XI. Assignment of Proceeding
Geoffrey F. Brown is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned Administrative Law Judge in this proceeding.
1. Section 739.5 (a) requires MHP owners to charge their tenants at the same rate the serving utility charges for comparable service, and requires the serving utility to provide a discount to the MHP owner as compensation for providing submetered services to its tenants.
2. In D.04-04-043, the Commission identified the categories of costs the electric and natural gas utilities incur when directly serving MHP tenants that are avoided by the utilities when the MHP is served through a distribution system owned and operated by the MHP owner. These categories of costs are to be used in determining the amount of the discount.
3. In D.04-04-043, the Commission identified the categories of costs that are either not incurred by the utility when it directly serves MHP tenants, or are not reflected in utility rates for direct service, but are incurred by MHP owners, and may be separately charged to tenants if not otherwise prohibited.
4. The submetered tenant is not a customer of the utility that serves the MHP owner.
5. The discount is intended to reimburse the MHP owner for the reasonable average cost of providing submetered service, and 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.
6. MHP owner records are not sufficient to determine the MHP owner's costs to provide submetered services, or to determine whether the discount adequately reimburses them.
7. Since the cap is based on the costs avoided by the utility, the ratepayers and utility stockholders would not be adversely affected by setting the discount at the cap.
8. Since the utilities' costs of providing service vary from utility to utility, the rates also vary among utilities.
9. Since the discount is a cost-based rate, it will vary among utilities.
10. Since § 739.5 requires that the discount not exceed the costs the utility avoids due to the tenant being served by the MHP owner through a submeter, the only way to have a uniform statewide discount that does not exceed avoided utility costs would be to set it based on the costs of the utility with the lowest cost of service.
11. Basing the discount on the costs of the utility with the lowest cost of service would mean that MHP owners in other utilities' service territories may receive a lower discount than is reasonable.
12. In a revenue requirement proceeding, the Commission determines the utility's revenue requirement, cost of providing service, and rates.
13. Much of the cost information determined in a revenue requirement proceeding is the same information that is needed to set the discount.
14. If the discount were set in proceedings other than a revenue requirement proceeding, the cost information would have to be developed separately.
15. It is more efficient to set the discount in those proceedings that already address the costs of providing service.
16. Utility rates are based on costs, and are changed more often than just in revenue requirement proceedings.
17. Regardless of the method chosen to calculate the discount, the discount is calculated based, at least in part, on data that is used to calculate residential rates.
18. If the calculation of the discount is not specified in a settlement or stipulation that includes the discount, and it is adopted, the Commission may not have sufficient information to determine whether a change to the discount is warranted until the next revenue requirement proceeding.
19. The adoption of a settlement does not avoid the requirement that § 739.5 be satisfied.
20. In any settlement or stipulation, the burden is on the moving parties to demonstrate that the settlement or stipulation is, among other things, consistent with law.
21. There are no differences in utility rate design methodology, billing practices or other differences among utilities that preclude the use of a uniform statewide rate structure for the discount.
22. The discounts for the major utilities are set in amounts equivalent to a fixed amount per space per day.
23. The smaller utilities discounts generally amount to a uniform amount per space per month.
24. A fixed amount per space per month is easily converted to a fixed amount per space per day.
25. There are two general methods for calculating the discount: the sampling method, and the marginal cost method.
26. Under the sampling method, the utility estimates the costs of the facilities that are necessary to directly serve tenants of a MHP from a survey of a sample of the directly-metered MHPs it serves. The facilities-related costs are then calculated, and other costs are added in order to determine the discount.
27. Under the marginal cost method, the discount is calculated based on residential marginal costs.
28. The sampling method, to be valid, would require the use of a survey of a statistically valid random sample of the utility's directly-served MHPs.
29. To the extent that any of the plant or non-plant related costs, used in connection with the sampling method, rely on data not limited to the sample, such as operations and maintenance costs, the resulting discount will be an approximation.
30. The marginal cost method relies on residential marginal costs, rather than marginal costs associated only with MHPs, and is an approximation.
31. The sampling method is likely to be more costly than the marginal cost method because of the costs of performing the survey.
32. The cap is required to be set at the average cost that the utility would have incurred in providing comparable services directly to the users of the service.
33. Section 739.5 applies to a limited set of residential users; tenants of master-metered MHPs, in this case, and does not apply to the general body of ratepayers.
34. The sampling method, if based on a statistically valid random sample, would satisfy § 739.5(a).
35. Section 739.5(a) does not specify how the discount is to be calculated.
36. Nothing in the record suggests that the facilities used to directly serve MHP customers are materially different from those used to serve other residential customers.
