BILL ANALYSIS �
AB 995
Page 1
Date of Hearing: April 22, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 995 (Frazier) - As Amended: April 16, 2013
SUBJECT : Public utilities: intervenor fees: customers
SUMMARY : This bill will make changes to the current Intervenor
Compensation Program administered by the California Public
Utilities Commission (PUC). Specifically, this bill :
a)Adds findings and declarations to memorialize the purpose of
intervenor compensation, the source of funds for intervenor
compensation, recognize the consumer advocacy role of the
Division of the Ratepayer Advocates (DRA), and the purpose of
the Division of Ratepayer Advocates.
b)Modifies existing legislative intent language stating that
intervenor compensation shall be administered in a manner that
avoids unproductive or unnecessary participation that
duplicates the participation of similar interests by removing
the phrase "unproductive or unnecessary."
c)Modifies the existing definition of substantial contribution,
which is used to determine whether or not an intervenor is
eligible for compensation, to include that they must promote a
public purpose that "directly benefits other customers."
d)Requires the PUC to adopt rules to verify that entities
representing customers are authorized to represent customers.
e)Limits eligibility for intervenor compensation to those
matters that were not represented by the Division of Ratepayer
Advocates unless the intervenor made a substantial
contribution.
f)Clarifies the PUC's authority to make intervenor compensation
awards to substantial contributions that make a public benefit
to customers.
g)Limits the total amount of funds available for each year for
intervenor compensation to the mean average awards made for
the previous three calendar years.
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h)Requires applicants for intervenor compensation to verify the
individual customer or customer group that the intervenor
represents.
EXISTING LAW
1)Establishes the Division of Ratepayer Advocates (DRA) to
represent and advocate on behalf of the interests of public
utility customers and subscribers within the jurisdiction of
the commission. The goal of the DRA is to obtain the lowest
possible rate for service consistent with reliable and safe
service levels. For revenue allocation and rate design
matters, DRA is required to primarily consider the interests
of residential and small commercial customers. (Public
Utilities Code 309.5)
2)Establishes a budget for the DRA to be paid from the Public
Utilities Commission Utilities Reimbursement Account. (Public
Utilities Code 309.5(f))
3)Authorizes DRA to employ experts necessary to carry out its
functions and requires the PUC to provide personnel and
resources, including attorneys and other legal support, at a
level sufficient to ensure that customer and subscriber
interests are effectively represented in all significant
proceedings. (Public Utilities Code 309.5(c))
4)Establishes a program to compensate reasonable advocate's
fees, reasonable expert witness fees, and other reasonable
costs to public utility customers for participation or
intervention in all formal proceedings of the commission
involving electric, gas, water, and telephone utilities.
(Public Utilities Code 1801)
5)Allows compensation for an intervening customer if the
participant materially supplements, complements, or
contributes to the presentation of another party, including
the commission staff, if the participation makes a substantial
contribution to a commission order or decision and has a
significant financial hardship. (Public Utilities Code 1802.5)
6)Defines a customer eligible for intervenor compensation as a)
a participant representing consumers, customers, or
subscribers of any electrical, gas, telephone, telegraph, or
water corporation that is subject to the jurisdiction of the
commission; b) a representative who has been authorized by a
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customer, or c) a representative of a group or organization
authorized pursuant to its articles of incorporation or bylaws
to represent the interests of residential customers, or to
represent small commercial customers who receive bundled
electric service from an electrical corporation.(Public
Utilities Code 1802(b))
7)Excludes from compensation: representatives of small
commercial customers who receive bundled electric service if
the representative has a conflict arising from prior
representation before the commission or any state, federal, or
local government agency, any publicly owned public utility, or
any entity that, in the commission's opinion, was established
or formed by a local government entity for the purpose of
participating in a commission proceeding. (Public Utilities
Code 1802(c) and 1802.5)
8)Federal Law provides any electric consumer of an affected
electric utility may intervene and participate as a matter of
right in any ratemaking proceeding or other appropriate
regulatory proceeding relating to rates or rate design which
is conducted by a State regulatory authority (with respect to
an electric utility for which it has ratemaking authority) or
by a nonregulated electric utility. (16 USC Sec. 2631)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement. "AB 995 proposes modest but important
reforms to the Intervenor Compensation Program at the CPUC to
ensure that the interests of ratepayers and customers of
regulated entities are properly represented.
