VI. Residential Tiering and Rate Design Proposals

The issue of tiered residential rates was included in the January 26^th ACR setting the scope of this phase of these proceedings. Parties initially presented detailed proposals on this issue. At the February 2nd PHC, TURN voiced its concern that if PG&E and Edison presented their originally served rate design testimony in Phase 1, this issue would be addressed at a level of detail which would be inappropriate and would extend hearings beyond the time available within the schedule.

Subsequent to this discussion, PG&E and Edison notified parties that they were withdrawing their rate-design testimony based on TURN's comments and an understanding that if the Commission adopts a rate increase in this phase, the Commission must use some rate design and revenue allocation principles to allocate the increase.²³ All parties who address rate design in this phase, except FEA, propose we use the equal cent/kWh approach that we adopted for the EPS in D.01-01-018.

While we adopt a rate increase today, we decline to adopt a specific residential tiering approach in the absence of an overall rate-design proposal and sufficient record evidence to so act. The assigned Commissioner's ACR, issued concurrently, sets forth a proposal for tiered rate design and ask for comments.

Conceptually, we agree that it is time to adopt a tiered approach for those customer classes that do not have rates structured on a time-of-use (TOU) basis. Residential customers whose usage is below 130% of baseline are now statutorily exempt from rate increases that were not in effect as of January 5, 2001.