BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 1165 - Wright Hearing Date:
April 24, 2012 S
As Amended: March 27, 2012 FISCAL B
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DESCRIPTION
Current law authorizes an "intervenor compensation" program by
which customer participants in cases before the California
Public Utilities Commission (CPUC) may be paid from utility
rates for their reasonable costs of participation if the CPUC
finds the participant substantially contributed to the
commission's decision and the participant could not otherwise
afford to take part without significant financial hardship.
Current law provides that a customer eligible for intervenor
compensation includes an individual utility customer, an
authorized representative of any utility customer, or of a group
authorized by its articles of incorporation or bylaws to
represent residential utility customers.
Current law provides that a customer eligible for intervenor
compensation does not include any state, federal, or local
government agency or any entity that was established or formed
by a local government entity for the purpose of participating in
a commission proceeding.
This bill would make a school district, county office of
education, or community college district eligible for intervenor
compensation.
BACKGROUND
The PUC's intervenor compensation program is designed to
encourage and enable wide customer participation in CPUC
proceedings and to provide compensation with ratepayer funds for
the contribution of participants from which others derive
benefits, such as a decision adopting lower rates. The total
amount of CPUC intervenor compensation awards is relatively
small compared to the billions collected in utility rates -
about $8.7 million in 2009, $3.7 million in 2010, and $4.5
million in 2011. Total awards for each year to individual
customers and organizations are set forth in Attachment A,
showing that The Utility Reform Network (TURN) receives the most
by far, more than half the total award in 2010 and 2011.
Started with Rate Cases - The program began in the early 1980s
to allow intervenor compensation in electrical, gas, telephone,
or water proceedings where the purpose of the participation was
to modify or influence a rate. SB 4 (Montoya, 1982) codified
the program, defining the customers eligible for awards and
specifying the criteria the CPUC must consider to determine if
an eligible applicant is entitled to an award - substantial
contribution and significant financial hardship. Making an
entity eligible for the program is no guarantee the CPUC will
award compensation in any given proceeding.
The program started with utility rate cases because of the
complex and lengthy proceedings that involve the CPUC acting
much like a court, relying on judges, attorneys, and expert
witnesses before making decisions. The cases involve public
hearings with written and oral testimony, cross examination,
opening and reply briefs, draft decisions with comments from
parties, and ultimately a final decision.
Participation is complicated, time consuming and expensive.
Utilities are able to fully participate in these cases and
recover their costs in rates. The CPUC's Division of Ratepayer
Advocates is directed by statute to represent customer interests
in virtually all CPUC proceedings involving electricity, natural
gas, telecommunications, and water. Residential customer
interests are represented by individual customers or
organizations who regularly participate in proceedings, such as
TURN representing residential utility customers.
Under the intervenor compensation, customers who couldn't
otherwise afford to participate without "significant financial
hardship" and who have made a substantial contribution to the
case, as determined by the CPUC, are eligible to have their
reasonable expenses covered, including attorneys fees and expert
witness fees. Any award made is paid by the public utility that
is the subject of the proceeding. For utilities subject to
traditional cost-of-service ratemaking (e.g. the electric
utilities), the expense of the intervenor compensation program
is recoverable from ratepayers. Where the utility is subject to
price-cap regulation, or where prices aren't regulated (e.g.
telecommunications utilities) the utility must manage the cost
of the program.
Expanded to All Utility Proceedings - Statutory changes in 1992
authorized intervenor compensation in any utility proceeding,
rather than just rate cases, with the award to be paid
proportionately by ratepayer funds from participating utilities.
Thus, an eligible customer could seek an award for
participation in a rulemaking or investigation for the CPUC to
adopt requirements for utilities to adopt energy efficiency
programs or to award funds to subsidize solar and other
renewable energy investments.
Government Agencies Not Eligible - The statute governing
intervenor compensation defines an eligible customer as not
including any state, federal, or local government agency, any
public utility, or any entity formed by a local government
agency for the purpose of participating in a CPUC proceeding.
This exclusion is premised on the fact that government agencies
are funded with public dollars and have the ability to increases
taxes or fees to fund their activities. Government agencies can
participate as a party in any CPUC proceeding.
