R.04-04-003 L/cdl

Decision 15-08-028 August 13, 2015

Before The Public Utilities Commission Of The State Of California

Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning. / Rulemaking 04-04-003
(Filed April 1, 2004)

ORDER modifying decision (d.) 15-05-008, and

denying rehearing, as modified

I.  INTRODUCTION

In this Order, we dispose of the application for rehearing of Decision
(D.) 15-05-008 (or “Decision”) filed by CAlifornians For Renewable Energy, Inc. (“CARE”).

The Decision resolved a petition for modification of D.04-12-048, filed by San Diego Gas & Electric Company (“SDG&E”), Southern California Edison Company (“SCE”), and Pacific Gas and Electric Company (“PG&E”) (together, “Joint Utilities”).[1] The Petition raised a concern regarding operation of the trigger mechanism procedure used to adjust for overcollections or undercollections in each of the utilities’ Energy Resource Recovery Account (“ERRA”) balancing accounts.

ERRA issues are governed generally by Public Utilities Code section 454.5 and related Commission implementing decisions.[2] The statute requires electric utilities to develop electricity procurement plans for Commission approval.[3] It also requires the Commission to set rates, review procurement cost balancing accounts, and adjust rates or order refunds as necessary to amortize the balancing accounts to ensure that any over or under collections do not exceed 5 percent of the actual recorded revenues for the prior calendar year.[4]

The Commission established the utilities’ ERRA balancing accounts and a related trigger mechanism to allow for necessary adjustments of the balancing accounts in D.02-10-062.[5] In D.04-12-048, the Commission determined, among other things, that the trigger mechanism should remain in effect “during the term of the [utilities’] long-term contracts, or ten years, whichever is longer.”[6]

The Joint Utilities’ Petition stated that although the utilities continue to utilize trigger mechanism procedures, it was unclear from D.04-12-048 whether the trigger mechanism remains viable and ongoing. The Petition sought confirmation that the trigger mechanism is still viable

The Decision granted the Petition, and modified D.04-12-048 to confirm the continued viability of the “trigger mechanism” for amortizing overcollections and undercollections of the utilities’ ERRA balancing accounts.

CARE filed a timely application for rehearing alleging that the Decision: (1) violated Commission Rule of Practice and Procedure 15.4 and thus failed to provide adequate due process;[7] (2) was based on impermissible and unconstitutional animus (bias); and (3) was rendered without evidentiary basis.

We have reviewed each and every issued raised by the application for rehearing and are of the opinion that good cause has not been established to grant rehearing. However, we modify D.15-05-008 to correct an inadvertent misstatement that a proposed decision had been issue in this case. With this correction, we deny the application for rehearing of D.15-05-008, as modified, because no legal error was demonstrated.

II.  DISCUSSION

A.  Rule 15.4

CARE contends that Rule 15.4 was violated, therefore the Commission failed to provide adequate due process.[8] (Rhg. App., at p. 5.)

Rule 15.4 provides in pertinent part:

The Commission shall vote on its decision in a ratesetting or quasi-legislative proceeding no later than 60 days after the issuance of a proposed or draft decision….

(See also Cal Code of Regs., tit. 20, § 15.4. (emphasis added.).)

Due process requires the Commission to afford parties adequate notice and opportunity to be heard.[9] CARE argues these requirements were violated because no proposed decision was issued in this proceeding, thus it had no opportunity to comment before the Decision was rendered.

CARE is correct that generally, proposed decisions are required before a final decision is rendered. CARE is also right that no proposed decision was issued in this instance. However, CARE ignores that Rule 14.6. applied to allow a waiver of the general requirement.

Rule 14.6 enumerates circumstances which lawfully allow the Commission to reduce or waive the period for public review of proposed decisions, draft resolutions, and alternates. In particular, Rule 14.6(c)(2) provides:

(c) In the following circumstances, the Commission may reduce or waive the period for public review and comment on draft resolutions and proposed decisions, and may reduce but not waive the period for public review of alternates to them:

. . .

(2) in an uncontested matter where the decision grants the relief requested.

