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Dissonant Voices Turn Up Volume, Payback on CPUC

March 23, 2009
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Dissenting voices both within and outside the state regulatory process got considerably louder recently regarding actions by the California Public Utilities Commission (CPUC) with several billion dollars of impact -- a rate case for Southern California Edison Co. (SCE) and an upgrade of the transition to advanced metering for Pacific Gas and Electric Co. (PG&E). Ironically, at this same meeting the CPUC approved nearly $400,000 in compensation to consumer groups and individuals for contributions they have made in past regulatory cases.

Those awards are the latest indication that the now three-decade-old practice of reimbursing consumers and consumer organizations for their contributions to various regulatory cases is still a thriving business in the state, totaling more than $3.7 million awarded by the CPUC last year.

Dating back to the late 1970s with CPUC and state Supreme Court actions following the concept of "intervenor funding" being developed in the 1978 federal Public Utility Regulatory Policies Act (PURPA), California's program subsequently has been embedded firmly in state law and state regulatory policy.

Basically, it says that legitimate consumer organizations or individuals can apply for and get reimbursement for legal and other expenses they incur in cases where the CPUC determines that they provided a "substantial contribution" to the final outcome of the case. The private-sector utilities involved in the case then pay the awards with shareholder -- not ratepayer -- funds.

At the March 12 CPUC meeting, The Utility Reform Network (TURN), a long-time San Francisco-based utility consumer watchdog group, blasted the state regulators' decision on the Edison rate case, alleging that it will cost ratepayers more than $2 billion during the next three years while a regulatory administrative law judge in the case had recommended a much smaller increase, which TURN estimates as $132 million.

Also that day in separate action, the state regulatory commission approved a $96,715 award to TURN for its contribution in another SCE case in which the Rosemead, CA-based utility is being penalized for misreporting consumer program results in previous years to gain incentive rewards from the CPUC. TURN had asked for $107,491 in so-called "intervenor funding" to recover its costs of being a party in the Edison utility case, but the CPUC decided the consumer group was only due the $96,715 award.

Nevertheless, another five groups and individuals won similar awards for helping save consumers money in other energy cases before the CPUC. An agriculture consumer organization, Aglet Consumer Alliance, won two awards ($99,194 and $32,182) for its contributions in separate cases involving all of the major energy utilities, one being the long-term procurement plan proceeding for the major power utilities.

TURN and another long-standing utility consumer group, San Diego-based Utility Consumers' Action Network (UCAN), among others, have collected millions of dollars from the intervenor funding program over the past three decades. Other groups and individuals, some more narrowly focused nonprofits, also participate in the program.

Usually active in 70 to 90 CPUC energy and telecommunications cases in any given year, TURN received about $2.3 million in intervenor awards for its most recent fiscal year for which it has complete records (July 2007-July 2008), a San Francisco-based spokesperson for the organization told NGI last Wednesday. "We don't ask for intervenor compensation on every case on which we work," the TURN spokesperson said.

Intervenor funding, which is based on various hourly attorney fees applied to particular cases, makes up the majority of TURN's annual operating budget -- from 60% to 70% -- according to the spokesperson. The number of attorneys from the group billing for hours on a particular case will vary. Overall, the utility consumer organization that established it reputation in the 1960s opposing San Francisco-based PG&E in various rate cases, now employs six full-time energy attorneys, full- and part-time telecommunications attorneys, and a telecommunications research director.

CPUC statistics show that 63 awards in 2008 were divided among 20 groups and individuals with the vast majority going to four organizations -- TURN; UCAN; an agriculture consumer organization, Aglet Consumer Alliance; and the Natural Resources Defense Council, which collectively received 46 of the awards. TURN led the way with 28, all of which except two involved one or more of the major energy utilities.

Of the $3.7 million awarded last year, TURN garnered nearly half of the money, about $1.7 million from a rough total of the list of awards supplied to NGI by the CPUC.

Separately, the CPUC's own independent consumer unit, the Division of Ratepayer Advocates (DRA), has been active in all of the major cases as a general people's advocate paid for as part of the state budget for the CPUC. DRA was loudly critical of the state regulatory commissioners for the PG&E metering and SCE rate case decisions.

Criticizing PG&E for changing its technology halfway through its deployment of more than 10 million smart natural gas and electricity meters, DRA complained that the combination utility's customers now will pay more than $2 billion for the advanced metering systems.

While the regulators approved an added $467 million for the upgraded meter technology, the DRA had argued that PG&E should get no more than $411 million, noting that the utility should have to swallow the added costs related to its own alleged inefficiencies that come with switching technologies.

"Smart meters will provide benefits to customers, but they are not cost-effective if customers have to pay twice," said DRA deputy director David Ashuckian. "During these difficult economic times the CPUC should not impose unwarranted rate increases."

DRA argued that both the PG&E meter decision and the SCE rate case set bad precedents, particularly in the current troubled economic times facing the state and nation.

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