G. Compliance with Rate Reduction Statutes
Pre and Post Deregulation/Restructuring

AB 1890 (Brulte 1996) legislated rate reduction for residential and small commercial customers through the inclusion of Pub. Util. Code sec. 368(a), which provided that rates for residential and small commercial customers were to be reduced to a level at least ten percent below the rates in effect on June 10, 1996. Subsequently, the legislature passed SB 85xx (Burton, 2001) which prevented the CPUC from eliminating the AB 1890 promised 10% rate reduction on residential and small commercial customers because of the passage of time or the end of the AB 1890 transition period.⁶ Because SB 85xx's safeguarding of the 10% rate reduction prevails over AB 1890's schematic for the legislated rate reduction,⁷ the CPUC must now undertake a thorough review of the revenue requirements and rate design of any electric utility before it can raise the rates of residential and small commercial customers.

In D.02-07-031, we granted Sierra Pacific an interim rate increase based on our determination that is was needed in order to provide Sierra Pacific with a reasonable opportunity to earn a forecast rate of return of 4.0%, which we determined not to be excessive. The proceeding before us now is a general rate case in which the commission is to look comprehensively at all the costs and revenue requirements of the company and to true up the issues remaining from our interim decision in D.02-07-031. In this decision, the parties entered into an uncontested settlement of Sierra Pacific's revenue requirement, expenses, and rate base. This proceeding constitutes the kind of thorough review of the revenue requirement and rate design of an electric utility contemplated by SB 85xx. Although the proposed decision in this proceeding resulted from a settlement rather than a litigated analysis, the proceeding and the settlement suffices for SB 85xx purposes as within the Commission's authority to institute a proceeding "to raise rates for reasons other than the termination of the 10-percent rate reduction set forth in subdivision (a) of Section 368."⁸ The analysis contained below discusses the reasons for the revenue requirement and the resulting rate increases for all Sierra Pacific customers, including the residential and small commercial customers, adopted herein.