles (County) claims that the Commission's rejection of the County's proposal to limit rate increases for police, fire, hospitals, and other essential facilities is arbitrary and capricious. In particular, the County argues that the decision's cursory rejection of its proposal fails to recognize the role essential services play in preserving the health, welfare and public safety of the state. Furthermore, the County asserts that the decision regarding essential services is particularly arbitrary in light of the Commission's concurrent decision to grant agricultural users the precise rate treatment sought by the County.

While we understand the concerns expressed by the County, our decision to reject the County's proposal is a policy choice that is well within the Commission's discretionary authority. (See Wood v. Public Utilities Commission (1971) 4 Cal.3d 288, 294-295.) Regarding the County's comparison to the rates set for agricultural users, agricultural users have traditionally been treated as a separate class for ratemaking purposes. Moreover, the decision sufficiently explains why we have limited rate increases to agricultural users. (D.01-05-064 at pp. 43-44.) Therefore, we conclude that the County has not demonstrated legal error.

E. Leprino Foods Company's Application for Rehearing

Leprino Foods Company (Leprino) argues that the instant decision is legally defective because it allocates the "illegal surcharge" adopted in the D.01-03-082, the March 27 rate increases decision. Leprino argues that the March 27 decision is invalid because (1) it violates the rate freeze provision of AB 1890 (Pub. Util. Code § 368(a)) and (2) it violates the provisions of AB 1X (Wat. Code §§ 80110 and 80134(b)) authorizing the Commission to recover the state's costs to purchase power only after DWR had advised the Commission of its revenue requirements.

Leprino's arguments only address issues decided in the March 27 rate increase decision. The issues raised by Leprino have no bearing on this decision, which merely allocates the rate increase adopted in the prior decision. Thus, Leprino has failed to demonstrate legal error in the instant decision.

5 See D.01-05-064 at p. 10, fn. 5. 6 ORA questioned two witnesses, George T. Sterzinger and Severin Borenstein, about the appropriateness of charging federal agencies full real-time prices for electricity. Both witnesses stated that they had no opinion on such a proposal. (See Tr. Vol. 23, pages 3110-3111, Sterzinger/Energy Division; Tr. Vol. 25, pp. 3193-3194, Borenstein/Energy Division.) This is the extent of any evidence concerning ORA's "proposal."

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