"This bill furthers the original intent of the program to
provide compensation to customers, or groups representing
customers, that are lacking sufficient financial resources to
participate in proceedings at the commission. That intent is
based on the "common fund theory": that if participation in a
proceeding results in a rate modification that benefits other
customers, those customers should share in the legal costs and
other reasonable costs of participating. Since the
compensation approved by the Commission comes directly from
other ratepayers, those ratepayers can expect to receive a
benefit for the participation.
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"This bill also ensures that intervenors are not duplicating
the work of others, which provides little benefit to the
commission or to other customers, and also ensures that they
are not duplicating or circumventing the work of the Division
of Ratepayer Advocates, which has an annual budget of $27
million and a staff of over 130 professionals to advocate on
behalf of ratepayer interests at the commission.
"This bill will help to ensure that intervenors participating
on behalf of other customer and ratepayers are compensated for
reasonable fees and costs, without unnecessarily delaying
proceedings or costing ratepayers excessive amounts of money
with no tangible benefit in return."
2)Who qualifies for Intervenor Compensation? The PUC allows
three categories of intervenors to claim funds:
a) A customer who is an actual customer whose self-interest
in the proceeding arises primarily from his/her role as a
customer of the utility and, at the same time, the customer
must represent the broader interests of at least some other
customers.
b) A representative who has been authorized by actual
customers to represent them where a customer or a group of
customers selects a more skilled person to represent the
customer's views in a proceeding.
c) A formally organized group authorized, by its articles
of incorporation or bylaws to represent the interests of
residential customers or small commercial electric
customers. The PUC also allows certain environmental groups
that represent residential customers who have concerns for
the environment to qualify, even if the above requirement
is not specifically met in the articles or bylaws.
The PUC relies on an explanation from the intervenor seeking
compensation to determine whether the intervenor qualifies for
compensation. They also require documents, such as
authorization from the customer, or current articles of
incorporation or bylaws, to support the claimed status.
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Intervenors must provide information on whether they have a
direct economic interest in the proceeding's outcomes and if
another party in the proceeding also represents ratepayers,
how the ratepayers they represent are different from the ones
represented by another party, and why they would not be
adequately represented without your participation.
Intervenors must demonstrate that they have a significant
financial hardship.
3)Division of Ratepayer Advocates Represents Customers . Current
law establishes DRA an independent consumer advocate within
the PUC that advocates solely on behalf of utility ratepayers.
As the only state entity charged with this responsibility, DRA
plays a critical role in ensuring that the customers of
California's electric, gas, water, and communications
utilities are represented at the PUC and in other forums that
affect consumer's utility bills, environmental benefits, and
the reliability and safety of those services. According to
DRA's annual report, in 2012, DRA participated in 176 PUC
proceedings and filed more than 600 pleadings in PUC
proceedings. DRA advocated ratepayers nearly 250 times in 2012
to ensure that the consumer perspective was heard.
Additionally, DRA influenced the outcome of numerous PUC
policies and decisions. Pleadings filed by the DRA included 51
in Communication proceedings, 337 in electricity proceedings,
70 in gas proceedings, and 106 in water proceedings.
4)Where do the Intervenor Compensation Funds Come From ?
Intervenor compensation awards are paid by public utilities
from monies collected from utility ratepayers. Utility rates
are affected by these awards so that utilities can collect any
amounts paid to intervenors. Typically, only a specific
utility is responsible for the payment of intervenor
compensation. That utility will increase its rate to cover
the award. If a proceeding applies to a utility category (for
example, "all Commission-jurisdictional load-serving entities"
or "non-dominant interexchange carriers") rather than a
specific utility, awards of compensation may be paid by the
PUC out of ratepayer fees collected by all utilities.
