BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ) ) ) ) ) ) ) ) ) )

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Andrade & Associates, a Professional Law Corporation, vs. Complainant, Southern California Edison Company, Defendant. Case No. 07-05-014 (Filed May 10, 2007 SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E PRE-HEARING REPLY BRIEF I. INTRODUCTION This matter arises out of a billing dispute between Andrade and SCE concerning an October 2005 electric utility bill for $35,745.99 that SCE submitted pursuant to its Rule 17 tariff to the Andrade law firm for previously-unbilled electric service provided by SCE from September 2002 through September 2005. In its Complaint and Pre-Hearing Opening Brief, Andrade argues that it should be relieved from paying the bill on the ground that the bill payment would constitute damages to Andrade for which SCE is liable. Andrade claims that because the bill covers a three-year period, it has been damaged because it cannot pass-through its energy costs to its customers. As Andrade would like to have it, SCE should be bear responsibility for the bill because another party (allegedly SCE and not Andrade caused the error that led to the retroactive bill. Andrade s Complaint is without merit. - 1 -

Andrade does not dispute that it used and benefited from the electricity retroactively billed by SCE. Nor does Andrade dispute that it did not fully pay SCE for that usage and benefit. Accordingly, SCE validly re-billed Andrade pursuant to its Rule 17 tariff, which authorized SCE to retroactively adjust Andrade s bill so that SCE receives full compensation for the electric service provided to Andrade. For these reasons, the Commission should dismiss Andrade s complaint. II. DISCUSSION A. SCE Properly Adjusted Andrade s Bill Pursuant To Tariff Rule 17. 1. Tariff Rule 17(D, 17(E And 17(F Each Provide SCE Authority To Adjust Andrade s Bill. In its Opening Brief, Andrade erroneously asserts that SCE is only permitted to render an adjusted bill for overcharges or undercharges resulting from a billing error caused by SCE, and for no other reason. (Andrade Opening Brief at 5. Andrade s reading of Rule 17 is incomplete. Rule 17 authorizes SCE to retroactively re-bill Andrade for uncollected charges for a number of reasons, regardless of whether SCE is at fault or not, so that SCE receives full compensation for electric service provided. a Tariff Rule 17(D SCE s re-billing was proper under Tariff Rule 17(D, even if SCE s actions caused the error leading to the retroactive bill. Indeed, Rule 17(D specifically defines a Billing Error as an error by SCE which results in incorrect billing charges to the customer. See Attachment A, Rule 17 (emphasis added. And under Rule 17(D, where SCE overcharges or undercharges a customer as the result of a Billing Error, SCE may render an adjusted bill for the amount of the undercharge. Id. Andrade s Complaint alleges nothing more than that SCE followed this - 2 -

procedure, which by the express terms of Tariff Rule 17(D was entirely permissible as a matter of law. b Tariff Rule 17(E Andrade further asserts in its Opening Brief that SCE is trying to shift responsibility to another party, Gill Electric, and that if Gill is responsible, SCE is precluded from rendering an adjusted bill to Andrade. (Andrade Opening Brief at 5. SCE is not trying to shift responsibility to Gill, but is instead arguing that its re-billing was proper under Rule 17(D regardless of whether Gill, SCE, Andrade, or any other party caused the error. Rule 17(E governs the adjustment of bills for unauthorized use, which is defined as including any intentional or unintentional use of energy whereby SCE is denied full compensation for electric service provided. See Attachment A, Rule 17(E. As with a Rule 17(D billing error, where SCE determines that there has been Unauthorized Use of electric service, SCE may bill the customer for SCE s estimate of such unauthorized use... for the most recent three years.... Id. The estimated use may be determined by accurately-metered use, which in this case was measured by the other crossed meter being billed to Williams Real Estate Management. (Stipulated Fact Nos. 11-14. Here, Andrade admits that it received energy from SCE, but did not pay for it. (Stipulated Fact Nos. 11-18, 22. Whether or not Andrade received the unbilled energy intentionally or unintentionally, SCE can properly collect the unbilled amount under Rule 17(E because SCE has not received full compensation for electric service provided to Andrade. See also, Brixey v. SCE, D.93-05-004 49 CPUC 2d 159 (1993 (providing that a utility can retroactively recover for energy used, but not paid for, by a customer. c Tariff Rule 17(F Providing a catchall, Rule 17(F provides, any billing adjustment not specifically covered in the tariffs for an undercharge or overcharge shall not exceed three years. (Attachment C, Rule 17. Consequently, even if the error in billing does not fit squarely within - 3 -

