*1 Nо. 24418. Mar. [S.F. 1983.] CORY, Controller, Petitioner,
KENNETH as State al., PUBLIC UTILITIES COMMISSION et Respondents; COMPANY, PACIFIC TELEPHONE AND TELEGRAPH Real Interest. Party
523 Counsel
George General, Deukmejian, Attorney C. Yeoryios At- Apallas, Deputy General, torney for Petitioner. Kerr,
Janice E. Hector Anninos and Suzanne Engelberg Respondents. Robert V. R. James S. Dalenberg, Hamasaki and Bruce A. for Real Ramsey Party Interest.
Opinion BROUSSARD, C. J. Acting we review Decision proceeding No. 93896 of the Public Utilities Commission as modified. decision рrovides that unclaimed refunds by Pacific payable Telephone Telegraph Company (Pacific) shall be distributed rata to its current pro customers. Kenneth Cory, the Controller California, of the State of claims that the funds should be unpaid to the state paid under the Proc., (Code Law.1 Civ. 1500 § et We seq.) agree.
After a series of decisions to the treatment relating of accelerated deprecia- tion in the calculation of income tax for rate expense making (City of Los v. Public Angeles Utilities Com. (1975) 15 Cal.3d 680 Cal.Rptr. [125 controversy stating
1Pacific disclaims interest in the it is a stakeholder.
524 1371]; 542 P.2d City Los v. Public Angeles Utilities Commission 7 Cal.3d 331 785]; P.2d Cal.Rptr. Fran City County San cisco v. Public Utilities Com. (1971) Cal.3d P.2d 798]), the commission ordered Pacific to refund to overcollections ratepayers million. The refunds to the customers were calculated *3 on the basis of prior from usage August 1974 to 1980 with current February customers receiving credits current against bills and former customers receiv ing checks.
After of the refund completion Pacific to the that plan, commission reported $6 million was undeliverable either been because checks had returned undelivered or not checks had been cashed.
A $5 little more than million of the refunds were not because checks paid were returned undelivered. In the decision now review the under commission found that аn “[Refunding amount to all is the ex- equal customers most and least peditious method costly an amount of this small refunding relatively ” The magnitude. commission $5 directed Pacific to credit the million to the ac- counts of current customers on a rata basis.2 pro the
Over the years, Legislature has dealt with refunds and refunds that utility are unclaimed in different In 1915 when it the Public Utilities ways. adopted Act, 68, it section (d) subdivision that refunds be provided rate must paid the customers paid who and that unclaimed amounts would overcharges 1915, 91, 1933, (Stats. escheat to the In 162-163.) state. ch. pp.
amended 68 section that for retaining requirement refunds overcharges them, to the who (Stats. customers but paid paid escheat deleting provision. 1933, 1159-1160; ch. see Market St. v. Railroad Commission Ry. Co. pp. (1946) 28 Cal.2d 369-371
In the Legislature a version of the Uniform passed Disposition (Stats. Unclaimed Act. ch. While Property the uniform act refunds, included specifically unclaimed the version enacted California did not. The California version excluded from the definition utilities original $6 2In its order the commission directed that about million be credited to the accounts of current but it subsequently rehearing customers modified the million on amount to about equal delete an to the amount delivered but uncashed an amount due to customers checks and recently who were located. During pendency proceedings, of these additional had reported Pacific been located drafts had been some been whose returned undelivered and that customers had outstanding unable to cash checks the checks are out-of-date banks. Pacific because deemed petitioned has modify permit newly the commission to its decision to located payment replace customers and to the out-of-date checks. much provides crediting decision under review also balance of another unpaid smaller refund. of a business association. Utilities were therefore excluded from most provi- sions of the law. California Law Revision Commission recommended changes law. One of the recommendations was that the utility exemption
should be narrowed so that utilities would be from only regulated exempt Law. The commission was concerned that unregulated utilities could unclaimed keep refunds whereas other of businesses could types not keep but were to turn it over to the state. In required connection, the commission said that unclaimed refunds should enure to the benefit of the rather than the ratepayers utility shareholders.
