Opinion ID: 726753
Heading Depth: 4
Heading Rank: 1

Heading: Legislature

Text: 11 California's legislature has clearly articulated and affirmatively expressed a policy of encouraging substantial market penetration of ... compressed natural gas fueled vehicles and of encouraging natural-gas utilities to pursue research, development, and demonstration activities in furtherance of th[at] legislative goal. Cal.Pub.Util.Code § 740.2. As to the specific question of NGV infrastructure, including NGV fueling stations, California's clearest legislative articulation of policy appears in Section 745.5 of the state's Public Utilities Code. 3 In adopting that section, the legislature made the following findings: 12  that the increased use of natural gas as a transportation fuel is desirable; 13  that [a] high quality, reliable, and cost competitive natural gas vehicle ... public fueling infrastructure must be built to sustain a market for natural gas vehicles; 14  that [u]tility participation in the construction and operation of compressed natural gas public refueling stations is needed to promote competition with oil companies and others selling compressed natural gas as a vehicle fuel and to help develop a market for natural gas vehicles; and 15  that [t]here are long-term benefits to natural gas utility ratepayers from the sale of natural gas for use as a transportation fuel, and that it should be the policy of the Public Utilities Commission to support utility natural gas vehicle conversion, maintenance, and fueling demonstration programs. 16 1991 Cal.Stat. Ch. 1204, §§ 1(a), (c), (d), (e). 17 The text of the law itself empowered the CPUC to authorize natural gas utilities to construct and maintain compressed natural gas refueling stations to be owned and operated by the utility, or to be transferred to nonutility operators and, where appropriate, to authorize natural gas utilities to recover through rates, either by expensing or capitalizing, or both, the reasonable costs associated with such fueling-station projects. Cal.Pub.Util.Code § 745.5(a), (d). Section 745.5(e), however, places two limits on the CPUC's power to authorize utilities to engage in fueling-station projects at ratepayer expense. First, the commission cannot allow a utility to pass the costs of fueling stations on to ratepayers unless it finds that the programs are substantially in the ratepayers' long-term interests. More importantly for purposes of this case, the legislature provided that [t]he decision of the commission shall also ensure that natural gas utilities do not unfairly compete with nonutility enterprises. 18 We note that § 745.5 appears to articulate a state policy that exhibits considerable tension between two apparently conflicting goals. On the one hand, the legislature wished to ensure that natural gas utilities do not unfairly compete with nonutilities in building, maintaining, and operating NGV fueling stations. On the other hand, the legislature allowed utilities, with CPUC approval, to recover the costs of such fueling-station activities through rates charged to utility customers, a resource obviously unavailable to potential nonutility competitors in the NGV-infrastructure market. A number of policies that reconcile these conflicting goals suggest themselves, 4 but what is undeniable is that the legislature intended for the CPUC to perform that reconciliation. Section 745.5 speaks entirely in terms of what the commission may authorize and under what conditions. Specifically, § 745.5(d) allows the commission to authorize recovery of costs through rates, and § 745.5(e) directs the commission, in deciding whether to authorize NGV projects and ratepayer funding for them, to ensure that utilities do not compete unfairly with nonutilities. Thus, it appears that the legislature's clearly articulated policy is to have the CPUC balance the need for utility participation in the development of the NGV-infrastructure market and the need for that market to develop into a competitive one. 5 Therefore, we must look to the CPUC's position to determine whether SoCalGas's conduct is part of a clearly articulated and affirmatively expressed ... state policy.