Rule 17(D or Rule 17(E, SCE is also authorized to re-bill Andrade under Rule 17(F to obtain full compensation for the energy provided to Andrade. d Tariff Rule 17 Authorizes SCE To Seek Full Compensation. In sum, the gravamen of Rule 17 as provided in the rules discussed above authorizes SCE to receive full compensation for electric service provided. See Re Retroactive Billing by Gas and Electric Utilities to Correct Alleged Meter Underbillings Due to Meter Error and Meter Fraud (Re Retroactive Billing, D.86-06-035, 21 CPUC 2d 270 (1986 (adopting uniform rules for all gas and electric utilities concerning retroactive billing. 1 Indeed, in Re Retroactive Billing (D.86-06-035, the Commission stated that its only concern is that a customer who has received energy should pay what the applicable tariffs prescribe for that energy. Id. Questions concerning guilt, innocence, or intent (i.e. responsibility for the error are irrelevant. Id. Accordingly, in applying Rule 17 here, the Commission need only determine whether SCE has re-billed Andrade for payment of energy that Andrade used, but for which Andrade did not pay. Andrade admits that it benefited from electrical service provided by SCE, but that it did not pay for it. Accordingly, Rule 17 establishes as a matter of law that SCE s re-billing to collect those unpaid charges from Andrade was proper. 2. Tariff Rule 17 Does Not Improperly Limit SCE s Liability. Andrade argues against this determination principally on the ground that SCE is wrongly limiting its liability for negligence. (Andrade s Opening Brief at 5. Andrade contends that because SCE s re-billing covers a three-year time period from September 2002 to September 2005, it has incurred damages in that it supposedly cannot pass-through its energy costs to its 1 Re Retroactive Billing, D.86-06-035, is attached as Attachment E to SCE s Opening Brief. - 4 -

customers. 2 Andrade asserts that SCE is liable for these damages. Andrade s liability theory is erroneous for several reasons. a SCE Is Collecting A Debt, Not Limiting Its Liability. Andrade s liability theory is premised on the notion that SCE is trying to escape liability for negligence. But SCE is not seeking to escape liability. Instead, it is Andrade who is seeking to escape liability for paying its electric bill. As explained above, SCE is seeking payment for energy service that Andrade used, but remains unpaid. In other words, Andrade owes SCE a debt for payment of the energy Andrade used, and SCE merely seeks compensation for the debt owed. Rule 17 is a bill-adjustment/debt-collection provision, not a limitation-of-liability provision. Furthermore, it strains legal reasoning, logic, and common sense to conclude that Andrade will incur damages by paying a debt owed, simply because SCE sent Andrade a retroactive bill covering a three-year period. Andrade cannot identify (nor has tried to identify any specific contractual or statutory billing obligations that SCE has breached or violated. Indeed, the billing obligations contained in SCE s (contractual tariffs, and billing-related (statutory provisions contained in relevant California statutes demonstrate that there is nothing wrongful about SCE s retroactive bill. (i SCE s Tariffs Are Contracts That Authorize The Bill Adjustment And Debt Collection. Utility tariffs in essence become the contract for service between the utility and the customer. See Waters v. Pacific Telephone Company, 12 Cal. 3d 1 (1974 (tariff schedules become the contract between the utility and its customers. As explained above, Rule 17 a contract between SCE and Andrade expressly provides that SCE can retroactively bill for a 2 As previously explained in SCE s Opening Brief, Andrade s claim that it cannot pass through its energy costs is also dubious. There is no reason why Andrade cannot pass through its energy costs to its customers once paid, if that is what it wishes to do, just as it presumably does for the energy costs it presently is incurring. - 5 -