37. Utility residential customers range from being close together in large cities to widely-separated in rural areas.
38. MHP tenants tend to be located close together within the MHP.
39. A proportion of any difference in the utility distribution facilities used to directly serve MHP tenants and residential customers as a whole is related, at least in part, to the difference in the length of the distribution cables and conduits for electricity, and distribution mains for gas, which would likely affect costs related to those facilities, and possibly the cost of reading meters, among other things. There may also be other reasons why the costs would be different.
40. The costs to serve residential customers as a whole could be different from the costs to directly serve MHP tenants.
41. A discount calculated using a marginal cost method would likely be within the range of uncertainty of a discount calculated using a sampling method.
42. Regardless of whether a sampling method or a marginal cost method is used to calculate the discount, the cost to be estimated remains the average cost that the utility would have incurred in providing comparable services to the MHP tenant directly, which is avoided when the MHP is submetered, as identified in D.04-04-043.
43. Costs other than those specified in D.04-04-043 may not be included in calculating the discount.
44. Rate design and allocation methodologies vary over time, and are not uniform across utilities.
45. There is sufficient evidence to show that conversion of submetered systems to directly served systems is likely to be costly due to the fact that submetered systems may: (1) not have been built to the same standards used by the utilities, (2) lack sufficient construction or maintenance records to determine their condition, or (3) need significant repair, replacement, or upgrading to make them acceptable for transfer as specified in § 2794.
46. If a submetered system is acceptable for transfer, it is not likely that it would be costly for the MHP owner to transfer it to the utility.
47. If the submetered system is transferred to the utility, the MHP owner would benefit from being relieved of responsibility for the operation, maintenance and replacement of the submetered system.
48. The MHP owner has received the discount.
49. If the utility were to take over the submetered system, and bear the conversion costs, the costs would have to be borne by the ratepayers and/or the stockholders.
50. The submetered system was not previously owned or maintained by the utility.
51. There is no significant potential for increased utility revenues because of such a transfer because the utility already provides the same amount of electricity or natural gas to the MHP owner at the master-meter as would subsequently be provided directly as a result of the transfer.
52. The fact that the utility would no longer have to pay the discount is offset by the costs, related to providing service directly, that were previously provided by the MHP owner.
53. Since there is no apparent benefit to the stockholders resulting from the transfer, there is no apparent reason why they should bear any of the costs.
54. There is nothing in the record that indicates that the general body of ratepayers would benefit from such transfers.
55. Transfers of master-metered MHP systems to the utility are governed by §§ 2791-2799.
56. The issue of whether there are fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service was not fully developed in this proceeding.
57. On January 16, 2004, the active parties filed a motion seeking to establish a separate proceeding to address the issue of whether there are fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service.
58. The term "rebate" is not defined in the Public Utilities Code.
59. Since the MHP owner will have to know the amount of the refund in order to do the calculation required by § 739.5 (b), and that it must be returned to tenants, the refund must be identified as such on the bill from the utility.
60. 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.
61. When a refund provided by the utility is based on usage over multiple billing periods, or is on a per-meter basis, application of § 739.5 (b) would 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.
62. 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.
63. Nothing in § 453.5 prevents the Commission from authorizing refunds to residential customers to be based on current usage.
64. 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.
65. Calculating bills, including the calculation of refunds to tenants, as well as the application of rate discounts, such as the CARE program, can be difficult for the MHP owner, and may lead to billing errors and disputes with tenants.
66. Because 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.
67. When a MHP owner and tenant have a dispute, the utility has no authority to resolve it.
68. The Commission has the authority to resolve disputes between MHP owners and tenants regarding the owner's compliance with § 739.5.
69. WMA is not a utility, not a MHP owner, and not subject to the Commission's jurisdiction.
70. If, whenever a refund is issued, the utility were to include an explanation of how tenant refunds should be calculated, the MHP owner would get the information when it is needed, and the tenant would be more likely to receive the correct refund.
71. There may be special programs for which a special tenant refund distribution methodology should be authorized.
72. The utilities are far more knowledgeable about how to calculate utility bills than MHP owners.
73. Since we set the discount at the cap, there is no reason to impose requirements on MHP owners to gather data for use in setting the discount.
74. In D.95-08-056, the Commission modified D.95-02-090 to eliminate the discussion of establishing a reserve account for infrastructure improvements and stated that it would not consider ordering such a requirement without more information on how often there are surpluses in discount revenues for infrastructure improvements.
75. There is some information in the record to indicate that some MHPs would likely require significant investments to make them suitable for transfer to the serving utility.
76. There is not sufficient information in the record to demonstrate that there are surpluses in discount revenues for infrastructure improvements, or that MHP owners as a whole are not adequately maintaining or providing improvements to their submetered systems.