Proposal for Education JPA Eligibility - A 1998 CPUC decision
adopted revisions to the intervenor compensation program and
identified proposals for statutory changes, including
authorizing some eligibility for public schools. The CPUC noted
the participation in CPUC proceedings of School Project for
Utility Rate Reduction and Regional Energy Management Coalition
(SPURR/REMAC). SPURR, according to its web site, is a joint
powers authority (JPA) that provides energy management and
regulatory services to nearly 4,000 facilities operated by over
200 public K-12 districts, community colleges, county offices of
education, universities, and other public agencies in
California. The CPUC decision stated:
"We believe that local government public education institutions
are to be encouraged to participate in Commission proceedings
and thereby identify ways to lower the utility-related operating
costs they face. According to SPURR/REMAC, its member
institutions do not have discretion to allocate funds to the
SPURR/REMAC consumer protection efforts, and the current
SPURR/REMAC funding barely covers the costs of administering
members' natural gas aggregation programs. We are convinced
that local government public education institutions are a unique
and important customer, whose views, absent the participation of
SPURR/REMAC, are otherwise absent from our proceedings. We would
support a Legislative amendment to make it clear that local
public education Joint Powers agencies, like SPURR/REMAC, are
customers able to avail themselves of our intervenor
compensation program."
Prior to this bill, no other legislation has proposed amending
the intervenor compensation to implement this recommendation.
Nonetheless, CPUC records indicate SPURR continues to
participate in proceedings, more than 10 years after the 1998
decision without intervenor compensation. No current
information about REMAC was identified.
COMMENTS
1. Author's Purpose . According to the author, K-14 schools
have made significant investments in energy efficiency
upgrades and renewable energy projects statewide pursuant
to programs administered by the CPUC. These programs, and
the schools' investments, are subject to revision in
pending CPUC proceedings, but schools cannot afford to
participate in these proceedings because of drastic cuts to
school budgets in recent years. "Schools should be able to
fully and formally explain their situation and the impact
of potential CPUC rulings, but are financially unable to do
so."
2. Author's Amendment . The current version of the bill
would make any school district, county office of education,
or community college district eligible for intervenor
compensation. The author has indicated an intent to amend
this bill to make any representative of those entities also
eligible. Current law authorizes eligibility for
intervenor compensation for an individual customer, a
representative who has been authorized by a customer, or a
representative of an organization authorized by its
articles of incorporation or bylaws to represent
residential customers or small commercial electric
customers. A question for the author is whether this
representative could be an organization and, if so, whether
an organization established solely for the purpose of CPUC
participation would be eligible. Expansion of this bill to
include organizations representating school districts,
county offices and community college districts, without
limitation, would significantly expand the pool of entities
eligible for award of attorneys' fees with ratepayer funds.
3. Eligibility Does Not Equal Award . Expanding the
universe of entities eligible for an intervenor
compensation does not guarantee those entities will ever
receive an award. Thus, increased intervenor compensation
awards is only a potential result if this bill is enacted.
It is certain, however, that this bill would result in more
applications for awards that the CPUC would be required to
assess based on the substantial contribution and financial
hardship criteria in specific proceedings. These
applications are likely not only in the energy efficiency
policy proceedings that the author cites to, but also in
individual rate cases where a school is a customer. The
impact could be most significant for small utilities and
their ratepayers.
4. Exception to Ineligibility of Government Agencies . If
enacted, this bill would for the first time result in a
government agency being eligible for intervenor
compensation. The author and sponsor argue that school
districts can be distinguished from other government
agencies in that they do not have taxing power or authority
to raise revenue through fees and, therefore, the
justification for excluding government agencies from
eligibility for intervenor compensation awards should not
apply.
On the other hand, school districts have authority to raise
revenue through a parcel tax for any purpose, which many
districts have passed in recent years to fund a variety of
programs. Moreover, school districts have authority to
raise revenue for school construction and facilities
through school bonds. To the extent energy efficiency
measures are incorporated into school facilities, it is
unclear if attorneys' fees connected with school
construction and facilities could include compensation for
participating in CPUC proceedings related to those
facilities investments.
A question for the committee to consider is whether
enacting this bill would lead to other government agencies
seeking eligibility for intervenor compensation, claiming
they also do not have resources for CPUC participation but
are making energy efficiency investments. Given recent
budget cuts at all level of government and widespread
public resistance to tax increases, other government
agencies could argue that they have no prospect of raising
revenue to cover the cost of participating in CPUC
proceedings to protect their energy efficiency investments.
5. Spending by School Groups to Influence Government . A
variety of school-related organizations support this bill.
Many more of the myriad school organizations could
potentially be eligible for intervenor compensation if the
author pursues an amendment to make school representatives
also eligible. According to the Secretary of State,
education groups spent about $37.6 million in 2009-10 to
influence state government. This level of spending
indicates there may be funds available for public schools
to participate in CPUC proceedings without asking
ratepayers to pay for their attorneys and other costs.
6. CPUC Recommendation for Legislation . The author and
sponsor also point to the CPUC's 1998 decision that
recommended legislation to encourage public schools to
participate in CPUC proceedings. However, that decision
recommended public school participation through a joint
powers agency and appeared to be specifically aimed at
SPURR/REMAC, whereas this bill would make any school
district, county office of education, or community college
district eligible.
