2007 California Public Utilities Code Article 1. Rates

CA Codes (puc:451-467)

451.  All charges demanded or received by any public utility, or by
any two or more public utilities, for any product or commodity
furnished or to be furnished or any service rendered or to be
rendered shall be just and reasonable.  Every unjust or unreasonable
charge demanded or received for such product or commodity or service
is unlawful.
   Every public utility shall furnish and maintain such adequate,
efficient, just, and reasonable service, instrumentalities,
equipment, and facilities, including telephone facilities, as defined
in Section 54.1 of the Civil Code, as are necesary to promote the
safety, health, comfort, and convenience of its patrons, employees,
and the public.
   All rules made by public utility affecting or pertaining to its
charges or service to the public shall be just and reasonable.




451.5.  (a) Any expense resulting from a bonus paid to an executive
officer of a public utility that has ceased to pay its debts in the
ordinary course of business shall not be recoverable either directly
or indirectly in rates and shall be borne exclusively by the
shareholders of the public utility.  This prohibition shall be
operative for a period of no less than two years after the public
utility resumes paying its debts in the ordinary course of business,
and shall be operative for any additional time period as determined
by the commission.
   (b) The requirements of subdivision (a) do not apply to a bonus
that is specifically defined in a standard employee compensation
contract.
   (c) For purposes of this section, "executive officer" means any
person who performs policy making functions and is employed by the
public utility subject to the approval of the board of directors, and
includes the president, secretary, treasurer, and any vice president
in charge of a principal business unit, division, or function of the
public utility.



452.  Nothing in this part shall be construed to prohibit any common
carrier from establishing and charging a lower than a maximum
reasonable rate for the transportation of property when the needs of
commerce or public interest require.  However, no common carrier
subject to the jurisdiction of the commission may establish a rate
less than a maximum reasonable rate for the transportation of
property for the purpose of meeting the competitive charges of other
carriers or the cost of other means of transportation which is less
than the charges of competing carriers or the cost of transportation
which might be incurred through other means of transportation, except
upon such showing as is required by the commission and a finding by
it that the rate is justified by transportation conditions.  In
determining the extent of such competition the commission shall make
due and reasonable allowance for added or accessorial service
performed by one carrier or agency of transportation which is not
contemporaneously performed by the competing agency of
transportation.



453.  (a) No public utility shall, as to rates, charges, service,
facilities, or in any other respect, make or grant any preference or
advantage to any corporation or person or subject any corporation or
person to any prejudice or disadvantage.
   (b) No public utility shall prejudice, disadvantage, or require
different rates or deposit amounts from a person because of ancestry,
medical condition, marital status or change in marital status,
occupation, or any characteristic listed or defined in Section 11135
of the Government Code. A person who has exhausted all administrative
remedies with the commission may institute a suit for injunctive
relief and reasonable attorney's fees in cases of an alleged
violation of this subdivision. If successful in litigation, the
prevailing party shall be awarded attorney's fees.
   (c) No public utility shall establish or maintain any unreasonable
difference as to rates, charges, service, facilities, or in any
other respect, either as between localities or as between classes of
service.
   (d) No public utility shall include with any bill for services or
commodities furnished any customer or subscriber any advertising or
literature designed or intended (1) to promote the passage or defeat
of a measure appearing on the ballot at any election whether local,
statewide, or national, (2) to promote or defeat any candidate for
nomination or election to any public office, (3) to promote or defeat
the appointment of any person to any administrative or executive
position in federal, state, or local government, or (4) to promote or
defeat any change in federal, state, or local legislation or
regulations.
   (e) The commission may determine any question of fact arising
under this section.


453.5.  Whenever the commission orders rate refunds to be
distributed, the commission shall require public utilities to pay
refunds to all current utility customers, and, when practicable, to
prior customers, on an equitable pro rata basis without regard as to
whether or not the customer is classifiable as a residential or
commercial tenant, landlord, homeowner, business, industrial,
educational, governmental, nonprofit, agricultural, or any other type
of entity.
   For the purposes of this section, "equitable pro rata basis" shall
mean in proportion to the amount originally paid for the utility
service involved, or in proportion to the amount of such utility
service actually received.
   Nothing in this section shall prevent the commission from
authorizing refunds to residential and other small customers to be
based on current usage.



454.  (a) Except as provided in Section 455, no public utility shall
change any rate or so alter any classification, contract, practice,
or rule as to result in any new rate, except upon a showing before
the commission and a finding by the commission that the new rate is
justified.  Whenever any electrical, gas, heat, telephone, water, or
sewer system corporation files an application to change any rate,
other than a change reflecting and passing through to customers only
new costs to the corporation which do not result in changes in
revenue allocation, for the services or commodities furnished by it,
the corporation shall furnish to its customers affected by the
proposed rate change notice of its application to the commission for
approval of the new rate.  This notice requirement does not apply to
any rate change proposed by a corporation pursuant to an advice
letter submitted to the commission in accordance with commission
procedures for this means of submission.  The procedures for advice
letters may include provision for notice to customers or subscribers
on a case-by-case basis, as determined by the commission.  The
corporation may include the notice with the regular bill for charges
transmitted to the customers within 45 days if the corporation
operates on a 30-day billing cycle, or within 75 days if the
corporation operates on a 60-day billing cycle.  If more than one
application to change any rate is filed within a single billing
cycle, the corporation may combine the notices into a single notice
if the applications are separately identified.  The notice shall
state the amount of the proposed rate change expressed in both dollar
and percentage terms for the entire rate change as well as for each
customer classification, a brief statement of the reasons the change
is required or sought, and the mailing, and if available, the e-mail
address of the commission to which any customer inquiries may be
directed regarding how to participate in, or receive further notices
regarding the date, time, or place of, any hearing on the
application, and the mailing address of the corporation to which any
customer inquiries relative to the proposed rate change may be
directed.
   (b) The commission may adopt rules it considers reasonable and
proper for each class of public utility providing for the nature of
the showing required to be made in support of proposed rate changes,
the form and manner of the presentation of the showing, with or
without a hearing, and the procedure to be followed in the
consideration thereof.  Rules applicable to common carriers may
provide for the publication and filing of any proposed rate change
together with a written showing in support thereof, giving notice of
the filing and showing in support thereof to the public, granting an
opportunity for protests thereto, and to the consideration of, and
action on, the showing and any protests filed thereto by the
commission, with or without hearing.  However, the proposed rate
change does not become effective until it has been approved by the
commission.
   (c) The commission shall permit individual public utility
customers and subscribers affected by a proposed rate change, and
organizations formed to represent their interests, to testify at any
hearing on the proposed rate change, except that the presiding
officer need not allow repetitive or irrelevant testimony and may
conduct the hearing in an efficient manner.