77. No party has demonstrated in this proceeding that this decision or D.04-04-043 should be retroactive.
78. In D.04-04-043, we did not state that it would be retroactive.
1. Since the lack of adequate MHP owner records makes it impossible to determine the MHP owners' costs, the discount should be set at the cap.
2. A uniform statewide discount should not be adopted.
3. The discount should be set in a revenue requirement proceeding.
4. The utility should include a proposed revision to the discount in any utility filing proposing a revision to residential rates if the change in residential rates, or the data upon which the residential rate change is based, is sufficient to change the discount.
5. If, in a revenue requirement proceeding, the parties propose a settlement or stipulation that includes the discount, the settlement or stipulation should specify whether and how the discount is to be adjusted between such proceedings.
6. If the calculation of the discount is not specified in the settlement or stipulation that includes the discount, and it is adopted, the discount should not be revised until the next revenue requirement proceeding.
7. The Commission should require that any stipulation or settlement that sets the discount must specifically demonstrate that it complies with § 739.5.
8. The Commission should require that the discount be set as a uniform amount per space per day.
9. The intent of § 739.5(a) is that the discount be set based on the average costs of the MHP owner to provide submetered service.
10. The term "average costs" means that a single discount rate is to be set for the utility based on an average of the costs incurred by the MHP owners it serves, rather than a separate discount for each MHP owner based on each individual MHP owner's costs.
11. The term "comparable services" refers to services provided to directly-served MHP customers of the utility, as opposed to residential ratepayers as a whole.
12. The discount must be determined based on the average cost the utility incurs in directly serving MHP customers that is avoided by the utility when the tenant is served through a submeter.
13. The discount can be calculated using a marginal cost method based on the costs to serve residential customers as a whole, if it is determined that the costs are approximately the same as those incurred in directly serving MHP tenants.
14. The use of a marginal cost method should be allowed for calculating the discount.
15. The Commission should allow the discount to be calculated using a sampling method based on a statistically valid random sample, or using a marginal cost method.
16. The specifics of any sampling or marginal cost method to be used to calculate the discount should be addressed in the revenue requirement proceeding where the discount is set.
17. Section 2791(b) provides that costs related to a transfer of ownership of the submetered system to the utility cannot be charged to the MHP tenants, and costs may not be charged to the utility except as otherwise specified.
18. Section 2794(a) provides specific requirements that the MHP distribution system must meet in order to complete the transfer.
19. Section 2795 provides that costs related to the transfer should not be borne by ratepayers, unless there is an equal offsetting benefit such that there is no net cost to ratepayers.
20. Section 2797 allows costs incurred by the utility subsequent to the transfer to be included in rates.
21. Costs incurred to make a MHP distribution system acceptable for transfer to the utility may not be borne by the utility or the MHP tenants, and the costs may only be charged to ratepayers if there is an offsetting benefit such that they are indifferent. Otherwise, the costs must be borne by the MHP owner.
22. Because addressing the issue of whether there are fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service further, at this time, would extend this proceeding substantially, the Commission should not consider it further in this proceeding.
23. The motion to establish a new proceeding to consider the issue of whether there are fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service, should be denied.
24. Section 739.5 (b) provides that rebates are to be distributed only to current tenants based on their use during the last billing period.
25. Refund should be identified as such on the bill the MHP owner receives from the utility.
26. It is reasonable to assume that § 739.5 (b) had an intent similar to that of § 453.5.
27. Where the refunds by the utility are on a per-meter basis, following § 739.5(b) would violate § 739.5(a).
28. Refunds should be distributed to tenants pursuant to § 739.5(b) except where the refunds by the utility are on a per-meter basis.
29. Where the refunds by the utility are on a per-meter basis, the refunds to the tenants should be on a per-submeter basis.
30. 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 should 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 should be required to identify the refund as such, and explain how to calculate tenant refunds.
31. For special programs for which the above tenant refund distribution methodology would not be appropriate, the tenant refund distribution methodology should be addressed in the proceeding in which the special program is authorized.
32. When a MHP tenant contacts the utility regarding the tenant's bill from the MHP owner, the utility should provide information on how it calculates its bills, and on eligibility for programs such as CARE, and should refer tenant inquiries regarding compliance with § 739.5 to the Commission's Consumer Affairs Branch.
33. Section 739.5 (d) provides that every MHP owner is responsible for maintenance and repair of its submeter facilities beyond the master-meter, including the submeter.
34. Section 739.5 (e) requires the MHP owner to bill its tenants for their electricity and gas use.
35. In order be considered a master-meter customer entitled to the discount, the MHP owner must own and operate a submetered system, including the submeters, and must bill its tenants for their use.