7. Ratepayer Impact . An award of intervenor compensation
is generally paid by the utility that is the subject of the
proceeding for which an award is made, and the utility is
allowed to recover the full amount of the award in customer
rates within one year of the award. By expanding the
universe of entities eligible for intervenor compensation
awards, this bill increases the potential for customer rate
increases.
POSITIONS
Sponsor:
County School Facilities Consortium
School Energy Coalition
Support:
Coalition for Adequate School Housing
Community College Facility Coalition
San Diego Unified School District
Small School Districts' Association
Oppose:
California Water Association
Jacqueline Kinney
SB 1165 Analysis
Hearing Date: April 24, 2012
Attachment A
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| | |
| CPUC Intervenor Compensation Program Awards | |
| | |
--------------------------------------------------------------------------
|------------------------------+----------+----------+----------+-----------+-|
|Party | 2009 | 2010 | 2011 | | |
| | Awards |Awards | Awards | | |
|------------------------------+----------+----------+----------+-----------+-|
| |$238,039.4| | | | |
|A World Institute for a | 0 | | | | |
|Sustainable Humanity | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Action Town Council | |$102,926.9| | | |
| | | 1| | | |
|------------------------------+----------+----------+----------+-----------+-|
|Aglet Consumer Alliace |$248,799.5|$52,413.00|$31,063.54| | |
| | 9| | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Arthur Mangold |$10,560.00| | | | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|CA Council on Science & | $0.00| | | | |
|Technology | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|CA for Renewable Energy |$87,125.12|$42,746.63|$68,511.48| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Center for Biological |$694,202.7| |$32,120.50| | |
|Diversity | 5 | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Community Environmental |$137,692.6| | $6,165.00| | |
|Council | 5 | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Conservation Groups | | |$32,865.00| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Consumer Federation of |$235,374.3|$14,875.00|$92,853.87| | |
|California | 3 | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Disability Rights Advocates |$600,931.8|$210,807.6|$245,355.6| | |
| | 1 | 5| 2| | |
|------------------------------+----------+----------+----------+-----------+-|
|Environmental Defense Fund | |$17,903.00| | | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Green Power Institute |$193,100.5| |$169,013.5| | |
| | 0 | | 2| | |
|------------------------------+----------+----------+----------+-----------+-|
|Greenlining Institute |$268,370.7|$103,081.1|$112,105.7| | |
| | 1 | 1| 8| | |
|------------------------------+----------+----------+----------+-----------+-|
|Hidden Hills Subunit | |$94,183.33| | | |
|Ratepayers Assn. | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Inland Aquaculture Group, | |$63,619.46| | | |
|L.L.C. | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|L. Jan Reid |$36,577.75|$14.097.93|$50,363.41| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Latino Issues Forum |$14,370.73| | | | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Leona Valley Town Council | | |$10,121.00| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|National Consumer Law Center |$88,431.75| |$59,236.83| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Natural Resources Defense |$62,850.10|$156,685.6|$39,055.49| | |
|Council | | 5| | | |
|------------------------------+----------+----------+----------+-----------+-|
|Pacific Environment | | |$57,557.31| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Protect Agriculture | | |$70,292.36| | |
|Communities Environment | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Rancho Penasquitos Concerned |$461,013.0| | | | |
|Citizens | 0 | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Ratepayers for Affordable |$4,607.34 | | | | |
|Clean Energy | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Robert Sarvey |$14,028.75| | | | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Ruth Henricks | | | $0.00| | |
|------------------------------+----------+----------+----------+-----------+-|
|San Francisco Community Power | |$17,880.91| | | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Surfrider Foundation | |$17,119.64|$285,818.2| | |
| | | | 3| | |
|------------------------------+----------+----------+----------+-----------+-|
|Sustainable Conservation |$33,163.31| |$11,259.50| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|The Mussey Grade Road |$207,446.2|$41,196.75| | | |
|Alliance | 0 | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|The Public Trust Alliance | | |$127,019.2| | |
| | | | 0| | |
|------------------------------+----------+----------+----------+-----------+-|
|The Utility Reform Network |$2,821,642|$2,583,881|$2,603,403| | |
| | .20 | .36| .02| | |
|------------------------------+----------+----------+----------+-----------+-|
|Union of Concerned Scientists |$19,776.37|$48,056.65|$98,159.39| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|Utility Consumers' Action |$2,243,174|$233,406.0|$311,177.4| | |
|Network | .44 | 3| 7| | |
|------------------------------+----------+----------+----------+-----------+-|
|Women's Energy Matters |$63,345.00|$73,292.30| $5,950.00| | |
| | | | | | |
|------------------------------+----------+----------+----------+-----------+-|
|TOTALS |$8,784,623|$3,771,148|$4,508,208| | |
| | .80 | .47| .02| | |
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Source: California Public Utilities Commission, April 19, 2012