Anchor Lighting v. So. California Edison

• Decision Date: 30 August 2006
• Docket Number: No. B184613.,B184613.
• Citation: 142 Cal.App.4th 541,47 Cal.Rptr.3d 780
• Court: California Court of Appeals Court of Appeals
• Parties: ANCHOR LIGHTING, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA EDISON COMPANY et al., Defendants and Respondents.

47 Cal.Rptr.3d 780

142 Cal.App.4th 541

ANCHOR LIGHTING, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA EDISON COMPANY et al., Defendants and Respondents.

No. B184613.

Court of Appeal, Second District, Division 1.

August 30, 2006.

Paul G. Kerkorian; Fresno; Berding & Weil, Daniel L. Rottinghaus and Steven R. Weinmann, Alamo, for Plaintiff and Appellant.

Brian A. Cardoza, Bruce A. Reed and Richard D. Arko, Rosemead, for Defendants and Respondents.

VOGEL, J.

In the late 1990's, the Legislature compelled electricity suppliers to reduce their rates for residential and certain small commercial customers, and the Public Utilities Commission was empowered to implement the program. The case before us is pursued by Anchor Lighting, a customer that did not qualify for Southern California Edison's 10 percent rate reduction for its small commercial customers. The trial court concluded that it lacked jurisdiction to consider Anchor's claims and resolved this lawsuit on that basis. We affirm.

BACKGROUND

A.

In 1996, the Legislature enacted the Electric Utilities Restructuring Act (Assembly Bill No. 1890) to conform to changes in federal law intended to increase competition in the provision of electricity. (Stats.1996, ch. 854, § 1, p. 4488, § 10, p. 4505; Pub. Util.Code, § 330 et seq.)¹ The Act declared the Legislature's intent to reduce electricity rates for residential and small commercial customers and, to that end, endorsed the CPUC's finding that California would be best served by a move from the existing regulatory framework in which retail electricity was provided principally by territory to a "framework under which competition would be allowed in the supply of electric power and customers would be allowed to have the right to choose their supplier of electric power." (§ 330, subd. (d).) Costs ancillary to the transition were to be collected "over a specific period of time on a nonbypassable basis and in a manner that [did] not result in an increase in rates to customers of electrical corporations." (§ 330, subd. (v).)

More specifically (and as relevant to this appeal), the Act expressed the Legislature's intent "to require and enable electrical corporations to monetize a portion of the competition transition charge for residential and small commercia consumers so that these customers [would] receive rate reductions of no less than 10 percent for 1998 continuing through 2002 . . . ." (§ 330, subd. (w).)² The Legislature gave the CPUC and the electricity corporations authority to "fill in" the gaps in the statutory framework (Re Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulation (1996) 70 Cal.P.U.C.2d 207, 218, 1996 WL 752460), and imposed on electric utilities an obligation to "secure the means to finance the competition transition charge by applying concurrently for financing orders from the [CPUC] and for rate reduction bonds from the California Infrastructure and Economic Development Bank." (§ 330, subd. (w).) In short, each electrical corporation had to submit rate reduction and financing proposals to the CPUC, and the Legislature understood that the revenue lost by the reduced rates would be replaced by rate recovery bonds authorized by financing orders approved by the CPUC. (§§ 330, 368, 840.)

B.

In October 1996, Southern California Edison Company (SCE) submitted a cost recovery plan to the CPUC in which it proposed a 10 percent rate reduction for "small commercial customers" (as defined by SCE's tariffs as "GS-1" customers) to be paid with rate reduction bonds.³ The CPUC approved the plan in December. In April 1997, the CPUC issued a public notice (Resolution 173) of the timetable for submission of applications for financing orders, making it clear that financing orders approved by the CPUC to cover rate discounts would be "final and irrevocable." There were provisions for protests, responses, and hearings, and the Act itself expressly provides that financing orders are "irrevocable." (§ 841, subd. (c).)⁴

In May 1997, SCE applied to the CPUC for a financing order for the 10 percent rate reduction and for issuance of the rate reduction bonds, confirming that the rate reduction would benefit only specified residential customers and GS-1 small commercial customers. All of SCE's filings were a matter of public record. In July, SCE and other major electric utilities filed a "Joint Direct Access Implementation Plan" which explained, among other things, that the "criteria for determining customer eligibility [for the rate reduction] in each case [would differ among the utilities] because of their different rate schedule eligibility criteria." In August, the CPUC invited all interested parties, including the public, to comment upon its proposed financing orders, but no one voiced any objection. The CPUC approved SCE's financing order in September.⁵

In December, in reliance on the Financing Order, SCE calculated the amount of rate reduction bonds to be issued to provide savings sufficient to offset the 10 percent rate reduction for the eligible consumers and filed an "Advice Letter" to establish the Fixed Transaction Account charges for the GS-1 rate groups according to the formula provided in the Financing Order. SCE provided the discount to its eligible customers beginning on January 1, 1998.⁶

C.

