IV. Discussion
The purpose of this application was to review Citizen's NRF. However, as discussed later in this decision, we have decided to close this proceeding, and address Citizens' NRF in an application to be filed at a later date (future NRF review).
Citizens' main point, regarding who pays for ORA's consultant costs, seems to be that there is no particular code section that specifically allows the Commission to require Citizens to reimburse it for the costs of ORA's consultants to perform the audit. However, there is also no statute that prohibits the Commission from doing so. Citizens claims that the lack of express authority is dispositive. This argument is incorrect. The Commission has plenary powers and broad authority to ensure that its regulatory duties and obligations are carried out and enforced.
The future NRF review will address the regulatory framework under which Citizens will operate. The services Citizens' customers will receive, and the rates, charges and rules under which service will be provided, will be directly affected by the results of the future NRF review. Therefore, it will be a significant proceeding.
An important element of the future NRF review will be an assessment of Citizens' compliance with the Commission's requirements, including sharing. In this case, such an assessment cannot be performed without an audit. The Commission must enforce the provisions of the Public Utilities Act, including § 451, which requires utility rates, charges and rules to be just and reasonable. Utilities are also required to maintain adequate, efficient, just and reasonable service to their customers. Pursuant to § 454, if the Commission adopts rate changes it must determine that those changes are justified. In order to assure Citizens' compliance with § 451, and the Commission's own compliance with the statutory scheme, the future NRF review proceeding must develop an adequate record on which to base its decision.
Section 314.5 further requires the Commission to audit Citizens' books and records for regulatory purposes at least every three years. It has been more than ten years since such an audit has been performed. ORA is the only interested party in this proceeding, and may possibly be the only interested party in the future NRF review. ORA is an arm of this Commission, and its staff has the authority to examine and audit utility records. Therefore, ORA's review of Citizens' financial condition and its participation in the future NRF review will be necessary to comply with § 314.5, and for the development of a record sufficient to support the exercise of the Commission's ratemaking authority. As a result, we find that an audit is necessary, and that ORA is the appropriate entity to conduct it.
ORA proposes that it be allowed to hire consultants to perform the audit. The Commission would pay the consultants, and ORA further proposes that these costs be reimbursed by Citizens who would be allowed to apply for recovery of the reimbursement from its ratepayers. Citizens takes the position that ORA should perform the audit itself using its existing resources. ORA represents that it does not have the personnel and resources to perform the audit. We have no reason to disbelieve ORA`s representations, and Citizens has offered no viable alternative to ORA's proposal. In order for the Commission to have an adequate record in the future NRF review, it is necessary to provide ORA with sufficient resources to hire consultants to do the audit.
The Commission is required by § 309.5(c) to provide ORA with sufficient resources and personnel to "ensure that customer and subscriber interests are fairly represented in all significant proceedings." The future NRF review will be a significant proceeding, and it is necessary for ORA to conduct an audit to represent ratepayer interests adequately, and for the Commission to have a sufficient record on which to base its decision. As a result, it is necessary to provide ORA with sufficient resources to hire consultants to do the audit in order to comply with § 309.5(c).
As pointed out by ORA, the Commission has taken this approach in the past, and it is by no means novel or unusual. We are mindful of our past decisions, and do not believe Citizens' arguments present a good reason to deviate from this longstanding practice, especially since the performance of the audit allows the Commission to comply with a number of statutory mandates. In this case, § 701 provides that the Commission "may do all things, whether specifically designated in this part or in addition thereto, which are necessary and convenient in the exercise of such power and jurisdiction." We believe this means that the Commission should use its authority to ensure that its regulatory duties and obligations are carried out and enforced.
Contrary to Citizens' assertions, it is well established that the Commission's powers are not limited to those expressly conferred upon it. Section 701 grants the Commission authority to "do all things", including those "in addition" to those set forth in the Public Utilities Act, so long as it does not contravene an express legislative directive or take action that is not cognate or germane to utilities regulation. (Assembly v. Public Utilities Com. (1995) 12 Cal. 4th 87, 103; Morel v. Railroad Com. (1938) 11 Cal. 2d 488, 492.) This decision relates to the financial information the Commission will use in a future rate proceeding, and addresses the funding of an audit to be undertaken by Commission staff. CLAM v. Public Utilities Com. (1979), 25 Cal. 3d 891, which discussed whether the ability to award attorneys fees to outside parties was cognate and germane to utilities regulation is inapposite. ORA is not an outside party; it is an arm of the Commission. (§ 309.5.) Specific legislation addressing the way the Commission conducts certain public purpose programs, or reviews construction costs or environmental impacts, does not define the scope of the Commission's authority here.
Based on the above analysis, we will require Citizens to reimburse the Commission for the costs of consultants to be hired by ORA to perform the audit. We will allow Citizens to recover the amount it reimburses the Commission, provided it reasonably cooperates with the audit. The specific means for doing so will be determined in the future NRF review.
As to recovery of its internal costs related to the audit, we note that Citizens only makes this request in connection with the requirement that it pay for ORA's consultants. We do not see how payment for ORA's consultants relates to the request. In addition, since periodic audits are required by § 314.5, Citizens' costs related to the audit are reasonably foreseeable, routine business expenses that are already covered in rates. Therefore, we will not allow separate recovery of such costs.
In order for the audit to begin as soon as possible, this decision should be effective immediately.