5)What's the Budget for Intervenor Compensation ? The Intervenor
Compensation Program has no budget. Because the utilities pay
the compensation from funds collected by ratepayers this
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program has not been subjected to budgetary oversight by the
Legislature. The PUC reports that beginning in 2008 the PUC
assigned 2 staff to process claims for compensation. Before
2008 claims were processed by Administrative Law Judges.
The PUC determines the appropriate compensation level for
eligible intervenors and directs the utilities to collect
ratepayer funds and remit payment. From 2002 to 2012 the PUC
has authorized the following:
------------------------------------------------------------
|Calenda| Total | Total $ | Sum of |Sum of lowest |
|r Year | Number | Awarded |highest award | award to a |
| | of | (Calendar | to a single | single |
| |Interveno| Year) | Intervenor | Intervenor |
| | rs | | | |
|-------+---------+------------+--------------+--------------|
| 2002 | 22 | $ | Data not | Data not |
| | | 3,190,536 | available | available |
|-------+---------+------------+--------------+--------------|
| 2003 | 38 | $ | Data not | Data not |
| | | 4,579,727 | available | available |
|-------+---------+------------+--------------+--------------|
| 2004 | 20 | $ | Data not | Data not |
| | | 4,534,479 | available | available |
|-------+---------+------------+--------------+--------------|
| 2005 | 19 | $ | Data not | Data not |
| | | 5,546,566 | available | available |
|-------+---------+------------+--------------+--------------|
| 2006 | 28 | $ | $ 5,205,565 | $ 4,532 |
| | | 9,190,598 | | |
|-------+---------+------------+--------------+--------------|
| 2007 | 24 | $ | $ 2,297,015 | $ 2,538 |
| | | 4,425,371 | | |
|-------+---------+------------+--------------+--------------|
| 2008 | 19 | $ | $ 2,079,417 | $ 1,430 |
| | | 3,669,622 | | |
|-------+---------+------------+--------------+--------------|
| 2009 | 23 | $ | $ 2,821,642 | $ 4,607 |
| | | 8,784,624 | | |
|-------+---------+------------+--------------+--------------|
| 2010 | 19 | $ | $ 2,461,587 | $ 9,563 |
| | | 3,765,879 | | |
|-------+---------+------------+--------------+--------------|
| 2011 | 22 | $ | $ 2,592,144 | $ 5,950 |
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| | | 4,370,226 | | |
|-------+---------+------------+--------------+--------------|
| 2012 | 21 | $ | $ 2,385,636 | $ 1,406 |
| | | 4,664,598 | | |
------------------------------------------------------------
6)Promoting a Public Purpose? The current amendments to AB 995
specifies that ratepayer funded compensation is allowed for
promoting a public purpose. The word "public" is vague and
could be inadvertently construed to expand the use of
intervenor compensation beyond those issues related to
ratepayers.
The author may wish to strike the word "public" from the
amendments proposed in the bill as follows:
Section 1 (uncodified) (d) The intent of the program is to
compensate an intervenor for participation, when his or her
participation promotes a public purpose and benefits other,
nonparticipating ratepayers, and when it presents evidence or
arguments that are separate and distinct from those presented
by the commission's Division of Ratepayer Advocates.
1802 (i) "Substantial contribution" means that, in the
judgment of the commission, the customer's presentation has
substantially assisted the commission in the making of its
order or decision because the order or decision has adopted in
whole or in part one or more factual contentions, legal
contentions, or specific policy or procedural recommendations
presented by the customer and the customer's participation
promoted a public purpose that directly benefits other
customers.
1802.5. Participation by a customer that materially
supplements, complements, or contributes to the presentation
of another party, including the commission staff, may be fully
eligible for compensation if the participation makes a
substantial contribution to a commission order or decision,
consistent with Section 1801.3. Participation that
substantially duplicates the presentation of the Division of
Ratepayer Advocates, or that falls within the scope and
purview of the division, shall not be eligible for
compensation, unless the commission determines that it
provided a substantial contribution to promote a public
purpose that the division did not provide.