In April 2001, Anchor Lighting (a commercial business) filed a class action against SCE (and Edison International, which is included in our references to SCE), alleging that although it was a small commercial customer within the meaning of subdivision (h) of section 331 and thus entitled to the 10 percent rate reduction provided by subdivision (w) of section 330, SCE had failed to give it the required reduction. SCE's demurrer was sustained with leave to amend, and Anchor filed a first amended complaint in September, alleging five causes of action, all variations on this same theme (violations of section 330, a common count for money had and received, unjust enrichment fraud, and violations of the Unfair Competition Law), and asking for damages in the amount it would have saved with the discount, imposition of a constructive trust, and injunctive relief.

In March 2002, Anchor filed the same claim with the CPUC, contending "small commercial customer" means a customer with a maximum peak demand of less than 20 kilowatts in any given monthly billing period (so that Anchor and other businesses could be a small commercial customer one month but not the next, depending on its monthly demands).

In the trial court, SCE demurred to the first amended complaint, which the trial court sustained in May 2002, finding it lacked jurisdiction to consider most of Anchor's claims (leaving only the causes of action alleging fraud and violations of the Unfair Business Practices Act). The trial court then stayed the action pending the CPUC's determination of Anchor's concurrent administrative claim.

In August 2003, the CPUC dismissed Anchor's administrative claim with prejudice, finding (1) that its prior decisions approving SCE's tariffs were "final and conclusive" because no one had suggested (during the public comment period on SCE's proposal or at any other time) that SCE's proposal conflicted with section 331, subdivision (h); (2) that Anchor's claim was an impermissible indirect challenge to the CPUC's interpretation of section 331, subdivision (h), "as developed in [its] cost recovery plan decision, the financing order decision, and the direct access implementation plan decision"; (3) that Anchor's challenges to the CPUC's decisions and orders were an improper collateral attack prohibited by section 1709; and (4) that SCE did not in any way mislead the CPUC with regard to its application of the proposed rate reduction (so that Anchor was not entitled to pursue a claim of "independent liability" against SCE on the ground that SCE had failed to comply with the CPUC's orders or the Public Utilities Code). Anchor's application for a rehearing was denied, and it did not seek review of the CPUC's decision in the Court of Appeal or the Supreme Court.

In February 2004, Anchor filed a second amended complaint limited to its causes of action for fraud and violations of the Unfair Competition Law, then abandoned its fraud cause of action. In May 2005, the trial court granted SCE's motion for summary judgment on the remaining cause of action, and this appeal is from the judgment thereafter entered.

DISCUSSION

I.

When the trial court sustained SCE's demurrers, it did so on the ground that it lacked jurisdiction to hear Anchor's challenge to SCE's rates. Anchor contends the trial court was wrong. We disagree.

A.

The CPUC is constitutionally empowered to regulate utilities and to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures (Cal. Const., Art. XII, §§ 1-6), and legislatively empowered to do "all things . . . necessary and convenient in the exercise of such power and jurisdiction." (§ 701; and see Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 905, 160 Cal. Rptr. 124, 603 P.2d 41 [the CPUC's powers are liberally construed].)

The CPUC has exclusive jurisdiction over the regulation and control of utilities and that jurisdiction, once assumed, cannot be hampered or second-guessed by a superior court action addressing the same issue. (Barnett v. Delta Lines, Inc. (1982) 137 Cal.App.3d 674, 680, 187 Cal.Rptr. 219; Pacific Tel. & Tel. Co. v. Superior Court (1963) 60 Cal.2d 426, 429-430, 34 Cal.Rptr. 673, 386 P.2d 233.) To that end, subdivision (a) of section 1759 provides: "No court of this state, except the Supreme Court and the court of appeal, to the extent specified in [the Public Utilities Code], shall have jurisdiction to review, reverse, correct, or annul any order or decision of the [CPUC] or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or...