time-period covering three years to obtain full compensation for electric service provided to Andrade. In addition, Rule 9.A.2 provides that while SCE will normally bill charges monthly, SCE may render bills more or less frequently at the option of SCE. See Attachment B, Rule 9 (emphasis added. These contractual terms are binding upon Andrade as a matter of law, and Andrade cannot object to them. (ii SCE s Rule 17 Tariff Is Consistent With And Derivative Of Statutory Law Setting Three-Year Limitations Period Concerning Utility Charges. In addition, SCE s Rule 17 three-year limitations period for retroactive billing is consistent with and derivative of California statutory law concerning the collection of a utility bill. In Re Retroactive Billing (D.86-06-035, the Commission considered the appropriate length of a limitations period for retroactive billing. In adopting a three-year limitations period under Rule 17, the Commission noted that there are several statutes that provide a three-year limitations period in analogous billing-dispute situations. Section 736, for example, sets a limitation of three years for a customer to file any action to recover overcharges. See Public Util. Code Section 736. More on point, Section 737 also sets a three-year limitations period for a utility to file an action for the collection of lawful tariff charges. See Public Util. Code Section 737. Referring to these code sections, the Commission determined that because billing for commercial customers is usually more complex and involves larger amounts of money, [the Commission] will continue to permit backbilling for commercial customers for three years. See Re Retroactive Billing, D.86-06-035, 21 CPUC 2d 270 (1986 (emphasis added. Andrade s assertion that Rule 17 violates public policy is incorrect. Rule 17 is entirely consistent with, and indeed, derivative of California public policy, as provided in Public Util. Code Sections 736 and 737. - 6 -

b Even If Rule 17 Is A Limitation-of-Liability Provision And SCE Is Seeking To Relieve Itself Of Liability For Negligence, SCE Is Not Doing So For Active Negligence. Citing Caza Drilling (California, Inc. v. Teg Oil & Gas U.S.A., Inc., 142 Cal. App. 4 th 453 (2006, Andrade further contends in a substantial portion of its Opening Brief that SCE cannot limit itself of liability for so-called active negligence, because Rule 17 does not refer to the term negligence or contain unequivocal language precluding such liability. (Andrade s Opening Brief at 5-7. Rule 17 is not a limitation-of-liability provision for the reasons explained above. SCE is adjusting a bill/collecting a debt, not limiting its liability for negligence. But even if Rule 17 could be construed in that way, it properly limits any liability SCE may have in this matter. Caza Drilling also provides that a contractual provision that generally limits liability shields a party for passive negligence. Caza Drilling, 142 Cal. App. 4 th at 467. Andrade characterizes SCE's installation of the meters as the active negligence in this matter. But Andrade s characterization of SCE s meter installation as active negligence is not tenable. If SCE was negligent, if at all, SCE s negligence was passive, because upon the installation of the meters, SCE did not complete an inspection or test to determine whether the meters were crossed. (Stipulated Fact No. 10. As provided in Andrade s own brief, such a failure/omission of an act constitutes passive negligence, not active negligence. (Andrade s Opening Brief at 7. Under Caza Drilling, Rule 17 properly limits SCE for such passive negligence, if it even occurred. III. CONCLUSION For the foregoing reasons, the Commission should dismiss Andrade s complaint. SCE was authorized under its Rule 17 tariff, to render an adjusted bill to Andrade for the amount of undercharges resulting from the crossed meters, not exceeding three years. - 7 -

Respectfully submitted, MICHAEL D. MONTOYA WALKER A. MATTHEWS, III /S/ By: Walker A. Matthews, III Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY Dated: October 31, 2007 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 Telephone: (626 302-6879 Facsimile: (626 302-3990 - 8 -

CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E PREHEARING REPLY BRIEF on all parties identified on the attached service list(s. Service was effected by one or more means indicated below: Transmitting the copies via e-mail to all parties who have provided an e-mail address. First class mail will be used if electronic service cannot be effectuated. Executed this 31 st day of October, 2007, at Rosemead, California. /S/ Napa Utrapiromsuk Case Analyst SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 #1423412

C.07-05-014 Wednesday, October 31, 2007 RICHARD B. ANDRADE ANDRADE AND ASSOCIATES 27101 PUERTA REAL, SUITE 120 MISSION VIEJO, CA 92691-8518 C.07-05-014 WALKER A. MATTHEWS, III SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVENUE, ROOM 390 ROSEMEAD, CA 91770 C.07-05-014 Sarah R Thomas CALIF PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE ROOM 5105 SAN FRANCISCO, CA 94102-3214 C.07-05-014 Page 1 of 1