June 3, 2002 

1. It results in ratepayer cross subsidies for telecommunications corporations in violation of D. 89-05-002;
2. It does not properly ensure that the monies will be spent for the purposes described; and
3. It is inconsistent with Commission policy established in D. 01-12-009.
4. SDG&E’s filing is imcomplete and does not comport with D. 8905-002 guidelines. 

UCAN urges the Commission to reject the Advice Letter filing and to require SDG&E to file an application with the Commission that addresses the issues raised by UCAN and any other protesting party.    In the alternative,  the Commission should reject the Advice Letter and instruct the City of San Diego to implement a local utility users’ tax instead of using a franchise fee artifice. 

Commission Jurisdiction over Franchise Fee Levels 

            In a decision issued late last year,  the Commission rejected proposals to increase ratepayer dollars allocated to undergrounding.   In that Decision, the Commission wrote: 

Currently, the state is facing an energy crisis, with ratepayers seeing increased electric and gas bills.  The Commission, therefore, is interested in ways to improve the existing system without increasing the cost to ratepayers.  Although the actions contemplated in this decision would not increase the current funding amounts, it is likely they will increase the costs and rates; but only within the limits of the existing funding level.  (D. 01-12-009, p. 20)            

          The rate crisis for San Diego is more severe than any other utility in the state.  According to SDG&E’s own determination,  SDG&E residential customers are now paying the highest electric rates of the three investor-owned utilities in the state of California.   (See Attachment “B”)    The franchise fee agreement with the City would expose City of San Diego electric customers to the highest rates in the state --- by a notable amount.     Yet, the record is bereft of any investigation made by the City and no disclosure by SDG&E to the City of the impact that the franchise fee has on the electric rates paid by customers.   The Commission must compel SDG&E to make a showing that the City of San Diego has considered the relative rate impacts of the proposed franchise fee and made an informed judgment to drive the bundled rate of electricity to levels in excess of any state or, for that matter, national electric utility.            

             Additionally, the City’s imposition of franchise fees is a blatant circumvention of the Commission ruling declining an increase in 20A undergrounding expenditures.    In December 2001,  the Commission clearly rejected requests for increased undergrounding expenditures.  In addition to rate impacts, it cited concerns about the cost-effectiveness and data collection.  It initiated a Phase 2 in the proceeding to study these, and other, matters further. 

            Rather than comply with the process set out by the Commission, the City of San Diego decided to use franchise fees to substitute for the current Rule 20A funding.  It effectively triples the ratepayer funds to be applied to undergrounding.   The Commission should not accept this circumvention of its process.   Until many of the issues relating to undergrounding are resolved, the Commission is imbued with the jurisdiction to prohibit a City from passing on unduly higher undergrounding costs to SDG&E ratepayers.