STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

February 23, 2001

TO: PARTIES OF RECORD IN APPICATION 00-11-038 ET AL.

Enclosed is the draft decision of Administrative Law Judge (ALJ) Wong. This item will be on the Commission's agenda for its March 7, 2001 continuation meeting. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Public Utilities Code Section 311(g)(1) requires this item served on all parties and subject to at least 30 days' public review and comment before the Commission may vote on them. Section 311(g)(2) and Rule 77.7(f)(9) provide that the 30-day period may be reduced or waived by the Commission upon a finding of public necessity. The comment period on this item is being shortened under this authority.

Comments on this item shall be filed and served by March 1, 2001 and reply comments, if any, shall be filed and served by March 5, 2001, as provided in Article 19, attached, of the Commission's "Rules of Practice and Procedure." Pursuant to Rule 77.3 comments shall not exceed 15 pages. In addition, comments must be served separately on the ALJ and all Commissioners, preferably by hand delivery, overnight mail, electronic mail or other expeditious method of service.

Lynn T. Carew, Chief

Administrative Law Judge

LTC:sid

Enclosures

ALJ/JSW/sid DRAFT H-19

3/7/2001

Decision DRAFT DECISION OF ALJ WONG (Mailed 2/23/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (E 3338-E) for Authority to Institute a Rate Stabilization Plan with a Rate Increase and End of Rate Freeze Tariffs.	Application 00-11-038 (Filed November 16, 2000)
Emergency Application of Pacific Gas and Electric Company to Adopt a Rate Stabilization Plan. (U 39 E)	Application 00-11-056 (Filed November 22, 2000)
Petition of THE UTILITY REFORM NETWORK for Modification of Resolution E-3527.	Application 00-10-028 (Filed October 17, 2000)

OPINION REGARDING

THE EMERGENCY MOTION SEEKING TO PREVENT THE UTILITIES FROM IMPLEMENTING LAYOFFS

I. Summary

In this decision, we consider the "emergency motion" that was filed on January 8, 2001 by the Coalition of California Utility Employees (CCUE). CCUE's motion seeks to prevent Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (SCE) from laying off workers until the Commission has had a full opportunity to review such proposals.

The motion of CCUE raises the issues of whether the proposed layoffs by the utilities will affect the utilities' obligation to furnish and maintain adequate, efficient, just and reasonable service, and whether the utilities' actions will affect the safety, service and reliability of the electricity system. SCE proposes to layoff 1,450 employees over the next several months, in addition to the 400 employees in the Transmission & Distribution Business Unit (T&D) which were announced in December 2000.¹ PG&E has announced that it is releasing 325 contract workers and hiring hall employees, and that another 675 reductions will occur over the next several months if PG&E's cash flow situation is not resolved.

We conclude that the layoffs that PG&E and SCE have implemented, and the reduction in overtime hours, have reduced the level of service below what customers expect as an adequate, efficient, just and reasonable level of service. The upcoming layoffs as proposed by the utilities will further exacerbate the decline in the level of service. We are concerned that the potential ill-effects of reducing staff during the winter storm season could increase reliability problems. We are also concerned that using estimated bills could result in some inaccuracies in calculating baseline usage. The utilities acknowledge that the cost savings from the layoffs will not materially improve their financial condition. CCUE's motion is therefore granted. PG&E and SCE are directed to take steps to rescind the layoffs which affect their level of service in answering customer telephone calls, outages and service problems, and monthly reading of meters, and are barred from engaging in future layoffs which affect the level of service in these areas.

CCUE's motion and the pleadings of other parties have alerted us to the possible effects that the utilities' proposed measures could have on costs incurred during the rate freeze, and on the level of service provided for in the utilities' revenue requirement. We direct the utilities to establish a memorandum account to record the costs and savings associated with their proposed measures for possible future adjustment.