454.1.  (a) Except as provided in subdivision (b), if a customer
with a maximum peak electrical demand in excess of 20 kilowatts
located or planning to locate within the service territory of an
electrical corporation receives a bona fide offer for electric
service from an irrigation district at rates less than the electrical
corporation's tariffed rates, the electrical corporation may
discount its noncommodity rates, but may not discount its
noncommodity rates below its distribution marginal cost of serving
that customer.  For purposes of this subdivision, the costs of the
electric commodity shall be excluded from both the irrigation
district and electric corporation's rates.  The electrical
corporation may recover any difference between its tariffed and
discounted service from its remaining customers, allocated as
determined by the commission.  However, the reallocation may not
increase rates to its remaining customers by any greater amount than
the rates would be increased if the customer had taken electric
distribution service from the irrigation district and the irrigation
district had paid the charge established in subdivision (e) of
Section 9607.  Further, there shall be a firewall preventing the
reallocation of such differences resulting from discounting to
residential customers or to commercial customers with maximum peak
demands not in excess of 20 kilowatts.  The commission shall review
the discounts provided under this section by each electrical
corporation and report to the Legislature not later than January 15,
2003.  The review shall include an assessment of the effectiveness of
the discount levels and the rate impacts to customers of the
discounts.  The commission shall include in its report a
recommendation of any changes that should be made to the discount
levels in light of other commission approved discount programs.
   (b) Subdivision (a) does not apply to a cumulative 75 megawatts of
load served by the Merced Irrigation District, determined as
follows:
   (1) The load is located within the boundaries of Merced Irrigation
District, as those boundaries existed on December 20, 1995, together
with the territory of Castle Air Force Base which was located
outside the district on that date.
   (2) For purposes of this section, a megawatt of load shall be
calculated in accordance with the methodology established by the
California Energy Resource Conservation and Development Commission in
its Docket No.  96-IRR-1890.
   (c) Subdivision (a) applies to the load of customers that move to
the areas described in paragraph (1) of subdivision (b) after
December 31, 2000, and such load shall be excluded from the
calculation of the 75 megawatts in subdivision (b).
   (d) If an electrical corporation seeks to apply the discounts
permitted under subdivision (a) within the geographic area described
in subdivision (b) of Section 9610, the electrical corporation's
resulting rate for distribution service may not be less than 120
percent of the electrical corporation's marginal distribution cost of
serving that customer.



454.2.  Notwithstanding Section 454, the commission may establish a
"zone of rate freedom" for any passenger stage transportation service
which is operating in competition with other passenger
transportation service from any means of transportation, if the
competition together with the authorized zone of rate freedom will
result in reasonable rates and charges for the passenger stage
transportation service.  An adjustment in rates or charges within a
zone of rate freedom established by the commission is hereby deemed
just and reasonable.  The commission may, upon protest or on its own
motion, suspend any adjustment in rates or charges under this section
and institute proceedings under its rules of practice and procedure.




454.3.  The commission may, after a hearing, approve an increase of
from one-half of 1 percent to 1 percent in the rate of return
otherwise allowed an electrical corporation on its electric plant for
investment by the corporation in facilities meeting one of the
following requirements:
   (a) The facility is designed to generate electricity from a
renewable resource, including, but not limited to, solar energy,
geothermal steam, wind, and hydroelectric power at new or existing
dams; the facility is subject to Resources Agency review of its
environmental impacts and determination that the facility is
environmentally acceptable; its capital costs, when added to its
costs of operation and maintenance, result in a cost of electricity
generated over the useful life of the facility less than that of
electricity generated by existing facilities utilizing nuclear power
or fossil fuel; and the facility is used and useful.
   (b) The facility is capable of meeting the then applicable
environmental pollution standards; its capital costs, when added to
its costs of operation and maintenance, result in a cost of
electricity generated over the useful life of the facility less than
that of electricity generated by existing facilities utilizing
nuclear power or fossil fuel; and the facility is used and useful.
   (c) The facility is experimental and is, in the determination of
the commission, reasonably designed to improve or perfect technology
for the generation of electricity from renewable resources or to more
efficiently utilize other resources in a manner which will decrease
environmental pollution from and lower the costs of the electricity
generated.


