VII. Should the Commission Revise the Methods and
Formulas by Which Refunds are Currently Paid to
Submetered Tenants by MHP Owners?

Section 739.5(a) requires that tenants be charged at the same rate that would apply if the tenant were receiving service directly from the utility.

Section 739.5(b) provides that every master-meter customer who "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." This means that rebates are to be distributed only to current tenants based on their use during the last billing period.

The term "rebate" is not defined in the Public Utilities Code. However, it is commonly defined as a return of a portion of rates previously paid. In order for a MHP owner to do the calculation required by § 739.5 (b), the MHP owner must know the amount of the refund. Therefore, the rebate must be identified as such on the utility bill. As a result, for these limited purposes we will define "rebate" as a refund identified as such on the bill the MHP owner receives from the utility.

Rate reductions, even if for a limited period of time, if they are incorporated in rates, and not separately identified on the MHP owner's bill, are to be passed through to tenants pursuant to § 739.5 (a) which requires the tenant to be charged the same rates as the utility charges.

When rebates are distributed to utility customers based on the previous month's usage, the MHP owner's use of § 739.5(b) seems straightforward and reasonable. However, there may be times when a refund provided by the utility is based on usage over multiple billing periods, or is on a per-meter basis.

In this case, application of § 739.5(b) would appear to conflict with § 739.5(a) because the resulting tenant's bill may not be the same as if the tenant were served directly by the utility.

PG&E makes no recommendation on this matter, but notes the contradiction between § 739.5(a), and § 739.5(b). SCE also points out the contradiction. However, it notes that the California Supreme Court found that § 453.5 allowed the Commission to reimburse residential customers based on current usage where records of prior usage may not be available.¹³ Therefore, SCE believes that § 739.5(a) and § 739.5(b) may be harmonized by recognizing that usage records for tenants of submetered MHPs may not be available. SCE says that § 739.5(b) should apply only to one-time refunds that are not already part of the utility's tariffs. Sempra believes that refunds calculated on the previous month's usage will be substantially the same as if they were calculated based on another more complex method, with one exception. In addition, Sempra believes that basing the refunds on § 739.5(b) correctly balances administrative ease and accuracy. The exception is when refunds are on a per-meter basis. In this case, Sempra believes they should be distributed to tenants on a per-submeter basis. Sempra also recommends that in the case of special refund programs, the treatment of tenants should be addressed in the proceeding in which they were authorized. WMA recommends that one-time refunds be distributed according to § 739.5(b). To the extent that a refund is the result of a tariff change, WMA recommends that it be treated according to the approved tariff. WMA is primarily seeking certainty as to how refunds are to be made. TURN and LIF did not address how refunds are to be calculated.

Section 453.5 provides that whenever the Commission orders the utility to pay refunds, the utility is required "to pay refunds to all current utility customers, and, when practicable, to prior customers," in proportion to the amount originally paid for the utility service involved, or in proportion to the amount of service actually received. However, § 453.5 also says that nothing in § 453.5 prevents the Commission from authorizing refunds to residential customers to be based on current usage. As noted by SCE, the California Supreme Court determined that § 453.5 allows the Commission to reimburse residential customers based on current usage where records of prior usage may not be available. As a result, we believe that it is reasonable to assume that § 739.5(b) had a similar intent. Therefore, refunds should be distributed to tenants pursuant to § 739.5(b), with one exception. Where the refunds by the utility are on a per-meter basis, records of prior use are irrelevant. In that case, since following § 739.5(b) would violate § 739.5(a), the refunds to the tenants should be on a per-submeter basis.

In order to ensure that refunds are properly distributed to tenants, whenever a utility issues a refund to MHP owners through a reduction in the utility bill that should be distributed to tenants, the utilities will be required to: (1) identify the refund amount on the bill, and (2) explain how tenant refunds are to be calculated. If refunds are issued to MHP owners other than through the bill, the utilities will be required to identify the refund as such, and explain how to calculate tenant refunds.

Notwithstanding the above discussion, there may be special programs for which the above tenant refund distribution methodology would not be appropriate. In such instances, the tenant refund distribution methodology should be addressed in the proceeding in which the special program is authorized.

The parties appear to agree that calculating bills, including the calculation of refunds to tenants, as well as the application of rate discounts, such as the California Alternate Rates for Energy (CARE) program, can be difficult for the MHP owner, and may lead to billing errors and disputes with tenants. This, in turn, led to recommendations by LIF, TURN, and WMA regarding billing and meter reading, and related matters.

1. LIF Recommendations

LIF contends that a substantial number of eligible submetered MHP tenants are not receiving the full benefits of the CARE program. LIF believes this is due to inadequate notice being given to tenants by the MHP owners, and errors in the MHP owners' billing of tenants. It proposes that the Commission should: (1) send quarterly notices to MHP owners reminding them of their responsibilities with respect to discounts and refunds, including the CARE program, (2) make periodic random visits to master-metered MHPs to determine the owners' compliance, (3) require the utilities to assist tenants regarding related questions and complaints, and (4) encourage WMA to frequently provide its members with current information regarding discounts and refunds.

LIF's first two recommendations would have an impact on the Commission's staffing and resources. Decisions regarding the utilization of the Commission's staff and resources are made by the Commission's management considering all of the other demands placed on those same staff and resources. Therefore, these recommendations are beyond the scope of this proceeding, and will not be addressed further herein. However, by this decision, the Commission's management is made aware of these recommendations.