In the Legislature the Law Revision Commission’s adopted position. The Legislature associations, included utilities in the definition of business in effect providing unless expressly utilities were to the Un- exempt, subject claimed (Code Proc., Law. Property Civ. (c).) subd. It an ex- adopted § in press exemption Code of Civil Procedure section 1502 of which property would be taken into account the Public similar by Utilities Commission or a state or federal in agency rates for the setting (Stats. benefit of ratepayers. ch. 740.)3 Legislature removed the from the utility exemption Law, Property deleting in Code of provision Civil Procedure section subdivision (b) which had previously unclaimed exempted taken into property account the Public by Utilities Commission (See in rates. fn. Utilities setting remained included within the Thus, definition of business associations. all utilities were to subject the Unclaimed Law. Property on the
Relying comments, 1967 Law Revision Commission the Public Utilities Commission claims that the Unclаimed Law does not apply the unclaimed refunds in the instant case because of the statement that such refunds should enure to the However, benefit of in ratepayers. 1976, without associations, utilities from the excluding definition of business repealed recommended provision in 1967 the Law Revision by Commission which had exempted used in calculation of property utility rates. theBy repeal, its intent to abandon the Legislature manifested statutory provision the Law Revision reflecting Commission’s recommenda- tion. “(b) 3Code of Civil Procedure section 1502 provided: Except payable telegraphic sums on orders, money chapter apply does not property utility held which is of a type that the Public Utilities Commission public agency of this state or a similar of another state or of the directly United indirectly States or takes into consideration for thе benefit of the ratepayers
determining charged by utility.’’ the rates to be in the Unclaimed Property There no being utility exemption presently over- Law, refunds of its are broad to sufficiently encompass provisions under Procedure 1510 set forth the conditions collections. Code Civil section are listed of property will escheat state. specific types property 1513-1528. Among property in Code of Civil Procedure sections types checks, (§ 1513), money on travelers covered are bank sums deposits payable (§ 1514), 1513), of safe (§ orders and other instruments contents deposits 1515), on dividends (§ monies insurance corporate payable policies (§ 1516). “(a) All tangible per-
Code of Civil Procedure section 1518 provides part: and, all intangible located in this to Section sonal state subject or intangible or increment on such tangible the incоme personal property, another escheats held in a for the benefit of fiduciary person capacity property, distributable, not, owner has if after or to this state it becomes payable or decreased the principal, accepted within a of seven increased period years, income, concerning prop- or in writing payment principal corresponded or other a memorandum or otherwise indicated an interest as evidenced erty, (Italics added.) record on file with the fiduciary.” *5 located Section 1520 of that code “All tangible personal property provides: and, 1510, ex- to property, this state Section all subject intangible personal 1513, 1514, 1515, 1511, of classes mentioned in Sections cept 1518, 1516, 1517, increment thereon and income or any including or in the course ordinary lawful that is held deducting any charges, owing for more the owner by of the holder’s business and has remained unclaimed state, to this after it became or distributable escheats than seven years payable section, which are ‘lawful means charges For of this purposes charges’ [f] Law, or statute, authorized other than the Unclaimed by specifically valid, enforceable contract.” come within the provi- checks We need not decide whether the unclaimed not, the catchall provi- come within 1518. If do would they they sions of section of section 1510 of section 1520. It is not claimed that the provisions sions in the ordinary are owing are refunds of overcollections inapplicable (See Cory Northern course of Pacific’s business. Blue Cross California for un- [money (1981) 735-736 Cal.Rptr. Cal.App.3d 901] checks].) cashed medical benefit 453.5 it is Utilities Code section
The commission claims that under Public as a and that to current customers authorized to refunds pay over the section takes precedence statute with refunds utility specific dealing statutes. escheat commission “Whenever Code section 453.5 provides:
Public Utilities distributed, public commission shall require rate refunds to be orders and, to customers, when practicable, all current utility refunds to utilities pay or whether as to customers, without regаrd on an rata basis equitable pro prior landlord, tenant, or commercial is classifiable as a residential not the customer business, industrial, educational, agri- homeowner, nonprofit, governmental, of this section cultural, For entity, or other type [f] originally paid to the amount rata basis’ shall mean in pro proportion ‘equitable involved, utility amount of such service or proportion for the received, the сommis- in this section shall prevent actually Nothing service [f] to be and other small from refunds residential authorizing sion 1977, ch. (Stats. in 1977. Section 453.5 was enacted based on current usage.” Assn. v. 453.5 in We considered section Mfrs. California Pursuant to P.2d Com. Cal.3d 836 836]. from their Commission, rebates utilities received orders of the Federal Power and the com- in earlier years, natural for overcharges interstate gas suppliers The gas account. balanсing the rebates to the utilities’ gas mission applied which might or losses accounts are used to excessive balancing profits prevent costs may and the actual rates are based on estimated costs gas arise because reflect the differences Rates in the near future are then adjusted vary widely. had who paid Some users large in the estimated and actual costs of the utilities. conservation instituted on thе and who had since rates based overcharges accounts to to balancing measures would be the