454.4.  The commission shall establish rates for gas which is
utilized in cogeneration technology projects not higher than the
rates established for gas utilized as a fuel by an electric plant in
the generation of electricity, except that this rate shall apply only
to that quantity of gas which an electrical corporation serving the
area where a cogeneration technology project is located, or an
equivalent area, would require in the generation of an equivalent
amount of electricity based on the corporation's average annual
incremental heat rate and reasonable transmission losses or that
quantity of gas actually consumed by the cogeneration technology
project in the sequential production of electricity and steam, heat,
or useful work, whichever is the lower quantity.



454.5.  (a) The commission shall specify the allocation of
electricity, including quantity, characteristics, and duration of
electricity delivery, that the Department of Water Resources shall
provide under its power purchase agreements to the customers of each
electrical corporation, which shall be reflected in the electrical
corporation's proposed procurement plan. Each electrical corporation
shall file a proposed procurement plan with the commission not later
than 60 days after the commission specifies the allocation of
electricity. The proposed procurement plan shall specify the date
that the electrical corporation intends to resume procurement of
electricity for its retail customers, consistent with its obligation
to serve. After the commission's adoption of a procurement plan, the
commission shall allow not less than 60 days before the electrical
corporation resumes procurement pursuant to this section.
   (b) An electrical corporation's proposed procurement plan shall
include, but not be limited to, all of the following:
   (1) An assessment of the price risk associated with the electrical
corporation's portfolio, including any utility-retained generation,
existing power purchase and exchange contracts, and proposed
contracts or purchases under which an electrical corporation will
procure electricity, electricity demand reductions, and
electricity-related products and the remaining open position to be
served by spot market transactions.
   (2) A definition of each electricity product, electricity-related
product, and procurement related financial product, including support
and justification for the product type and amount to be procured
under the plan.
   (3) The duration of the plan.
   (4) The duration, timing, and range of quantities of each product
to be procured.
   (5) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services,
including the format and criteria of that procurement process.
   (6) An incentive mechanism, if any incentive mechanism is
proposed, including the type of transactions to be covered by that
mechanism, their respective procurement benchmarks, and other
parameters needed to determine the sharing of risks and benefits.
   (7) The upfront standards and criteria by which the acceptability
and eligibility for rate recovery of a proposed procurement
transaction will be known by the electrical corporation prior to
execution of the transaction. This shall include an expedited
approval process for the commission's review of proposed contracts
and subsequent approval or rejection thereof. The electrical
corporation shall propose alternative procurement choices in the
event a contract is rejected.
   (8) Procedures for updating the procurement plan.
   (9) A showing that the procurement plan will achieve the
following:
   (A) The electrical corporation will, in order to fulfill its unmet
resource needs and in furtherance of Section 701.3, until a 20
percent renewable resources portfolio is achieved, procure renewable
energy resources with the goal of ensuring that at least an
additional 1 percent per year of the electricity sold by the
electrical corporation is generated from renewable energy resources,
provided sufficient funds are made available pursuant to Sections
399.6 and 399.15, to cover the above-market costs for new renewable
energy resources.
   (B) The electrical corporation will create or maintain a
diversified procurement portfolio consisting of both short-term and
long-term electricity and electricity-related and demand reduction
products.
   (C) The electrical corporation will first meet its unmet resource
needs through all available energy efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
   (10) The electrical corporation's risk management policy,
strategy, and practices, including specific measures of price
stability.
   (11) A plan to achieve appropriate increases in diversity of
ownership and diversity of fuel supply of nonutility electrical
generation.
   (12) A mechanism for recovery of reasonable administrative costs
related to procurement in the generation component of rates.
   (c) The commission shall review and accept, modify, or reject each
electrical corporation's procurement plan. The commission's review
shall consider each electrical corporation's individual procurement
situation, and shall give strong consideration to that situation in
determining which one or more of the features set forth in this
subdivision shall apply to that electrical corporation. A procurement
plan approved by the commission shall contain one or more of the
following features, provided that the commission may not approve a
feature or mechanism for an electrical corporation if it finds that
the feature or mechanism would impair the restoration of an
electrical corporation's creditworthiness or would lead to a
deterioration of an electrical corporation's creditworthiness:
   (1) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services. The
commission shall specify the format of that procurement process, as
well as criteria to ensure that the auction process is open and
adequately subscribed. Any purchases made in compliance with the
commission-authorized process shall be recovered in the generation
component of rates.
   (2) An incentive mechanism that establishes a procurement
benchmark or benchmarks and authorizes the electrical corporation to
procure from the market, subject to comparing the electrical
corporation's performance to the commission-authorized benchmark or
benchmarks. The incentive mechanism shall be clear, achievable, and
contain quantifiable objectives and standards. The incentive
mechanism shall contain balanced risk and reward incentives that
limit the risk and reward of an electrical corporation.
   (3) Upfront achievable standards and criteria by which the
acceptability and eligibility for rate recovery of a proposed
procurement transaction will be known by the electrical corporation
prior to the execution of the bilateral contract for the transaction.
The commission shall provide for expedited review and either approve
or reject the individual contracts submitted by the electrical
corporation to ensure compliance with its procurement plan. To the
extent the commission rejects a proposed contract pursuant to this
criteria, the commission shall designate alternative procurement
choices obtained in the procurement plan that will be recoverable for
ratemaking purposes.
   (d) A procurement plan approved by the commission shall accomplish
each of the following objectives:
   (1) Enable the electrical corporation to fulfill its obligation to
serve its customers at just and reasonable rates.
   (2) Eliminate the need for after-the-fact reasonableness reviews
of an electrical corporation's actions in compliance with an approved
procurement plan, including resulting electricity procurement
contracts, practices, and related expenses. However, the commission
may establish a regulatory process to verify and assure that each
contract was administered in accordance with the terms of the
contract, and contract disputes which may arise are reasonably
resolved.
   (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. The commission shall
establish power procurement balancing accounts to track the
differences between recorded revenues and costs incurred pursuant to
an approved procurement plan. The commission shall review the power
procurement balancing accounts, not less than semiannually, and shall
adjust rates or order refunds, as necessary, to promptly amortize a
balancing account, according to a schedule determined by the
commission. Until January 1, 2006, the commission shall ensure that
any overcollection or undercollection in the power procurement
balancing account does not exceed 5 percent of the electrical
corporation's actual recorded generation revenues for the prior
calendar year excluding revenues collected for the Department of
Water Resources. The commission shall determine the schedule for
amortizing the overcollection or undercollection in the balancing
account to ensure that the 5 percent threshold is not exceeded. After
January 1, 2006, this adjustment shall occur when deemed appropriate
by the commission consistent with the objectives of this section.
   (4) Moderate the price risk associated with serving its retail
customers, including the price risk embedded in its long-term supply
contracts, by authorizing an electrical corporation to enter into
financial and other electricity-related product contracts.
   (5) Provide for just and reasonable rates, with an appropriate
balancing of price stability and price level in the electrical
corporation's procurement plan.
   (e) The commission shall provide for the periodic review and
prospective modification of an electrical corporation's procurement
plan.
   (f) The commission may engage an independent consultant or
advisory service to evaluate risk management and strategy. The
reasonable costs of any consultant or advisory service is a
reimbursable expense and eligible for funding pursuant to Section
631.
   (g) The commission shall adopt appropriate procedures to ensure
the confidentiality of any market sensitive information submitted in
an electrical corporation's proposed procurement plan or resulting
from or related to its approved procurement plan, including, but not
limited to, proposed or executed power purchase agreements, data
request responses, or consultant reports, or any combination,
provided that the Office of Ratepayer Advocates and other consumer
groups that are nonmarket participants shall be provided access to
this information under confidentiality procedures authorized by the
commission.
   (h) Nothing in this section alters, modifies, or amends the
commission's oversight of affiliate transactions under its rules and
decisions or the commission's existing authority to investigate and
penalize an electrical corporation's alleged fraudulent activities,
or to disallow costs incurred as a result of gross incompetence,
fraud, abuse, or similar grounds. Nothing in this section expands,
modifies, or limits the State Energy Resources Conservation and
Development Commission's existing authority and responsibilities as
set forth in Sections 25216, 25216.5, and 25323 of the Public
Resources Code.
   (i) An electrical corporation that serves less than 500,000
electric retail customers within the state may file with the
commission a request for exemption from this section, which the
commission shall grant upon a showing of good cause.
   (j) (1) Prior to its approval pursuant to Section 851 of any
divestiture of generation assets owned by an electrical corporation
on or after the date of enactment of the act adding this section, the
commission shall determine the impact of the proposed divestiture on
the electrical corporation's procurement rates and shall approve a
divestiture only to the extent it finds, taking into account the
effect of the divestiture on procurement rates, that the divestiture
is in the public interest and will result in net ratepayer benefits.