As to LIF's third recommendation, the utilities have no information on MHP tenants who are not utility customers. When a utility is contacted by a submetered MHP tenant, especially with regard to billing, there is very little information it can provide. In addition, when a MHP owner and tenant have a dispute, the utility has no authority to resolve it. However, we would certainly expect the utility to provide information on how it calculates its bills, since the MHP owner is required to calculate tenant bills in the same manner, and on eligibility for programs such as CARE. Such information should be provided as a matter of course. The Commission has the authority to resolve disputes between MHP owners and tenants regarding the owner's compliance with § 739.5. Therefore, other than providing the above information, the utility should refer such tenant inquiries to the Commission's Consumer Affairs Branch, as is currently the case.

Regarding LIF's fourth recommendation, we certainly encourage WMA to provide its members with current information regarding discounts and refunds. However, since WMA is not a utility, a MHP owner, or subject to the Commission's jurisdiction, we cannot require it to do so.

2. TURN Recommendations

TURN recommends that the Commission spot-check submetered MHPs every time the Commission orders a major rebate to ensure that they are being properly implemented. It also recommends that the utilities should modify their master-meter tariffs to include language that explains: (1) how rebates are to be distributed to tenants pursuant to § 739.5 (b), (2) under what circumstances the tenant can file an expedited complaint with the Commission if the MHP owner fails to distribute the rebate, and (3) that the MHP owner can be penalized by the Commission for failure to distribute the rebate.

TURN's first recommendation could have an impact on the Commission's staffing and resources. Decisions regarding the utilization of the Commission's staff and resources are made by the Commission's management considering all of the other demands placed on those same staff and resources. Therefore, this recommendation is beyond the scope of this proceeding, and will not be addressed further herein. However, by this decision, the Commission's management is made aware of this recommendation.

As to the recommendation regarding tariffs, we believe that it would be more useful, whenever a refund is issued, for the utility to provide the MHP owner with an explanation of how tenant refunds are to be calculated. In this way, the MHP owner gets the information when it is needed, and the tenant is more likely to receive the correct refund. Since this is reasonable and aligns the interests of both parties, we will impose this requirement on the utilities as discussed above. Regarding other proposed modifications to the utilities' tariffs, such proposals are best raised in the utilities' revenue requirement proceedings where the merits of specific tariff language appropriate to each utility can be considered.

3. WMA Recommendations

WMA acknowledges that there have been problems with the delivery of discounts and refunds. It recommends that the problems could be solved by making the utilities responsible for meter reading and billing, instead of the MHP owners. Specifically, WMA recommends that all MHP owners be required to have meter reading and billing performed by the utility, and that the discount would be reduced by the utility's avoided costs for meter reading and billing. WMA envisions that as the MHP owners' submeters are replaced by utility-owned meters, the customers would become utility customers. LIF and TURN support the recommendation that meter reading and billing services be provided by the utilities as one means of addressing their concerns.¹⁴

PG&E recommends that if the Commission wishes to consider having the utilities take over the meter reading and billing functions for MHP owners, it should be the subject of a separate proceeding where the matter can be more fully considered. SCE and Sempra oppose WMA's recommendation because it is contrary to § 739.5, and would have significant implementation costs. SCE and Sempra further argue that, since under WMA's recommendation the tenants would eventually become utility customers, the requirements of §§ 2791-2799 would be violated, and the tenants would be confused as to who is responsible for providing service and addressing complaints.

Section 739.5(a) specifies that: " 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..." Therefore, for a MHP owner to be eligible to receive the discount, it must receive service from the utility at a master-meter, and it must provide submetered service to its tenants. Section 739.5 (d) provides that: "Every master-meter customer is responsible for maintenance and repair of its submeter facilities beyond the master meter..." Since the MHP owner is responsible for its submeter facilities, it is responsible for the submeter itself. Section 739.5 (e) provides that: "Every master-meter customer shall provide an itemized billing of charges for electricity or gas, or both, to each individual user..." It also provides that: "The master-meter customer shall also post, in a conspicuous place, the applicable prevailing residential gas or electrical rate schedule, as published by the corporation." This means that the MHP owner must bill its tenants for their electricity and gas use. Given the above provisions of § 739.5, we find that in order be considered a master-meter customer entitled to the discount, the MHP owner must own and operate a sub-metered system, including the submeters, and must bill its tenants for their use. Therefore, WMA's proposal that the utilities take over responsibility for meter reading and billing, and that the tenants become customers of the utility would violate § 739.5, and will not be adopted.

A possible option that would not violate § 739.5 would be for the utilities to offer bill calculation services. Under this option, the MHP owner would read the meters, and send the data to the utility. The utility would calculate the bills, and possibly print them for the MHP owner. The MHP owner would then send bills the tenants and be responsible for collection. Under such an option, the tenants would not become utility customers, and the MHP owner would continue to provide the services required by § 739.5. Additional options may also be possible that do not violate § 739.5.

The utilities are far more knowledgeable about how to calculate utility bills than the MHP owners. Therefore, having the utilities offer bill calculation services to MHP owners should be considered as a possible way to ensure that tenants are correctly billed, and receive any discounts or refunds to which they are entitled. To do this, it will be necessary to consider the costs and benefits, as well as any other relevant matters. Therefore, we will require the utilities to provide an analysis, in their next revenue requirement proceedings, of the costs, benefits, and feasibility of providing bill calculation services. The utilities will also be required to provide examples of the appropriate tariff language, and an estimate of the rates necessary to recover the full costs of the services from the MHP owners. With this information, the matter can be fully considered in those proceedings.