(See also Cal. Code of Regs., tit. 20, § 14.6, subd. (c)(2).)

Our review indicates that no party commented on or opposed the Joint Utilities Petition. Thus, the Decision merely granted the relief requested in an uncontested matter. As a result, pursuant to Rule 14.6. it was lawful to waive public review and issue the Decision without first mailing a proposed decision.

While there is no legal error, the Decision contains boilerplate language which incorrectly states that a proposed decision had been mailed. To correct this inadvertent error, we will modify the Decision as set forth in the below ordering paragraphs.

B.  Unconstitutional Animus

CARE alleges that failing to issue a proposed decision evidenced impermissible bias, i.e., unconstitutional animus. (Rhg. App., at pp. 5-8, citing e.g., Palmore v. Sidoti (1984) 466 U.S. 429, 430-431 [Animus as Private Bias]; City of Cleburne v. Cleburne Living Center (1985) 473 U.S. 432, 436-437, 442-447 [Animus as Stereotype and Fear]; Romer v. Evans (1996) 517 U.S. 620, 632-635; Brown v. Board of Education (1954) 347 U.S. 483, 495 [Animus as Race Segregation]; and Plyler v. Doe (1982) 457 U.s 202, 210-220 [Animus as Class-Based Legislation].) This argument is without merit.

Because the Decision was lawful under Rule 14.6., we find no basis to support a claim of bias. Further, CARE fails to establish how the cited constitutional principles are relevant here.

Such claims arise under the Equal Protection Clause, which requires the law to treat those similarly situated in an equal manner unless disparate treatment is warranted.[10] There are two standards of review.

If a challenged law disadvantages a suspect class or impinges on a fundamental right, a “strict scrutiny” standard is applied. This standard is inapplicable because the Decision does not impact a suspect class or fundamental right as contemplated under the law.

A “rational basis” standard would apply to other laws such as economic regulations. Arguably, if any equal protection / impermissible bias claim could be made in connection with the Decision, this standard of review would apply.

Still, there is no class or group that is disparately impacted by the Decision. Further, government actions will generally be upheld if they are rationally related to a legitimate government purpose. Confirming the continued viability of the trigger mechanism was rationally related to our legitimate state purpose of fulfilling the objectives of section 454.5.


Section 454.5 not only requires us to establish rates that include approved procurement costs,[11] it requires us to determine a schedule to amortize any overcollections or undercollections of procurement costs exceeding the established threshold.[12] The trigger mechanism is the established vehicle to achieve this statutory objective.

C.  Record Evidence

CARE contends there was no evidentiary basis to continue collecting ERRA surcharges from utility customers under AB 57 (Section 454.5). (Rhg. App., at pp. 5, 9.)

CARE appears to misinterpret the purpose of the Decision. The purpose was not to determine whether rates should continue to include reasonable and approved utility electric procurement costs. That requirement is already established by statute. The purpose was to clarify whether the trigger mechanism to adjust rates is still necessary. That is not an evidentiary question. It is legal procedural question that is governed by statute.

Initially, the statute required the Commission to adjust for over or under collections semi-annually.[13] However, after January 1, 2006, it provides that we should allow for necessary adjustments “when deemed appropriate consistent with the objectives of this section.”[14]

Nothing has amended or eliminated this statutory requirement. Therefore, the Decision simply clarified that the trigger mechanism is relevant throughout the duration of the utilities’ electric procurement obligations.[15] Accordingly, we find no legal error.

III.  CONCLUSION

For the reasons stated above, the application for rehearing of D.15-05-008, as modified is denied.

THEREFORE, IT IS ORDERED that:

1. Decision 15-05-008 is modified as follows:

a. Page 3, Comments on Proposed Decision is modified to state:

The Joint Utilities’ petition for modification was

uncontested, and this Decision grants the relief requested. Therefore, no proposed decision was required pursuant to

Rule 14.6(c)(2) of the Commission’s Rules of Practice

and Procedure.

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2. The application for rehearing D.15-05-008, as modified is denied.