   (2) Any electrical corporation's procurement necessitated as a
result of the divestiture of generation assets on or after the
effective date of the act adding this subdivision shall be subject to
the mechanisms and procedures set forth in this section only if its
actual cost is less than the recent historical cost of the divested
generation assets.
   (3) Notwithstanding paragraph (2), the commission may deem
proposed procurement eligible to use the procedures in this section
upon its approval of asset divestiture pursuant to Section 851.



454.55.  The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall identify all
potentially achievable cost-effective electricity efficiency savings
and establish efficiency targets for an electrical corporation to
achieve pursuant to Section 454.5.



454.56.  (a) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall identify all
potentially achievable cost-effective natural gas efficiency savings
and establish efficiency targets for the gas corporation to achieve.

   (b) A gas corporation shall first meet its unmet resource needs
through all available natural gas efficiency and demand reduction
resources that are cost effective, reliable, and feasible.



454.6.  (a) A contract entered into pursuant to Section 454.5 by an
electrical corporation for the electricity generated by a replacement
or repowering project that meets the criteria specified in
subdivision (b) shall be recoverable in rates, taking into account
any collateral requirements and debt equivalence associated with the
contract, in a manner determined by the commission to provide the
best value to ratepayers.
   (b) To be eligible for rate treatment in accordance with
subdivision (a), a contract shall be for a project which meets all of
the following criteria:
   (1) The project is a replacement or repowering of an existing
generation unit of a thermal powerplant.
   (2) The project complies with all applicable requirements of
federal, state, and local laws.
   (3) The project will not require significant additional
rights-of-way for electrical or fuel-related transmission facilities.

   (4) The project will result in significant and substantial
increases in the efficiency of the production of electricity.
   (5) The Independent System Operator or local system operator
certifies that the project is needed for local area reliability.
   (6) The project provides electricity to consumers of this state at
the cost of generating that electricity, including a reasonable
return on the investment and the costs of financing the project.




454.7.  The commission shall, to the extent permitted by federal law
and consistent with Section 2771, provide cogeneration technology
projects with the highest possible priority for the purchase of
natural gas.


454.8.  In any decision establishing rates for an electrical or gas
corporation reflecting the reasonable and prudent costs of the new
construction of any addition to or extension of the corporation's
plant, when the commission has found and determined that the addition
or extension is used and useful, the commission shall consider a
method for the recovery of these costs which would be constant in
real economic terms over the useful life of the facilities, so that
ratepayers in a given year will not pay for the benefits received in
other years.


