IV. Legal Standards
A. The Public Utilities Act
Under the Public Utilities Act, our primary purpose "is to insure the public adequate service at reasonable rates without discrimination..." (Pacific Telephone and Telegraph Company v. Public Utilities Commission (1950) 34 Cal.2d 822, 826 [215 P.2d 441]; Pacific Telephone and Telegraph Company v. Public Utilities Commission (1965) 62 Cal.2d 634, 647 [44 Cal. Rptr. 1, 401 P.2d 353]; City and County of San Francisco v. Public Utilities Commission (1971) 6 Cal.3d 119, 126 [98 Cal. Rptr. 286, 490 P.2d 798].) Under § 451, public utilities may demand and receive only just and reasonable charges, and they must provide "adequate, efficient, just, and reasonable service" in a way that promotes the "safety, health, comfort, and convenience of [their] patrons, employees, and the public." Under § 454, public utilities must make a showing to the Commission that any proposed rate change is justified, and receive a finding by the Commission to that effect, before making such change. Under §§ 701 and 728, the Commission has the authority to determine what is just and reasonable, and to disallow costs not found to be just and reasonable. In particular, the Commission "has the power to prevent a utility from passing on to the ratepayers unreasonable costs for materials and services by disallowing expenditures that the Commission finds unreasonable." (Pacific Telephone and Telegraph Company v. Public Utilities Commission, et al., supra.)
Our legal obligation to the residents of California is to ensure that SoCalGas and SDG&E provide adequate service at just and reasonable rates. As we use the term here, adequate9 service encompasses all aspects of the utilities' service offering, including but not limited to safety, reliability, emergency response, public information services, new customer connections, and customer service. In addition, we assume that a utility that provides adequate service is in compliance with laws, regulations, and public policies that govern public utility facilities and operations. In carrying out this statutory obligation, we assess whether SoCalGas and SDG&E have justified the revenue increase proposals, disallow those proposals to the extent that they have not been justified, and order reductions in the revenues collected by SoCalGas and SDG&E if the evidence shows that is necessary. This is the same standard we discussed and applied in D.00-02-046 and is applicable to all rate proceedings.
B. Burden of Proof
There is a natural litigation advantage enjoyed by utilities,10 and the fact that we must rely in significant part on their experts, reinforces the importance of placing the burden of proof in ratemaking applications on the applicant utilities. ORA reminds us of this in its opening litigation brief11 and while we are mindful of this, it is important to note that the intervenors, including ORA must assist us by raising credible question of fact or reasonable policy objections.
TURN argues in its opening litigation brief12 that:
"the Commission's own evidentiary obligation. Pub. Util. Code § 1757(a)(4) provides that the Commission's findings in a decision must be supported by substantial evidence in light of the whole record. The Commission has interpreted this substantial evidence standard as follows:
"We have a regulatory responsibility to ensure [SoCalGas] provides adequate service at just and reasonable rates, and we must view the facts accordingly. Our legislative mandate encompasses promoting the "safety, health, comfort, and convenience of [SoCalGas'] patrons, employees, and the public." (See § 451.) "In construing substantial evidence, we must consider all factors that may have a bearing on this goal." (D.01-10-031, p. 5.)
Similarly, the Commission must have "adequately considered all relevant factors, and [have] demonstrated a rational connection between those factors, the choice made, and the purposes of the enabling statute to survive judicial review." (See D.01-10-031, p. 5 (citing Calif. Hotel & Motel Assoc. v. Industrial Welfare Comm'n (1979) 25 Cal.3d 200, 212.)
It is through the critical analysis of the utilities' showings, the presentation of witnesses and exhibits by the intervenors and ORA, and through their cross-examination of the utilities, that the Commission gains another perspective on the evidence and can weigh the facts and the policy options to reach the necessary findings of fact to support this decision.
SoCalGas and SDG&E have the sole obligation to provide a convincing and sufficient showing to meet the burden of proof, and any active participation of other parties can never change that obligation. This was clearly described in D.87-12-06713 as follows:
"The inescapable fact is that the ultimate burden of proof of reasonableness, whether it be in the context of test year estimates, prudence reviews outside a particular test year, or the like, never shifts from the utility seeking to pass it costs of operations onto ratepayers on the basis of the reasonableness of those costs." And further:
"The longstanding and proper rule is set forth in D.90642 at 2 CPUC 89, 98-99 and requires that the utility meet its burden by clear and convincing evidence. To meet this burden we have specified that "... the applicant must produce evidence having the greatest probative force.""
Nothing in this decision in anyway alters or redefines the obligations of SoCalGas and SDG&E to meet the legal requirements on burden of proof.
9 Webster's Third International Dictionary (1976), defines adequate as equal in size or scope, or fully sufficient for a specified or implied requirement.
10 This advantage is discussed at length in D.00-02-046, a recent rate case for PG&E.
11 ORA opening litigation brief, at pp. 10-11.
12 TURN opening litigation brief, pp. 6 and 7.
13 D.87-12-067, 27 CPUC 2d, 1, 21, and footnote 1 at p. 169.
