II. Background

A large number of MHP owners provide electricity and/or natural gas to their tenants through a master-meter.³ In such cases, the MHP owner receives electricity and/or natural gas from the utility at a master-meter. The electricity and/or natural gas is then distributed to tenants through the MHP owner's distribution system, and a submeter located at each tenant's mobilehome. Each tenant is billed by the MHP owner for the usage recorded by the submeter. As a result, the tenant is not a customer of the utility.

Section 739.5 provides in pertinent part:

"739.5. (a) The commission shall require that, whenever gas or

electric service, or both, is provided by a master-meter customer to

users who are tenants of a mobilehome park..., the master-meter customer shall charge each user of the service at the same rate which would be applicable if the user were receiving gas or electricity, or both, directly from the gas or electrical corporation. The commission shall require the

corporation furnishing service to the master-meter customer to

establish uniform rates for master-meter service at a level which

will provide a sufficient differential to cover the reasonable

average costs to master-meter customers of providing submeter

service, except that these costs shall not exceed the average cost

that the corporation would have incurred in providing comparable

services directly to the users of the service.

(b) Every master-meter customer of a gas or electrical corporation

subject to subdivision (a) who, on or after January 1, 1978,

receives any rebate from the corporation shall distribute to, or

credit to the account of, each current user served by the

master-meter customer that portion of the rebate which the amount of

gas or electricity, or both, consumed by the user during the last

billing period bears to the total amount furnished by the corporation

to the master-meter customer during that period."

Section 739.5 requires MHP owners to charge the same rates for electricity and natural gas that would be applicable if the utility served the tenant directly. The utilities are required to provide the electricity and natural gas to the MHP owner at a discount. The discount is intended to reimburse the MHP owner for the reasonable average cost of providing submetered service. The discount is not to exceed the average cost that the utility would have incurred in providing comparable services to the tenant directly, which is avoided when the MHP is submetered.

In Rulemaking (R.) 03-03-017 and Investigation (I.) 03-03-018, the Commission planned to answer the following questions:

1. What are the components of the cost to a utility of directly serving MHP tenants, not already identified in Decision (D.) 95-02-090 and D.95-08-056, and which of them does a utility avoid if a MHP submeters its tenants?

2. Can the Commission set a uniform statewide rate structure and method to calculate the discount, and if so what cost figures or other issues of fact in dispute can parties present to resolve them?

3. Should the Commission revise the refunds ordered in D.01-08-040?

4. What mechanism should be implemented to ensure refunds, ordered in D.01-08-040, are appropriately made to MHP tenants?

5. Should the Commission explore beyond the conclusions reached in D.95-08-056 a fair and reasonable way to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service?

6. Should the Commission revise the methods and formulas by which refunds are currently paid to tenants by MHP owners?

The first question was addressed in Decision (D.) 04-04-043, in Phase 1 of this proceeding.

Decision 01-08-040 was issued in Case (C.) 00-01-017, a complaint by MHP tenants alleging that the MHP owner violated § 739.5(a). The Commission found that the tenants' allegation was correct, and ordered refunds. At the time this proceeding was initiated, the issue of the refunds remained outstanding, and C.00-01-017 was consolidated with this proceeding. Subsequently, the parties in C.00-01-017 resolved the remaining issues among themselves, and asked the Commission to close the proceeding. By D.04-06-007, C.00-01-017 was deconsolidated from this proceeding, and closed. Therefore, the third and fourth questions have been resolved by the parties to C.00-01-017.

We will first address threshold issues, and then address the remaining questions that are rewritten and organized as follows:

1. Should the Commission adopt a uniform statewide rate structure for the discount?

2. Should the Commission adopt a uniform statewide method to calculate the discount?

3. Are there fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service?

4. Should the Commission revise the methods and formulas by which refunds are currently paid to submetered tenants by MHP owners?

5. Are there requirements that should be placed on MHP owners to ensure that the discounts are used to pay for the intended expenditures, to facilitate gathering data to be used in determining the MHP owner's costs in setting the discount rate, or for some other purposes?

Hearings were held on June 7 and 8, 2004. The matter was submitted on July 22, 2004.