Southern California Edison Co. v. Public Utilities Commission

By this petition for writ of review Southern California Edison Company (Edison) challenges the lawfulness of portions of Decision No. 85731 of respondent Public Utilities Commission which require it to amortize, by 36 months of billing credit to its customers, substantial overcollections generated by operation of its “fuel cost adjustment clause.” Edison’s principal contention is that because the funds in issue were lawfully collected pursuant to a rate structure found by the commission to be just and reasonable at the time, the order to return them constitutes illegal “retroactive ratemaking.” We conclude that the contention is without merit and the decision should be affirmed.

*816 If the prohibition against retroactive ratemaking is to remain a useful principle of regulatory law and not become a device to fetter the commission in the exercise of its lawful discretion, the rule must be properly understood. In Pacific Tel. & Tel. Co. v. Public Util. Com. (1965) 62 Cal.2d 634 [ 44 Cal.Rptr. 1 , 401 P.2d 353 ] (hereinafter Pacific Tel. & Tel.), the first decision of this court on the question, 1 we construed Public Utilities Code section 728 to vest the commission with…

I dissent.

Until today it was settled by statute and case law in California that “ratemaking” could not be retroactive. The Public Utilities Commission order patently constitutes retroactive ratemaking because it provides credits for the difference between lawfully fixed, final rates and those rates which in the commission’s present view should have been collected.

The commission attempts to avoid the rule against retroactive rate-making by claiming there is no retroactivity. However, the measure of the credit remains asserted past “overcollections,” and, as the majority recognize, the credit is retroactive in effect. (Ante, p. 830.)

Rejecting the commission’s attempted distinction, the majority attempt to avoid the rule against retroactive ratemaking on the theory that adjusting rates does not involve ratemaking. (Id) Not only is the majority’s basic premise fallacious, but their holding that adjustments are exempt from the rule against retroactive ratemaking effectively abrogates the rule, establishes a new system which can be manifestly *832 unfair, and creates uncertainties which can only result in downgrading all California utility bonds, potentially costing our citizens…

MOSK, Acting C.J.

(1a) By this petition for writ of review Southern California Edison Company (Edison) challenges the lawfulness of portions of Decision No. 85731 of respondent Public Utilities Commission which require it to amortize, by 36 months of billing credit to its customers, substantial overcollections generated by operation of its "fuel cost adjustment clause." Edison's principal contention is that because the funds in issue were lawfully collected pursuant to a rate structure found by the commission to be just and reasonable at the time, the order to return them constitutes illegal "retroactive ratemaking." We conclude that the contention is without merit and the decision should be affirmed.

If the prohibition against retroactive ratemaking is to remain a useful principle of regulatory law and not become a device to fetter the commission in the exercise of its lawful discretion, the rule must be properly understood. In Pacific Tel. & Tel. Co. v. Public Util. Com. (1965) 62 Cal.2d 634 [ 44 Cal. Rptr. 1 , 401 P.2d 353 ] (hereinafter Pacific Tel. & Tel. ), the first decision of this court on the question, [1] we construed Public Utilities Code section 728 to vest…