454.9.  (a) The commission shall authorize public utilities to
establish catastrophic event memorandum accounts and to record in
those accounts the costs of the following:
   (1) Restoring utility services to customers.
   (2) Repairing, replacing, or restoring damaged utility facilities.

   (3) Complying with governmental agency orders in connection with
events declared disasters by competent state or federal authorities.

   (b) The costs, including capital costs, recorded in the accounts
set forth in subdivision (a) shall be recoverable in rates following
a request by the affected utility, a commission finding of their
reasonableness, and approval by the commission.  The commission shall
hold expedited proceedings in response to utility applications to
recover costs associated with catastrophic events.



455.  Whenever any schedule stating an individual or joint rate,
classification, contract, practice, or rule, not increasing or
resulting in an increase in any rate, is filed with the commission,
it may, either upon complaint or upon its own initiative, at once and
if it so orders without answer or other formal pleadings by the
interested public utility or utilities, but upon reasonable notice,
enter upon a hearing concerning the propriety of the rate,
classification, contract, practice, or rule.  Pending the hearing and
the decision thereon the rate, classification, contract, practice,
or rule shall not go into effect.  Except as provided in Section
455.1, the period of suspension of the rate, classification,
contract, practice, or rule shall not extend beyond 120 days beyond
the time when it would otherwise go into effect unless the commission
extends the period of suspension for a further period not exceeding
six months.  On the hearing the commission shall establish the rates,
classifications, contracts, practices, or rules proposed, in whole
or in part, or others in lieu thereof, which it finds to be just and
reasonable.
   All rates, classifications, contracts, practices, or rules not so
suspended shall become effective on the expiration of 30 days from
the time of filing thereof with the commission or a lesser time as
the commission may grant, subject to the power of the commission,
after a hearing had on its own motion or upon complaint, to alter or
modify them.


455.1.  Whenever a water corporation files with the commission,
pursuant to an advice letter submitted in accordance with commission
procedures for this means of submission, a schedule stating rates,
classifications, contracts, practices, or rules for the service of
recycled water, the policies and standards for which are provided for
in Article 7 (commencing with Section 13550) of Chapter 7 of
Division 7 of the Water Code, the commission shall observe the
following procedures:
   (a) Unless the commission determines, pursuant to subdivision (b),
that the schedule filed by a water corporation for the service of
recycled water is not justified or, pursuant to subdivision (d), any
other party protests in writing the filing of the schedule, the
schedule shall become effective upon the expiration of 40 days from
the time of filing thereof.
   (b) Notwithstanding the filing of notice of changes or amendments
as provided in subdivision (c) or a protest as provided in
subdivision (d), the schedule as filed shall become effective on an
interim basis upon the expiration of 30 days from the time of filing
thereof, subject to refund of any amount of the rate subsequently
found by the commission to be in excess of a just and reasonable
rate.
   (c) If, upon its own initiative, the commission, acting through
the staff organization with responsibility for reviewing advice
letter filings, determines that the schedule filed by a water
corporation for the service of recycled water is not justified, it
shall notify the water corporation of the determination in writing
within 40 days from the time of filing of the schedule and shall
state in the notice all changes or amendments to the schedule that
are required to make it just and reasonable. Upon the refiling by the
water corporation within 10 days of the receipt of the notice of a
revised schedule incorporating all changes and amendments specified
by the commission, the revised schedule shall become effective on an
interim basis subject to refund upon the expiration of five days from
the time of the refiling thereof, and shall become final upon formal
commission action approving the schedule, as revised.
   (d) If any other party, including the commission organization or
division created pursuant to Section 309.5, protests in writing the
schedule filed by a water corporation for the service of recycled
water, the commission shall set the matter for a hearing on the
protest to be held within a reasonable time from the time that the
party files its written protest with the commission.
   (e) Subdivision (d) of Section 311 shall govern the timing of
actions by the commission after the close of the record in any
proceeding pursuant to subdivision (d) of this section.



455.2.  (a) The commission shall issue its final decision on a
general rate case application of a water corporation with greater
than 10,000 service connections in a manner that ensures that the
commission's decision becomes effective on the first day of the first
test year in the general rate increase application.
   (b) If the commission's decision is not effective in accordance
with subdivision (a), the applicant may file a tariff implementing
interim rates that may be increased by an amount equal to the rate of
inflation as compared to existing rates.  The interim rates shall be
effective on the first day of the first test year in the general
rate case application.  These interim rates shall be subject to
refund and shall be adjusted upward or downward back to the interim
rate effective date, consistent with the final rates adopted by the
commission.  The commission may authorize a lesser increase in
interim rates if the commission finds the rates to be in the public
interest.  If the presiding officer in the case determines that the
commission's decision cannot become effective on the first day of the
first test year due to actions by the water corporation, the
presiding officer or commission may require a different effective
date for the interim rates or final rates.
   (c) The commission shall establish a schedule to require every
water corporation subject to the rate case plan for water
corporations to file an application pursuant to the plan every three
years.  The plan shall include a provision to allow the filing
requirement to be waived upon mutual agreement of the commission and
the water corporation.
   (d) The requirements of subdivisions (a) and (b) may be waived at
any time by mutual consent of the executive director of the
commission and the water corporation.



