Peevey Scoping Memo and Ruling Establishing Scope, Schedule, and Procedures for Phase II of Investigation 03-01-012

Scope of the Proceeding

As stated in the February 25, 2005 ACR, the purpose of this proceeding is to determine whether PG&E's past actions with regard to billing and collecting, including its collection of deposits from customers, are consistent with the orders and regulations of the Commission.

The ACR identified the following issues as within the scope of the Investigation:

· Whether PG&E has implemented any changes to its billing practices since the beginning of 2002 that would impact the number of estimated or delayed bills it issues to its customers.

· The effect of PG&E's new billing system CorDaptix on the utility's billing practices.

· Whether PG&E has implemented any change to its collection practices since the beginning of 2002.

· In each year since 2002, of the customers who had their service terminated due to non-payment of their utility bill, how many had received estimated or delayed bills.

· How PG&E determines whether and when to require a deposit, including whether it has implemented any change to its deposit requirement practices since the beginning of 2002.

· In each year since 2002, the number of customers from which PG&E requested a new or additional deposit for continuation of service.

· In each year since 2002, of the customers from whom PG&E requested a new or additional deposit, how many had received estimated or delayed bills.

· Investigation of whether PG&E's actions with regard to estimated and delayed bills and the impacts these bills have on the utility's customers warrant imposition of a fine.

· Investigation of appropriate reparations to the PG&E customers who have suffered from the utility's estimated and delayed billing practices and the associated collection activities for delinquent amounts from such bills.

The ACR also stated that the investigation shall determine whether:

· PG&E violated D.86-06-035 and Tariff Rules 9 and 17.1 by billing customers for periods in excess of three months, and/or

· PG&E violated its tariff rules by providing customers with estimated bills for periods in excess of three months.

The ACR also put PG&E on notice that the investigation would determine whether, pursuant to Sections 701, 734, and 1702 of the Public Utilities Code, imposition of any or all of the following remedies for the customers that have suffered from PG&E's practices is warranted:

· PG&E should be required to refund any amounts collected in violation of Tariff Rules 9 and 17.1, plus interest, to all customers who paid such amounts, and/or,

· PG&E should be fined pursuant to Public Utilities Code Sections 2107 and 2108 for violations of the Orders and Rules of this Commission.

At the PHC, PG&E suggested that the proceeding be separated into two phases, with the first phase consisting of an evaluation of the rules PG&E should follow on a prospective basis. PG&E also suggested that the Commission consider adjustments to PG&E's revenue requirements within the scope of the Investigation to ensure that PG&E has an opportunity to recover any increased costs associated with any new policies adopted.

PG&E's concern regarding new policies is premature. As set forth in the ACR, the purpose of this Investigation is to determine whether PG&E's past conduct with regard to billing and collection issues, including its collection of deposits from customers, is consistent with the decisions, rules or orders of the Commission, as opposed to establishing new billing and collection policies. As such, potential adjustments to PG&E's revenue requirements are outside the scope of this Investigation. This is consistent with the general policy that, for a utility subject to a traditional general rate case, such as PG&E, revenue requirements are set in a general rate setting proceeding, in which the Commission considers historical data and forecasted expenditures to determine for a test period the just and reasonable amount of revenues needed by the utility to provide adequate public utility service and have the opportunity to earn a reasonable rate of return. The assumption underlying this process is that between test years, changes in revenue, expense and rate base will vary proportionately so that the utility may continue to receive a fair return. Regulatory requirements, like other expenses, are therefore expected to fluctuate between test years, and the utility is not entitled to recovery of increased costs, nor is it expected to refund any excess revenues associated with decreases in expenses.

Nevertheless, for purposes of reviewing PG&E's compliance with existing orders and regulations of the Commission, PG&E shall include in its testimony an accounting of the amount spent on CorDaptix implementation, relative to the amount authorized in D.04-05-055. In addition, the question of whether any revenue under-collection resulting from the collection limits imposed by Tariff Rule 17.1 should be recovered from PG&E's ratepayers through the uncollectible rate is also within the scope of this Investigation.

Several parties suggested that the scope of the Investigation should also include a review of billing and collection actions related to nonresidential customers. The Commission is interested in evaluating the reasonableness of PG&E's actions with respect to billing and collecting activities in general; therefore nonresidential customer billing and collection is also within the scope of this Investigation.

In Resolution G-3372, the Commission ordered PG&E to produce a report on delayed and estimated bills dating back to the year 2000. The Commission's Consumer Protection and Safety Division (CPSD) recommends that since PG&E claims that the level of delayed and estimated bills is consistent with historical averages, the scope of the Investigation should include consideration of PG&E billing and collection activity dating back further than 2002. In light of the fact that the implementation of PG&E's CorDaptix system occurred in 2002, it is reasonable to include, for purposes of comparison, billing and collection data prior to 2002. We will broaden the specified time period of this Investigation back to January 2000 consistent with the direction provided in Resolution G-3372.

We also clarify, as requested by TURN and The City and County of San Francisco (CCSF), that the Investigation will consider whether delayed bills or "true-up" bills presented by PG&E following a period of estimated usage charged customers for energy use in higher tiers in the current billing period than customers actually used.

The record should establish a clear understanding of the chronology of events leading up to the TURN motion, causes of billing and collection problems, customer classes affected by such problems, any attempts to resolve problems, the effect of any problems on customers, and whether refunds or other remedies are warranted. This Investigation is not intended to set new billing and collection policies, but to determine if PG&E's actions were consistent with the existing policies.

The ACR included within the scope of this Investigation the question whether PG&E should be granted authority to implement a late payment fee. However, since the question whether PG&E should be granted authority to implement a late payment fee is dependent in part on the findings issued in the first part of this proceeding, we reserve the issue of the late payment fee to a later phase of this Investigation, if appropriate.