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1803(a) (1) The customer's presentation makes a substantial
contribution to the adoption, in whole or in part, of the
commission's order or decision and promotes a public purpose
that benefits other customers.
7)Standards for Verification. AB 995 requires the PUC to adopt
rules, by July 1, 2015, establishing standards to verify that
a "customer" representative is authorized by consumers,
customers, or subscribers of any electrical, gas, telephone,
telegraph, or water corporation to represent their interests.
In order to ensure that the PUC can adopt the rules in the
timeframe contemplated by the author, the author may wish to
amend this provision as follows:
1802.1. In either a new or currently open proceeding, By by
July 1, 2015, the commission shall adopt rules establishing
standards to verify that a "customer" representative is
authorized by consumers, customers, or subscribers of any
electrical, gas, telephone, telegraph, or water corporation to
represent their interests.
8)The Cap Creates Uncertainty for Intervenors. The Utility
Reform Network (TURN) expresses concern that many proceedings
at the PUC involve several years of efforts and that the PUC
can takes months of deliberations before it makes a final
award determination. There may also be situations where the
volume of proceedings is larger than normal or involve a
greater level of complexity. TURN also suggests the proposed
cap on spending would adversely impact organizations like TURN
who might not have payments from past years efforts that could
be impact receiving full compensation.
The author may wish to amend the bill to provide the PUC with
some level of flexibility in situations where the claimant is
seeking compensation for several years of efforts as follows:
1803(b) The total amount the commission may annually award for
intervenor compensation shall not exceed the mean average of
awards for the previous three calendar years. The PUC may
reasonably factor in claims for compensation for those
proceedings that have been litigated over an extended period
of time or are complex in order to ensure that full
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compensation for approved expenditures are provided to
eligible claimants.
In addition, the author may wish to amend the bill to require
the PUC to report on the status and age of intervenor
compensation claims pending to encourage the PUC to make
timely payments to qualified intervenors that have
demonstrated financial hardships as follows:
1803 (c) The PUC shall include in its annual report to the
Legislature a status report on how many intervenor claims it
approved, how much was awarded, and the length of time taken
between when the claim was approved and when the claim was
paid.
9)Does DRA trump all Intervenors? TURN expresses concern that
the proposed language in section 1805.5 will essentially limit
participation by intervenors because it will be difficult, if
not impossible, for an intervenor to participate in a manner
that is "separate and distinct from those presented by the
commission's Division of Ratepayer Advocates" and be eligible
for compensation.
This section states that, "Participation that substantially
duplicates the presentation of the Division of Ratepayer
Advocates, or that falls within the scope and purview of the
division, shall not be eligible for compensation, unless the
commission determines that it provided a substantial
contribution to promote a public purpose that the division did
not provide ." [emphasis added]
This section has two parts, the first stating that:
a) participation that substantially duplicates the
presentation of the DRA, or that falls within the scope and
purview of the division, shall not be eligible for
compensation
The second stating, quite clearly that:
b) unless the PUC determines that the participation
provided a substantial contribution to promote a [ public ]
purpose that that the DRA did not provide. [striking
'public is a committee proposed amendment]
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AB 995 leaves the determination of a substantial contribution
to the PUC to decide, as long as it is consistent with the
Public Utilities code's definition of a substantial
contribution.
REGISTERED SUPPORT / OPPOSITION :
Support
AT&T
Verizon
Opposition
Agriculture Energy Consumers Association (AECA)
Center for Accessible Technology (CforAT)
Consumer Federation of California
Engineers and Scientists of California (ESC), IFPTE Local 20,
AFL-CIO
National Asian American Coalition
Sierra Club California
The Greenlining Institute
The Utility Reform Network (TURN)
Utility Workers Union of America (UWUA), AFL-CIO
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083