PUC didn’t give adequate notice before eliminating pro-conservation water rates

In Golden State Water Company v. Public Utilities Commission, and the consolidated case of California-American Water Company v. Public Utilities Commission, the Supreme Court today faults the PUC for not giving sufficient notice that it would consider a change to how large water companies charge their customers. The change — which eliminated a rate method that the petitioning water companies said promoted water conservation, but that the PUC claimed could cause surcharges viewed by users as punishing conservation — is nullified.

The court’s unanimous opinion by Justice Leondra Kruger deals with the procedure, not the merits, of the PUC’s decision, but the court does note that “California’s interest in reducing water consumption . . . is particularly acute in an era marked by frequent and sustained periods of drought.”

The PUC’s procedural failing, the court holds, was in not identifying the rate-change issue that was to be considered in a quasi-legislative proceeding. The opinion says, “Identifying the issues under consideration facilitates informed participation — including presentation of arguments and evidence — by those who may have a stake in the resolution of those issues.” The PUC did give notice of some rate issues, but, the court finds, “The connection between” those issues and the action ultimately taken “is simply too attenuated to have given fair notice that the potential elimination of [the water rate method] was within the scope of the proceeding.”

The court also rejected a PUC argument that 2022 legislation — Senate Bill 1469 — mooted the case. The opinion concludes that “[t]he practical difference between the[ ] remedies [given by the Legislature and those sought in the current case] may well be limited, but we consider it ‘enough to save this case from mootness.’ ”

The case is an original proceeding commenced by petitions for writs of review that invoke the Supreme Court’s exclusive jurisdiction of “decisions pertaining solely to water corporations.” (Public Utilities Code section 1756, subdivision (f); see also rule 8.724.)