rebates prejudiced applying We usage. future rather than to refund them on the basis past reduce rates account improper held that of the rebates to the balancing application 453.5. with section that the rebates should be distributed in accordance *6 “ by ‘distributed’ Where the section ‘refunds’ which are ordered applies, formula; present statutory be according commission must allocated the basis on users) must be customers for small residential compensated (except and, where practical, to which the refund usage their prior corresponds, of the overcharges to the extent customers must also prior participate 842; The court italics in (24 original.) Cal.3d at they previously paid.” p. “to the cоmmission that refunds of rebates are ordered by reasoned and ap- thereby dividing whenever it directs their final ‘distributed’ disposition, the “general noted that (24 them.” Cal.3d at We also p. portioning accor- in strict and customers feasibility reimbursing many prior] [present refund plans.” by past their actual is demonstrated dance with overpayments 848-849; in (24 original.) Cal.3d at italics un- to order pay not authorize the commission’s
Section 453.5 does orders; it refund The section authorizes refunds to current customers. claimed does not deal with unclaimed The words “when ob- property. practicable” mean that the shall it viously commission determine whether is to practicable refund to customers. It determined that it to prior refund to practicable when it ordered in prior the refunds. As stated California Mfrs. Com., 848, Assn. v. 24 Cal.3d the commission supra, orders the refunds to be distributed “whenever it their final directs disposition and them.” thereby dividing There is in the section in- apportioning nothing that the commission dicating ordered the refunds is authorized to subse- having customers, of unlocated quently repudiate property former declare a rights forfeiture, and for provide windfall current customers who have already received the full refund to which are entitled under section 453.5. they
While the dealt with and Legislature both refunds unclaimed re- originally law, funds in the utilities it dealt in the public with refunds Public subsequently and Utilities Code unclaimed in held utilities the Unclaimed property by The Law. Property discussed above clear. The statutory history is first for utilities, escheat of provided held next property provided for total from the exemption escheat statute of all held by unclaimed property utilities, then if the would be taken into provided only exemption property rates, considerаtion calculation re- regulatory agency finally the limited intent un- pealed exemption. history The reflects a legislative claimed held come by utilities should within the property Property and, Law under Code of Civil Procedure sections 1518 and that un- claimed refunds should within come the law. of the Unclaimed to Law are unknown Property
owners them by locating their restoring state the property give benefit of the use of it. Co. v. 58 Cal.2d (Dоuglas Cranston Aircraft 374 P.2d 98 A.L.R.2d Controller states that during last few his the true owners have years efforts locate been successful to them of the returning property percent him. turned over to The commission is not authorized to forfeit the refunds of customers, the unlocated and the for the benefit of should be held property unlocated customers and for with the Un the use state in accordance Law. claimed There no morе the unclaimed rate is reason allocate refunds to current be for a bank to customers than there would telephone allocate unclaimed to its current customers.
The is decision annulled. J., Newsom, Mosk, J., Richardson, J., Rouse, J.,* J.,* Kaus, con and curred.
*Assigned by Acting the Judicial Council. Chairperson the
529 its decision almost REYNOSO, J. dissent. The bases majority respectfully I 1500 et section its construction of Code of Civil Procedure exclusivеly upon history (UPL). It draws a careful Law seq., Consequently, and it but in a virtual vacuum. legislation analyzes closely The Public Utilities arrives at a reasonable result. but majority unpersuasive view, in (Commission), designing in acted within its Commission my power (Pacific) Pacific and Company’s plan protected Telephone Telegraph customers. a constitu-
The state as Commission stands alone nearly among agencies is to whose mandate tiоnally multifunctioned independent, body empowered, 38 So.Cal.L.Rev. (See (1965) Comment represent public good. 144.) when it of Commission range power codified “every authorized it to “do all and convenient” in things necessary regulating Code, 701.) of the Com- (Pub. in the State.” Util. The extent public § exert virtual- mission’s evinces the concern that utilities authority Legislature’s close control over and therefore ly necessary require services mоnopolistic In- Community and the Regulation Public Utilities monitoring. (Arnebergh, terest (1957) 30 So.Cal.L.Rev. court has construed Consistently, this likewise, duties, intent functions and Legislature’s the Commission’s finding v. (Consumers to be far Public powers reaching. Lobby Against Monopolies (1979) 41]; Utilities 25 P.2d Com. Cal.3d 603 Cal.Rptr. [160 Court People Superior (1965) 62 Cal.2d Cal.Rptr. then, discretion,
P.2d Constitu- 385].) The Commission’s in the broad is rooted tion and scheme affirmed court. legislative which has been this
The Commission has been with its factual find- authority: vested particular final; will its be but this ings only presumed legal findings may appealed, Code, (Pub. court. Util. review we can overrule 1756.) Our is limited in that § a Commission’s of law if constitutional finding it violates only petitioner’s (Pub. Code, relation right 1757) Util. or “fails to bear a reasonable § Lines, Public statutory (Greyhound Inc. v. Utilities language.” 406,410 97,438 Com. 68 Cal.2d This limited P.2d review, with Code sec- power the clear mandate coupled tion 701 the Commission wide giving discretionary powers regulate public utilities, Here the Con- to the heart in the case. goes controversy instant troller before has the substantial burden of error Commission’s showing court can Controller set aside Commission’s fails. properly procedure.