455.3.  (a) Notwithstanding any other provision of law, including,
but not limited to Section 454, no later than January 1, 1998, the
commission shall adopt rules and regulations that substantially
revise the manner in which oil pipeline corporations may change and
use rates.
   (b) The revised rules and regulations shall adhere to the
following criteria:
   (1) Pipeline corporations shall be required to give the commission
and all shippers no less than 30 days' notice of rate changes.
   (2) After the 30-day notice of rate change, pipeline corporations
shall be permitted to change rates and use those rates prior to
commission approval.
   (3) The commission shall have the authority to suspend a rate
change and use of the changed rate for a period of time not to exceed
30 days from expiration of the 30-day notice period specified in
paragraph (1).
   (4) Pipeline corporations shall refund, with interest, any portion
of the rate change that is subsequently disallowed by the commission
to all shippers within 30 days of the commission's decision becoming
final.  Interest shall accrue from the date the new rate is first
charged.
   (5) Any increase in the shipping rate charged by an oil pipeline
corporation prior to commission approval shall not exceed 10 percent
per 12-month period.  The commission shall determine the
appropriateness of allowing retroactive charge and collection of
subsequently approved rate increases above 10 percent.
   (c) It is the intent of the Legislature that oil pipeline
corporations be permitted to use new rates after the period of the
suspension of a rate change, if any, by the commission pursuant to
paragraph (3) of subdivision (b) prior to commission approval,
provided any disallowed portion of the new rate is fully refunded
with interest.


455.5.  (a) In establishing rates for any electrical, gas, heat, or
water corporation, the commission may eliminate consideration of the
value of any  portion of any electric, gas, heat, or water generation
or production facility which, after having been placed in service,
remains out of service for nine or more consecutive months, and may
disallow any expenses related to that facility.  Upon eliminating
consideration of any portion of a facility or disallowing any
expenses related thereto under this section, the commission shall
reduce the rates of the corporation accordingly  and shall, for
accounting purposes, record the value of that portion of the facility
in a deferred debit account and shall treat this amount similar to
the treatment of the allowance for funds used during construction.
When that portion of the facility is returned to useful service, as
provided in subdivision (c), the corporation may apply to the
commission for the inclusion of its value and expenses related to its
operation for purposes of the establishment of the corporation's
rates.
   (b) Every electrical, gas, heat, and water corporation shall
periodically, as required by the commission, report to the commission
on the status of any portion of any electric, gas, heat, or water
generation or production facility which is out of service and shall
immediately notify the commission when any portion of the facility
has been out of service for nine consecutive months.
   (c) Within 45 days of receiving the notification specified in
subdivision (b), the commission shall institute an investigation to
determine whether to reduce the rates of the corporation to reflect
the portion of the electric, gas, heat, or water generation or
production facility which is out of service. For purposes of this
subdivision, out-of-service periods shall not include planned outages
of predetermined duration scheduled in advance.
   The commission's order shall require that rates associated with
that facility are subject to refund from the date the order
instituting the investigation was issued.  The commission shall
consolidate the hearing on the investigation with the next general
rate proceeding instituted for the corporation.
   (d) Upon being informed by the corporation that any portion of its
electric, gas, heat, or water generation or production facility
which was eliminated from consideration by the commission in
establishing rates for being out of service for nine or more
consecutive months pursuant to subdivision (a) or (b), has been
restored to service and has achieved at least 100 continuous hours of
operation, the commission may again consider that portion of the
facility for purposes of establishing rates, and may adjust the
corporation's rates accordingly without a hearing, except that a
hearing is required on whether to include, for purposes of
establishing rates, any additional plant value added.
   (e) Nothing in this section prohibits the commission from
reviewing the effects of any electric, gas, heat, or water generation
or production facility which has been out of service for less than
nine consecutive months or planned outages of predetermined duration
scheduled in advance.
   (f) For purposes of this section, an electric, gas, heat, or water
generation or production facility includes only such a facility that
the commission determines to be a major facility of the corporation,
and does not include any facility determined by the commission to
constitute a plant held for future use.



456.  Nothing in this part shall be construed to prohibit any public
utility from profiting, to the extent permitted by the commission,
from any economies, efficiencies, or improvements which it may make,
and from distributing by way of dividends, or otherwise disposing of,
such profits.  The commission may make or permit such arrangement
with any public utility as it deems wise for the purpose of
encouraging economies, efficiencies, or improvements and securing the
public utility making them such portion of the profits thereof as
the commission determines.



458.  (a) No common carrier, or any officer or agent thereof, or any
person acting for or employed by it, shall, by means of known false
billing, classification, weight, weighing, or report of weight, or by
any other device or means assist, suffer, or permit any corporation
or person to obtain transportation for any person or property between
points within this state at less than the rates and fares then
established and in force as shown by the schedules filed and in
effect at the time.
   No person, corporation, or any officer, agent, or employee of a
corporation shall, by means of false billing, false or incorrect
classification, false weight or weighing, false representation as to
contents or substance of a package, or false report or statement of
weight, or by any other device or means, whether with or without the
consent or connivance of a common carrier or any of its officers,
agents, or employees, seek to obtain or obtain such transportation
for such property at less than the rates then established and in
force therefor.
   (b) Subdivision (a) is not applicable to network railroad
transportation.



459.  (a) No person or corporation, or any officer, agent, or
employee of a corporation, shall knowingly, directly or indirectly,
by any false statement or representation as to cost or value, or the
nature or extent of an injury, or by the use of any false billing,
bill of lading, receipt, voucher, roll, account, claim, certificate,
affidavit, or deposition, or upon any false, fictitious, or
fraudulent statement or entry, obtain or attempt to obtain any
allowance, rebate, or payment for damage, in connection with or
growing out of the transportation of persons or property, or an
agreement to transport such persons or property, whether with or
without the consent or connivance of a common carrier or any of its
officers, agents, or employees.  No common carrier, or any of its
officers, agents, or employees, shall knowingly pay or offer to pay
any such allowance, rebate, or claim for damage.
   (b) Subdivision (a) is not applicable to network railroad
transportation.



