C. Discussion

2. Settlement Criteria

The stipulation is properly characterized as an uncontested settlement.¹ In such cases, the Commission applies the standard set forth in Rule 51.1(e) of the Commission's Rules of Practice and Procedure, and applicable to both contested and uncontested settlement agreements, requires that the "settlement is reasonable in light of the whole record, consistent with law, and in the public interest."

The proposed stipulation was primarily negotiated between PAWW and the City, and mediated by the Director of the Commission's Water Division. PAWW was represented by its officers and counsel in the proceeding. On behalf of ratepayers, the City was represented by its Mayor and counsel. Both parties were actively involved in all phases of the proceeding. Thus, the sponsoring parties for the stipulation are fairly representative of the affected interests, and they have been active advocates in this proceeding.

The stipulation sets forth the parties' final agreement on major issues, including Summary of Earnings, Tariff Rate Schedules, Comparison of Rates, and Adopted Quantities and Tax Calculations prepared by Water Division staff to reflect the rate-making provisions of the stipulation.

Pub. Util. Code § 454² provides that no public utility shall change any rate except upon a showing before the Commission and a finding by the Commission that the new rate is justified. In the stipulation and earlier filings, the parties have explained their initial positions and what adjustments have been made to arrive at the summaries of earning and revenue requirements set forth in the stipulation. The resulting rates will produce necessary and sufficient revenues for the test year. We find that the rates and the supporting revenue requirements are justified by the parties' showing and are in the interest of ratepayers and the public. Also, as indicated by the description of the stipulation, the documentation with regard to this matter is sufficient for the Commission to discharge its future regulatory obligations with respect to the parties and their interest. (See San Diego & Electric, 46 CPUC 2d 538, 550-55 (1992.)

The stipulation satisfies the Commission's requirements for settlements under Rule 51. The stipulation is reasonable in consideration of the whole record, consistent with the law, and in the public interest. We will therefore approve it.

3. The Overcharge Issue

There is no dispute that PAWW overcharged the 5/8 x 3/4 inch meter customers for approximately 10 years, and refunded the overcharges for only three years. PAWW contends it owes no further refunds, pursuant to the three-year limitation period found in § 736.³ The City argues that this statute of limitations does not apply when customers have not discovered the billing error. We find that PAWW's tariffs were publicly available to all customers, who could have determined that they were being charged an incorrect amount. Consequently, the three-year limitation applies, and PAWW has no obligation to make further refunds.

In Res. W-4356, the Commission summarizes the overcharge issue:

In its investigation, the staff discovered that upon implementing its newly authorized rates pursuant to Res. W-3594, dated June 19, 1991, PAWW began incorrectly assessing its 5/8 X 3/4-inch metered customers with the ¾ -inch metered service charge rate, an initial overcharge of $3.15 per month per customer ($15.20 versus $12.05). The utility assessed this incorrect rate up until the interim rates authorized by Res. W-4308 were implemented in January 2002. It may be that the incorrect billing was inadvertent on the part of PAWW. However, even though the Staff's audit shows that PAWW has been losing money since 1994 (even with the incorrect billing), the utility still was in violation of Section 532 of the Pub. Util. Code. Therefore, the Division recommends that PAWW be required to refund three years (1999, 2000 and 2001) of the over-collection to each affected customer over a twelve-month period. This is consistent with Section 736 of the Pub. Util. Code that limits the claim for damages resulting from violations of any of the provisions of Section 532 of the Code to three years. The total over-collection from January 1, 1999 through December 31, 2001 was $17,965. The utility agrees with the reasonableness of this refund.

Accordingly, the Commission ordered PAWW to provide overcharge credits for 1999, 2000, and 2001 to the affected customers in installments of $9.57 per month for twelve months commencing with the first billing after the effective date of new rates authorized in the resolution. The Resolution is subject to modification consistent with the final opinion in this application.

In its opening brief, PAWW concurs with the staff report and the Resolution that § 736 limits PAWW's refund obligation to three years. By charging rates other than as set forth in its tariffs, PAWW violated § 532, which provides that "no public utility shall charge or receive a different compensation for any . . . service to be rendered, than the rates, tolls, rentals and charges applicable thereto as specified in its schedules on file and in effect at the time." PAWW concludes that by refunding the last three years of overcharges, it has fully discharged its refund obligation.

The City argues that PAWW's customers are legally entitled to recover refunds from PAWW from the beginning of the period in which these customers were overcharged, approximately seven additional years of refunds. The City contends that the statute of limitations found in § 736 is tolled "until ratepayers become aware, or should become of aware, of their injury" and that the Commission has consistently interpreted § 736 as being subject to this "discovery rule." The City points to TURN v. Pacific Bell, (1991) 54 CPUC2d 122, where the Commission ordered refunds of late payment fees charged over five years that were caused by Pacific Bell's "wrongdoing" in crediting payments.

The Commission has previously determined that "when a [public utility] customer files a complaint about inappropriate charges, the customer is limited by § 736 to overcharges accrued during the three years immediately preceding the time when it filed the complaint." Homeowners Assn of Lamplighter v. Lamplighter Mobile Home Park, (1999) 84 CPUC 2d 727, 731 (D.99-02-001). In the Lamplighter case, the mobile home park owners had assessed an illegal surcharge for facilities improvements for over 10 years. The residents, citing to TURN v. Pacific Bell, argued that they "could not have known that they were being unlawfully charged." The Commission rejected this analysis and stated:

TURN v. Pacific Bell does not stand for the principle that a statute of limitations is tolled when a party does not understand its legal rights. We are unaware of legal precedent that would support such an argument. A statute of limitations is not created to preserve the rights of a complainant. It serves as protection for a defendant, whether or not an untimely claim would otherwise have legal merit. We do not conclude that a statute of limitations is tolled when one or more parties is unaware of its legal rights.

Id. at 733. See also, e.g., Utility Audit Company, Inc. v. Southern California Gas Company, (2003) Decision 03-09-053.

In TURN v. Pacific Bell, the Commission found that Pacific Bell instituted a series of unreasonable mail processing practices that led to recording timely payments as late, for which Pacific Bell then charged a late payment fee. In that decision, the Commission held that "ratepayers could not reasonably have
become aware of their injury" and that therefore the otherwise applicable

three-year statute of limitations in § 736 was tolled.⁴ Pacific Bell's actions, unlike PAWW's and Lamplighter Park's, were concealed from ratepayers and could not have been discovered. PAWW and Lamplighter Park openly charged improper rates and information was publicly available that showed the rates were illegal.

PAWW's customers reasonably could have become aware of their injury by inspecting PAWW's tariffs. All public utilities must "print and keep open to public inspection, schedules showing all rates, tolls, rentals, charges, and classifications collected or enforced." § 489. Commission General Order 96-A further requires that each public utility maintain, open for public inspection, copies of its complete tariff schedules and advice letters as filed with the Commission. Each public utility must also post a notice in its offices stating that the tariff schedules are on file, and "may be inspected by anyone desiring to do so." PAWW has confirmed to Commission staff that such a notice is posted in its offices.

PAWW was charging its 5/8 x 3/4 inch meter customers the tariff rate for 3/4-inch meters. A 5/8 x 3/4 inch meter customer could compare the bill to the tariff amount and discover that a higher rate was being charged. Accordingly, a customer could reasonably have discovered the injury. Therefore, the three-year limitation found in § 736 defines the time period over which PAWW is obligated to make refunds. As PAWW has made refunds for three years worth of overcharges, we conclude that no further refunds are due.