IV. The Rulemaking

The Commission initiated this rulemaking to amend GO 156, § 8.5 and related sections, to eliminate a utility's ability to create an "excluded category" of products and services, and to refine certain aspects of GO 156 verification and reporting.

We proposed eliminating the exclusions provided by § 8.5 in order that the utilities make more concerted efforts to implement GO 156, and to achieve greater standardization of the reports. For the last 14 years, pursuant to GO 156, the utilities have been able to exclude certain products and services from the base of WMDVBE procurement dollars where the utilities can demonstrate the unavailability of WMDVBE suppliers. In the first decision implementing Pub. Util. Code §§ 8281-8285, we explained the utilities' burden if they created certain excluded categories.

"We will allow utilities to create `excluded categories' of products or services where they can demonstrate the unavailability of WMBE [currently WMDVBE] suppliers. Utilities can note such categories in their annual reports to the Commission. In order to ensure that such excluded categories meet real needs and do not continue to exist after WMBE suppliers in such categories become available, we will require utilities to report any efforts made to recruit WMBE suppliers in these categories and to note in their annual plans any plans they have to recruit such suppliers in the future." (D.88-04-057, 28 CPUC2d 36, 60.)

The Commission has emphasized that GO 156 exclusions are not carved in stone and should continue only as long as they are truly needed. Significantly, utilities must justify exclusions on an annual basis. "If it were otherwise, the exclusion program could act as a barrier to [WMDVBE] progress. (D.90-12-027, 38 CPUC2d 384, 390.)

The rulemaking found that the utilities are mixed in their ability to eliminate all WMDVBE exclusions. For instance SBC/California (SBC) does not currently utilize exclusions in its WMDVBE report to the Commission. However, the rulemaking recognized that some utilities have increased, rather than decreased their exclusions. Furthermore, the rulemaking concluded that recent utility reports pursuant to GO 156 demonstrate that many utilities do not present sufficient justification on an annual basis for continuing the exclusions. For example, GO 156 requires that if a utility uses an exclusion, it must justify such use and provide "a description of any efforts made to find and or recruit WMDVBE suppliers of products and services in the excluded category." (GO 156, § 9.1.9.) However, a review of the annual WMDVBE reports for 1999, 2000, and 2001 for Southern California Edison Company (Edison), Pacific Gas and Electric Company (PG&E), and Verizon California, Inc. (Verizon) demonstrates that the justification and description of the excluded categories is insufficient and conclusory.

In order to facilitate greater standardization in the reports, this rulemaking proposes amending GO 156 to require that the utilities report their WMDVBE product and services expenditures according to the uniform system of accounts (USOA) applicable for each utility. The rulemaking also proposes that the utilities be required to retain their workpapers associated with their WMDVBE annual reports and to provide these workpapers to the Commission upon request.