ALJ/XJV/k47 ** Mailed 5/16/2001

Decision 01-05-058 May 14, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation on the Commission's own motion into the rates, charges, and practices of water and sewer utilities providing service to mobilehome parks and multiple unit residential complexes and the circumstances under which those rates and charges can be passed to the end user.

Investigation 98-12-012 (Filed December 17, 1998)

TABLE OF CONTENTS

Title Page

OPINION 2

1. Summary 2

2. Origins of This Investigation 3

3. Procedural Background 4

4. Overview - The Major Issues 6

4.1. MHP Issues 7

4.2. Issues at Multi-Unit Apartments 10

5. Basis of CPUC Jurisdiction 11

5.1. The Statutes - CPUC Jurisdiction 12

5.2. Case Law - CPUC Jurisdiction 15

5.2.1. No Public Utility Status Without Dedication of Property to Public Use 16

5.2.2. Municipal Utilities Are Not Public Utilities Subject To CPUC Jurisdiction 19

6. Application of the Submeter Exemption 20

6.1. "Water Corporation" 22

6.2. "Rate" 24

6.3. Comparing the Water and Energy Submeter Exemption 30

7. Water Service at Multi-Unit Apartments 32

8. Sewer Service 35

9. Other Matters 36

10. Conclusion 37

Comments on Draft Decision 39

Findings of Fact 40

Conclusions of Law 43

ORDER 46

OPINION

1. Summary

The Commission issued this Order Instituting Investigation (investigation or OII) to explore "concerns raised about the legitimacy of charges for water and sewer services imposed on tenants by the owners of multiple unit residential complexes and mobilehome parks." (Investigation 98-12-012, slip. op. at 1.) In this proceeding, we review information obtained about current practices of owners/operators of mobilehome parks (MHPs) and multiple unit residential complexes (multi-unit apartments) that bill tenants for water and sewer services separately from rent. We also review the extent of California Public Utilities Commission (Commission or CPUC) jurisdiction under existing law and limitations on CPUC oversight.

While this proceeding has provided a forum for the expression of varied concerns about the billing practices at MHPs and multi-unit apartments, our decision today offers few answers to these dilemmas. This decision does clarify the pivotal issue, the extent to which CPUC jurisdiction permits this Commission to address and resolve the billing issues presented.

Whether an MHP or multi-unit apartment is a public utility subject to CPUC regulatory control depends on whether it satisfies the statutory definition of a public utility as that definition has been interpreted by the courts. If it is a private entity selling (or reselling) water or sewer services for compensation -- the express statutory requirement-- and it has dedicated its property to public use as required by case law established by the courts, and it does not qualify for an express legislative exemption from CPUC control, then more likely than not, the MHP or multi-unit apartment would be determined by the Commission to be a public utility, subject to its control. With one limited exception, if a MHP or multi-unit apartment selling or reselling water or sewer services is not deemed a public utility, the Commission has no jurisdiction to regulate its rates and services.