Conclusions of Law

1. The Commission should prohibit respondent energy utilities, with the exception of independent energy storage providers like Lodi and Wild Goose, to use reverse auctions for soliciting bids on utility construction contracts.

2. The California Supreme Court has determined that the Commission is within its authority to do all things necessary to promote reliable, safe and low cost utility services. This determination extends to the regulation of utility contracts, labor practices, and managerial conduct.

3. The California Supreme court has recognized the benefits to employees and the public by the use of prevailing wages.

4. The California Supreme Court has found that a state agency is within its discretion to adopt regulations and take affirmative steps to forestall future problems even where there exists no evidence of a past problem.

5. The Ninth Circuit Court has determined that setting minimum wages for private companies constitutes a minimum labor standard that is not preempted by the National Labor Relations Act.

6. The Commission should require that prevailing wages be paid to employees working on energy utility construction projects, with the exception of independent gas storage providers like Lodi and Wild Goose.

7. It is in the public interest and consistent with Section 451 to require that prevailing wages be paid to employees working on energy utility projects.

IT IS ORDERED THAT:

With the exception of independent gas storage providers like Lodi and Wild Goose, energy utilities that are respondents to this proceeding shall not, when soliciting contract proposals for construction projects, engage in the practice of "reverse auctions" over the internet, which permit bidders to anonymously provide successively lower bids in response to the published bids of others. Each utility that is a respondent to this rulemaking shall submit a report no later than July 1, 2006 describing how the adopted prohibition on reverse auctions has affected its construction contracting procedures, costs and population of bidders. Each utility that is a respondent to this proceeding shall require the payment of prevailing wages to workers who are employed on energy utility construction projects. Utilities that are respondents to this proceeding shall require that prevailing wages be paid out to employees working on energy utility construction projects.

This proceeding remains open to consider the issues described herein.

This order is effective today.

Dated December 16, 2004, at San Francisco, California.

I dissent.

/s/ GEOFFREY F. BROWN

Commissioner

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