3. This proceeding, Rulemaking (R.) 04-04-003 remains open.

This order is effective today.

Dated August 13, 2015, at San Francisco, California.

MICHAEL PICKER

President

MICHEL PETER FLORIO

CATHERINE J.K. SANDOVAL

CARLA J. PETERMAN

LIANE M. RANDOLPH

Commissioners

2

[1] Petition for Modification of the Joint Utilities of Decision (D.) 04-12-048 to Confirm the Continued Viability of the ERRA Trigger Mechanism (“Petition”), dated January 30, 2015.

[2] All subsequent section references are to the Public Utilities Code unless otherwise specified. Section 454.5 was enacted pursuant to Assembly Bill (“AB”) 57 (Stats. 2002, ch. 850, § 3.).

[3] Pub. Util. Code, § 454.5, subd. (b).

[4] Pub. Util. Code, § 454.5, subd. (d)(3).

[5] Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development [D.02-10-062] (2002) __Cal.P.U.C.3d_ , at
pp. 59-66 (slip op.). All citations to Commission decisions are to the official pdf versions which are available on the Commission’s website at: http://docs.cpuc.ca.gov/DecisionsSearchForm.aspx.

[6] Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning [D.04-12-048] (2004) __Cal.P.U.C.3d__, at pp. 2, 111-113 (slip op.). The initial requirement to adjust for over or under collections was set until January 1, 2006. (Pub. Util. Code, § 454.5(d)(3).) After that, the statute authorized the Commission to provide for the adjustment “when deemed appropriate consistent with the objectives of this section.” (Ibid.)

[7] All subsequent references to rules are to the Commission’s Rules of Practice and Procedure unless otherwise specified.

[8] CARE also states that prior to issuing D.15-08-008, the Commission failed to act on its motion for official notice of the March 6, 2015 Memorandum of the United States Court of Appeals for the Ninth Circuit in Solutions for Utilities, Inc,.and CAlifornians for Renewable Energy, Inc., v. California Public Utilities Commission Case No. 13-55206, D.C. No. 2:11-cv-04975-SJO-JCG. CARE asserts that failure to act on its motion prejudiced the Court case. (Rhg. App., at p. 5.) CARE fails to establish how taking notice of the Court case here would in any way impact that matter. Further, there was no basis to do so. The Memorandum was an unpublished opinion and cannot be cited or relied upon by a Court or a party in any other proceeding. (See Cal. Rile of Court, Rule 8.115.)

[9] See e.g., Railroad Commission of California v. Pacific Gas and Electric Company (1937) 302 U.S. 388, 393; People v. Western Air Lines, Inc. (1954) 52 Cal.2d 621, 632.

[10] U.S. Const. 14th Amend.; Cal. Const., art. I, § 7(a), art. IV, § 16(a). (See also e.g., Griffiths v. Superior Court of Los Angeles County (“Griffiths”) (2002) 96 Cal.App.4th 757, 775-776.)

[11] Pub. Util. Code, § 454.5, subd. (d)(3) states in pertinent part:

(d) A procurement plan approved by the commission shall accomplish each of the following objectives:

. . .

(3) Ensure timely recovery of prospective procurement costs incurred pursuant to an approved procurement plan. The commission shall establish rates based on forecasts of procurement costs adopted by the commission, actual procurement costs incurred, or combination thereof, as determined by the commission….

[12] Pub. Util. Code, § 454.5, subd. (d)(3) states in pertinent part:

…The commission shall establish power procurement balancing accounts to track the differences between recorded revenues and costs incurred….The commission shall determine the schedule for amortizing the overcollection or undercollection in the balancing account to ensure the 5 percent threshold [of a utility’s actual recorded generation revenues excluding revenues collected for the Department of Water Resources] is not exceeded. After January 1, 2006, this adjustment shall occur when deemed appropriate by the commission consistent with the objectives of this section.

[13] Pub. Util. Code, § 454.5(d)(3).

[14] Id.

[15] D.05-05-008, at pp. 2-4 [Ordering Paragraph Number 1].