James Hunter

Wednesday, September 6, 2017

SOL doesn't bring sunshine to you or how did SOL get into CPUC?

SOL is the acronym for Statue of Limitations, this is a short look at SOL and it's misuse, in this blogger's opinion by the utility companies, in California.

Utilities in California primary goal is to charge every penny possible to consumers they "serve!". If they can't charge you in your monthly bill the next best strategy is for them to burden the consumer with as much of the "risk" of doing business as possible. Examples, are the WRAM (Water Revenue Adjustment Mechanism/Modified Cost Balancing Account) and now the SRM (Sales Reconciliation Mechanism). These are some of the ways, the utilities use, to shift risk in doing business to their customers, they also protect the utilities from their own overstated forecasts and protect the utilities profits/revenues, at the customers expense, for the benefit of the shareholders and utilities management.

Buried in the CPUC General Code is a misuse, in this bloggers opinion, of the Statue of Limitations, it's like getting the card in Monopoly that's gets you out of jail, except the utilities have what appears to be perpetually renewing get out of jail card. This means if quasi-monopolistic (no competition) utilities in California seem to believe they have and or are trying to convince CPUC that there should a limit on what their customers can claim, based on actions or errors made by the utility.

This blogger must state for the record he is not an attorney. Having made that clear let's take a look at some of the basis and precedents, that are used or being tried by our utilities, which may be in fact misused.

SOL (California Statue of Limitations):
Statute of Limitations: A fraud (deceit, intentional misrepresentation) lawsuit is required to be filed within three years before plaintiff either discovered facts constituting the fraud or with reasonable diligence could have (should have) discovered those facts, whichever comes first. Sun'n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808; Kline v. Turner (2001) 87 Cal.App.4th 1369, 1374.
The delayed-discovery rule in fraud cases applies and is codified in California Code of Civil Procedure § 338(d):

“Within three years: (d) An action for relief on the ground of fraud or mistake…[is] not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”
“This discovery element [triggering the 3-year statute of limitations time clock] has been interpreted to mean ‘the discovery by the aggrieved party of the fraud or facts that would lead a reasonably prudent person to suspect fraud.’ ” Doe v. Roman Catholic Bishop of Sacramento (2010) 189 Cal.App.4th 1423, 1430.
The California Legal Code is very complex, possibly the reason for California having more lawyers than the Country of Japan. (A small joke) The Code exempts certain crimes, but in fact California seems unique in the US in the very wide application and complexity of SOL.

CPUC SOL (Statue of Limitations):
 The following are excerpts from

California Code, Public Utilities Code

Public Utilities Code - PUC § 210

Any public utility which does, causes to be done, or permits any act, matter, or thing prohibited or declared unlawful, or which omits to do any act, matter, or thing required to be done, either by the Constitution, any law of this State, or any order or decision of the commission, shall be liable to the persons or corporations affected thereby for all loss, damages, or injury caused thereby or resulting therefrom.  If the court finds that the act or omission was wilful, it may, in addition to the actual damages, award exemplary damages.  An action to recover for such loss, damage, or injury may be brought in any court of competent jurisdiction by any corporation or person.

No recovery as provided in this section shall in any manner affect a recovery by the State of the penalties provided in this part or the exercise by the commission of its power to punish for contempt.

I t looks like the a Utility either has committed fraud or intentional deceit or has exhibited incompetence, in doing business. It's not clear to me that an attorney could make a strong case for limiting the period of the overcharges, if the period is more than three years. It looks to me like the plaintiff in an action has a three year limitation to take action, separate from the period for actual where monetary harm may be applicable.

There is also the principal of the "two edge sword":
For the past decade, California’s investor-owned utilities have frequently relied upon the ‘‘duty or obligation to serve’’ as the means for obtaining valuable concessions from the California legislature and Public Utilities Commission. The utilities have exploited this regulatory principle as one of their primary weapons to justify billions of dollars of rate recovery and concessions. It is clear, however, that the duty to serve is not a saber which is only available to the utilities. Rather, the duty to serve is a double-edged sword that might equally be brandished by ratepayers. Peter W. Hanschen and Gordon P. Erspamer
We then have instances of land transfers from the San Jose Water Company, a regulated wholly owned subsidiary, of SJW Corporation. The SJW is a publicly traded company, to the SJW Land Company. In one of the instances of a transfer of property from SJWC was made to SJW Land Company, with a value of about $42,000 and to this bloggers surprise, SJW Land Company sold the property 5-6 months later for more than $4.2 million dollars. Which this blogger feels that the transfer price cost the customers of SJWC over $4 million dollars that should have been applied to infrastructure or other costs that then had to be paid by customer rate increases. There is also the question did the transfer reduce or eliminate taxes normally owed on a sale by San Jose Water Company, to the city of San Jose, the State of California or Federal taxes? Then we need to also consider that an intra-corporate transfer between a regulated subsidiary and an unregulated subsidiary may have distorted the financial reports required by the SEC (Security & Exchange Commission.

This blogger would like to thank WRATES for their efforts in researching the transaction noted above, as well as others. For those of who are interested can access the information under:

APN# 529-31-041 - SJWC first transfers property to SJW Land. Then within 5 months SWJ Land sells to Sienna Oaks.
2005 Recorded Land Value when transferred to SJW Land - $45,228
2006 Recorded Land Value when sold to Sienna Oaks - $4,200,000
Sienna Oaks subdivided property to APN# 529-31-009, 100, 101, 102
This blogger hopes that a careful look will be taken, by appropriate agencies,  to determine, if we as customers and ratepayers need be concerned about this transaction and if it benefited, at the customer's expense, other parties.

What can you do:
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