460.3.  (a) The commission shall prohibit any passenger stage
corporation from charging any fare to, or imposing any other charge
on, any physically disabled or handicapped passenger which is more
than the fare or charge imposed on a passenger who is not physically
disabled or handicapped for the same transportation or service, and
shall approve no schedule of fares or charges which is discriminatory
under this section.
   (b) Any special provision made by a passenger stage corporation
for assisting a physically disabled or handicapped person in using
its transportation service is, for purposes of subdivision (a), a
part of the same transportation or service offered to passengers who
are not physically disabled or handicapped, and is not a separate
service for which an additional charge may be made.  Nothing in this
section, however, requires a passenger stage corporation to furnish
any equipment or assistance for a physically disabled or handicapped
person different from or in addition to that which may be required
under any other law.



460.7.  (a) Beginning July 1, 1990, and continuing thereafter, every
passenger stage corporation shall file with the commission one of
the following:
   (1) A certificate of workers' compensation coverage for its
employees issued by an admitted insurer.
   (2) A certification of consent to self-insure issued by the
Director of Industrial Relations, and the identity of the
administrator of the carrier's workers' compensation self-insurance
plan.
   (3) A statement under penalty of perjury, stating that, in its
operations as a passenger stage corporation, it does not employ any
person in any manner so as to become subject to the workers'
compensation laws of this state.
   (b) The workers' compensation certified to under paragraph (1) of
subdivision (a) shall be effective until canceled.  Cancellation
shall require 30 days' advance notice.
   (c) If, after filing the statement described in paragraph (3) of
subdivision (a), the corporation becomes subject to the workers'
compensation laws of this state, the corporation shall promptly
notify the commission that the corporation is withdrawing its
statement under paragraph (3) of subdivision (a), and shall
simultaneously file the certificate described in either paragraph (1)
or (2) of subdivision (a).
   (d) The commission may adopt rules and regulations that it
determines to be necessary to carry out this section.



461.2.  For purposes of establishing rates for a telephone or
telegraph corporation, the commission shall include all revenues and
expenses of the corporation from the installation and maintenance of
that simple inside wiring which is subject to the order of the
Federal Communications Commission deregulating that wiring (CC Docket
No. 79-105, FCC 86-63; 51 F.R. 8498, March 12, 1986).



461.5.  (a) (1) No discrimination in charges or facilities for
transportation shall be made by any railroad or other transportation
company between places or persons, or in the facilities for the
transportation of the same classes of freight or passengers within
this state.  It shall be unlawful for any railroad or other
transportation company to charge or receive any greater compensation
in the aggregate for the transportation of passengers or of like kind
of property for a shorter than for a longer distance over the same
line or route in the same direction, the shorter being included
within the longer distance, or to charge any greater compensation as
a through rate than the aggregate of the intermediate rates.
   (2) Upon application to the commission company may be authorized
by the commission to charge less for longer than for shorter
distances for the transportation of persons or property and the
commission may from time to time prescribe the extent to which such
company may be relieved from the prohibition to charge less for the
longer than for the shorter haul.  The commission may authorize the
issuance of excursion and commutation tickets at special rates.
   (3) Nothing contained in this section shall be construed to
prevent the commission from ordering and compelling any railroad or
other transportation company to make reparation to any shipper on
account of the rates charged to such shipper being excessive or
discriminatory, provided no discrimination will result from such
reparation.
   (b) Subdivision (a) is not applicable to network railroad
transportation.



462.  Every street or interurban railroad corporation shall upon
such terms as the commission finds to be just and reasonable furnish
to its passengers transfers entitling them to one continuous trip in
the same general direction over and upon the portions of its lines
within the same city or city and county not reached by the
originating car.



463.  (a) For purposes of establishing rates for any electrical or
gas corporation, the commission shall disallow expenses reflecting
the direct or indirect costs resulting from any unreasonable error or
omission relating to the planning, construction, or operation of any
portion of the corporation's plant which cost, or is estimated to
have cost, more than fifty million dollars (,000,000), including
any expenses resulting from delays caused by any unreasonable error
or omission.  Nothing in this section prohibits a finding by the
commission of other unreasonable or imprudent expenses.  This
subdivision is a clarification of the existing authority of the
commission, is not intended to limit or restrict any power or
authority of the commission conferred by any other provision of law,
and applies to all matters pending before the commission.  This
section does not prohibit the commission from establishing rates for
an electrical or gas corporation on a basis other than an allowed
rate of return on undepreciated capital costs.
   (b) Whenever an electrical or gas corporation fails to prepare or
maintain records sufficient to enable the commission to completely
evaluate any relevant or potentially relevant issue related to the
reasonableness and prudence of any expense relating to the planning,
construction, or operation of the corporation's plant, the commission
shall disallow that expense for purposes of establishing rates for
the corporation.  This subdivision does not apply where the
commission determines that a reasonable person could not have
anticipated either the relevance or potential relevance, to an
evaluation of costs incurred on the project, of preparing or
maintaining the records or the extent of recordkeeping required to
adequately evaluate those costs.
   (c) For purposes of this section:
   (1) "Planning" includes, but is not limited to, activities related
to the initial and subsequent assessments of the need for a plant
construction project; the selection of contractors and the
negotiation of contract provisions; certification; project
organization; and site selection, including the investigation and
interpretation of environmental factors such as seismic conditions
and other external factors affecting the construction, operation, and
safety of the plant.
   (2) "Construction" includes, but is not limited to, activities
related to engineering such as the development and use of
specifications, drawings, and procedures; the preparation and use of
construction plans, including blueprints; procurement activities;
repairs, replacement, redesign, or repositioning of equipment and
facilities; startup activities; and quality assurance and quality
control activities.
   (3) "Operation" includes, but is not limited to, activities
related to decisions affecting the timing and nature of the use of
the plant; dispatch and control activities and decisions; and plant
operation, fuel loading, and maintenance.
   (4) "Error" includes, but is not limited to, any action or
direction which causes an avoidable (i) increase in the time required
to bring the plant to  full commercial operation, (ii) change in the
number or types of personnel or firms required to bring the plant to
full commercial operation, (iii) increase in the number of worker
hours required to complete any portion of the plant construction
project, or (iv) change of equipment, configuration, design,
schedule, or program.
   (5) "Omission" includes, but is not limited to, any failure to act
or to provide direction which causes an avoidable (i) increase in
the time required to bring the plant to full commercial operation,
(ii) change in the number or types of personnel or firms required to
bring the plant to full commercial operation, (iii) increase in the
number of worker hours required to complete any portion of the plant
construction project, or (iv) change of equipment, configuration,
design, schedule, or program.