All Pacific to re- that the initial order parties agree Commission’s requiring fund between 1974 million to its customers who received services nearly with Public Utilities Code section 453.5. Current complied who were customers received their refund during those years simply form of refunds in a credit. Pacific tried to locate former customers and gave
the form of drafts. Those who remain unreimbursed former are customers Pacific unable to locate. some of since those have Apparently, persons died, address, moved elsewhere without a or moved into leaving forwarding other households. There is in the record to indiсate a lack of nothing diligence or on good faith Pacific’s part.
Having acknowledged Commission’s broad we now its authority, analyze of section reading 453.3. The was added order to provision identify proper recipients refunds on are based utility overcharges: be reimbursed as as fairly Section 453.5 all current possible. protects customers and former case, customers when In the instant practicable. Commissiоn found that the had been requirement sastified Pacific’s efforts proposed second distribution to current customers when Pacific only that more reported than million remained undistributed. The Commission’s of section reading case, 453.5 is not only in this but it is possible reading reasonable.
The Controller argues that the UPL the interests absent protects prop- I erty owners. agree. Controller Further insists that the UPL and reading section 453.5 must state, result in thе unclaimed monies escheated to being because utility refunds are no from the UPL. In for longer exempt arguing ap- 453.5, hand, of section plication on the other the Commission that *9 is, the Commission which Pacific’s customers were that whether overcharged; overcharges abused its which includes all a second credit power ordering will benefit have a direct relationship customers. Current customers present Pacific, itself, class, have none. whereas as a and the state general taxpayers is the that that section 453.5 intends to Consequently, group group protect benefit Commission’s would from the plan. we add a The Controller contends that
Finally, observation. purely practical each) (of current customers stand to 65 cents a windfall gain However, never the absent with utilities there is receiving customers’ refunds. an exact correlation between and services. Customers regularly pay payments for utility years. which will not be available for improvements
I am A dif- discretion is boundless. unwilling that Commission’s argue If, situation, ferent or a a different result. different factual could mandate plan, $10,000 little were owed each customer there is example, question Commission to the UPL would be an abuse discretion. plan contrary reasonable, us, however, record before Commission’s presents picture Pacific customers. systematic fashioned to current and approach past Our when within its duty ends we determine that the Commission operated broad discretionary power. benefit Pacific’s Commission chose a designed procedure I
customers. believe it has under the operated requirements Therefore, Code section 453.5 I believe the and within the of the UPL. goals Commission’s should be affirmed. plan notes statutes, statutes specific control general (Cohn which is rule. ordinarily (1920) Isensee Cal.App. P. Both statutes deal with the of funds disposition not in the hands owner. The of each rightful purpose is consumer protection. Given this common court har- ground, ought monize the statutes (Long Beach City School Dist. v. 219 Cal. Payne 598, 605 P.2d 663]), which the fails to do. majority statutory Harmonizing to be provisions appear antagonistic a look аt the requires purpose each scheme. Here statutory we must the Commission’s begin by recognizing broad powers regulate use and customers. Then we must telephone ask whether the Commission has or abused its violated the UPL. power First, a careful of the UPL shows that is to reading primary purpose prevent windfalls to holders of unclaimed are not Here who owners. property rightful windfall, Pacific is the holder of the It stands to no рroperty. gain however, Therefore, because it is no interest in asserting keeping money. the Commission’s does not plan evade this UPL purpose. important Second, the UPL authorizes the unclaimed to inure to the state effect, safe until the rightful owner claims it. the state uses the keeping money, knowing no more than 50 of the absent owners historically percent ever claim their at ante property. (Majority opn., question becomes whether the is state of a of monies recipient portion appropriate