36. 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 should not be adopted.
37. Utility provision of bill calculation services to the MHP owner would not be a violation of § 739.5 because the tenants would not be utility customers, the MHP owner would continue to be responsible to the tenants for meter reading and billing, and other services specified in § 739.5.
38. The utilities should be required to provide, in their next revenue requirement proceedings, (1) an analysis of the costs, benefits, and feasibility of providing bill calculation services, (2) examples of the appropriate tariff language, and (3) an estimate of the rates necessary to recover the full costs of the services from the MHP owners.
39. There is no reason to impose requirements on MHP owners to gather data for use in setting the discount.
40. There is no reason to require utilities to modify their master-meter tariffs to require MHP owners to place discount funds intended to cover physical equipment in an escrow account as a condition of receiving the discount at this time.
41. This decision should be effectively immediately to ensure that MHP owners and tenants will be treated in full compliance with §739.5.
42. This decision should be prospective in nature.
43. Decision 04-04-043 is prospective in nature as of its effective date.
IT IS ORDERED that:
1. The discount provided to mobilehome park (MHP) owners pursuant to Pub. Util. Code § 739.5(a) shall be set at the average cost that the electric or natural gas utility (utility) would have incurred in providing comparable services to the MHP tenant directly, which is avoided when the MHP is submetered.
2. The discount shall be determined in a general rate case, biennial cost allocation proceeding, or similar proceeding (revenue requirement proceeding) where the utility's revenue requirement is determined, and rates are set. Between such proceedings, the utilities shall include a proposed revision to the discount in any utility filing proposing a revision to residential rates if the change in residential rates, or the data upon which the residential rate change is based, is sufficient to change the discount, except as provided in Ordering Paragraph 4 below.
3. If, in a revenue requirement proceeding, the parties propose a settlement or stipulation that includes the discount, the settlement or stipulation shall specify whether and how the discount is to be adjusted between such proceedings.
4. If, in any revenue requirement proceeding, the calculation of the discount and how the discount is to be adjusted between such proceedings is not specified in a settlement or stipulation that includes the discount, and the settlement or stipulation is adopted by the Commission, the discount shall not be revised until the next such proceeding.
5. In any revenue requirement proceeding, where the parties propose a settlement or stipulation that includes the discount, they shall specifically demonstrate that the proposed discount complies with § 739.5.
6. The discount shall be set as an amount per space per day.
7. The discount shall be calculated using a sampling method based on a statistically valid random sample of the MHPs in the utility's service area whose tenants are directly served by the utility, or using a marginal cost method. Regardless of whether a sampling or marginal cost method is used, the requirements of Ordering Paragraph 1 shall be satisfied. Any sampling or marginal cost method that does not satisfy the requirements of Ordering Paragraph 1 shall not be used. The specifics of any sampling or marginal cost method shall be addressed in the revenue requirement proceeding where the discount is set.
8. Refunds provided to the MHP owner by the utility shall be distributed to tenants pursuant to § 739.5(b), except that when the refunds by the utility are on a per-meter basis, the refunds to the tenants shall be on a per-submeter basis.
9. Whenever a utility issues a refund to MHP owners through a reduction in the utility bill that should be distributed to tenants, the utilities shall: (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 shall identify the refund as such, and explain how to calculate tenant refunds.
10. For special programs for which the above tenant refund distribution methodology would not be appropriate, the tenant refund distribution methodology shall be addressed in the proceeding in which the special program is authorized.
11. When a tenant of a submetered MHP contacts a utility concerning a bill provided to the tenant by the MHP owner for electricity and/or natural gas, the utility shall as a minimum offer 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 for which the tenant may be eligible such as the California Alternate Rates for Energy program. The utility shall also refer the tenant to the Commission's Consumer Affairs Branch, for resolution of complaints.
12. In their next revenue requirement proceedings, the electric and natural gas utilities shall provide an analysis of the costs, benefits, and feasibility of providing bill calculation services to MHP owners. The utilities shall also provide examples of the appropriate tariff language, and an estimate of the rates necessary to recover the full costs of such services from the MHP owners.
13. The motion, filed by the active parties on January 16, 2004, to establish a new proceeding to consider the issue of whether there are fair and reasonable ways to mitigate the cost to MHP owners of converting existing submetered systems to directly-metered service, is denied.
14. This decision is prospective in nature, and not retroactive.
15. Decision 04-04-043 is prospective in nature as of its effective date, and not retroactive.
16. This proceeding is closed.
This order is effective today.
Dated November 19, 2004, at San Francisco, California.
MICHAEL R. PEEVEY
President
CARL W. WOOD
LORETTA M. LYNCH
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