463.5.  (a) Section 463 does not require the commission to undertake
a reasonableness review of recorded costs to determine the
reasonableness of the costs of each item of any electrical or gas
corporation's plant which costs, or is estimated to have cost, more
than fifty million dollars (,000,000) where the commission either
has established a maximum reasonable cost pursuant to Section 1005.5
or has adopted an estimate of the reasonable costs in any proceeding.

   The establishment of the maximum costs or adoption of an estimated
cost does not limit or restrict the discretion of the commission in
considering the reasonableness of plant-related costs in subsequent
proceedings.
   (b) This section shall become operative January 1, 1989.



464.  (a) Reasonable expenditures by transmission owners that are
electrical corporations to plan, design, and engineer
reconfiguration, replacement, or expansion of transmission facilities
are in the public interest and are deemed prudent if made for the
purpose of facilitating competition in electric generation markets,
ensuring open access and comparable service, or maintaining or
enhancing reliability, whether or not these expenditures are for
transmission facilities that become operational.
   (b) The commission and the Electricity Oversight Board shall
jointly facilitate the efforts of the state's transmission owning
electrical corporations to obtain authorization from the Federal
Energy Regulatory Commission to recover reasonable expenditures made
for the purposes stated in subdivision (a).
   (c) Nothing in this section alters or affects the recovery of the
reasonable costs of other electric facilities in rates pursuant to
the commission's existing ratemaking authority under this code or
pursuant to the Federal Power Act (41 Stat. 1063; 16 U.S.C. Secs.
791a, et seq.).  The commission may periodically review and adjust
depreciation schedules and rates authorized for an electric plant
that is under the jurisdiction of the commission and owned by an
electrical corporation and periodically review and adjust
depreciation schedules and rates authorized for a gas plant that is
under the jurisdiction of the commission and owned by a gas
corporation, consistent with this code.



465.  (a) Except as provided in subdivision (c), whenever any labor
of a custodial or janitorial nature is not performed by the employees
of a public utility, such labor shall be let out under contract to
the lowest responsible bidder with the provision that prevailing
wages be a condition of any such contract.  For the purposes of this
section, "prevailing wages" shall be deemed to include employer
payments for health and welfare, pension, holidays, sick leave,
vacation, apprenticeship or other training programs.
   (b) A public utility shall implement the provisions of subdivision
(a) by requiring the entity with which it contracts to pay its
custodial or janitorial employees the prevailing wage.  The public
utility awarding the contract shall cause to be inserted in the
contract a stipulation that the failure to pay prevailing wages shall
be cause for the termination of the contract.
   (c) Nothing in this section shall prevent a public utility from
employing a custodial or janitorial service for a period of 90 days
or less without a contract meeting the requirements of subdivision
(a) of this section.
   (d) The Director of the Department of Industrial Relations shall
determine the prevailing wage for custodial or janitorial employees
in accordance with the standards set forth in Section 1773 of the
Labor Code.


466.  Pursuant to Section 465, the contractor to whom the contract
is awarded and any subcontractor under him shall pay not less than
the specified prevailing wage to all workmen performing custodial or
janitorial labor in the excecution of the contract.
   Each contractor and subcontractor shall keep an accurate payroll
record, showing the name, address, social security number, work
classification, straight time and overtime hours worked each day and
week, and the actual per diem wages paid to each janitorial and
custodial worker employed by him in connection with the contract.
The contractor's and subcontractor's payroll records shall be
available for inspection at all reasonable hours, and a copy shall be
made available upon request to the employee, or his authorized
representative, and the Division of Labor Standards Enforcement.
After a complaint has been filed with the Division of Labor Standards
Enforcement alleging that the contractor or the subcontractor has
paid less than the prevailing wage, the contractor or subcontractor
shall upon receipt of a written notice from the Division of Labor
Standards Enforcement within 10 days file with the public utility and
the Division of Labor Standards Enforcement a certified copy of the
payroll records.


467.  The Division of Labor Standards Enforcement in the Department
of Industrial Relations shall enforce Section 466 in the same manner
as provided for by Chapter 4 (commencing with Section 79) of Division
1 of the Labor Code.