4. Substantial Contribution

In evaluating whether a customer made a substantial contribution to a proceeding, we look at several things. First, we look at whether the Commission adopted one or more of the factual or legal contentions, or specific policy or procedural recommendations put forward by the customer. (§ 1802(i).) Second, if the customer's contentions or recommendations paralleled those of another party, we look at whether the customer's participation unnecessarily duplicated or materially supplemented, complemented, or contributed to the presentation of the other party. (§§ 1801.3(f) and 1802.5.)

As described in § 1802(i), the assessment of whether the customer made a substantial contribution requires the exercise of judgment.

In assessing whether the customer meets this standard, the Commission typically reviews the record, composed in part of pleadings of the customer and, in litigated matters, the hearing transcripts, and compares it to the findings, conclusions, and orders in the decision to which the customer asserts it contributed. It is then a matter of judgment as to whether the customer's presentation substantially assisted the Commission.⁷

With this guidance in mind, we turn to the contributions TURN claims to have made in the various proceedings at issue.

4.1. Decision 06-07-032 (R.04-04-003 and
R.04-04-025)

As part of R.04-04-003 the Commission reviewed long-term policy for new and existing QFs. Before evidentiary hearings began on the QF policy and pricing issues, the Commission encouraged all the parties to the QF proceedings to explore settlement possibilities. TURN was a party to the QF proceeding. During December 2005, all of the parties interested in the QF issues from

R.04-04-003 and R.04-04-025 met for a 10-day period to negotiate the issues and pursue possible settlement of some, or all, of the outstanding issues. Pacific Gas and Electric Company (PG&E) and Independent Energy Producers (IEP) continued their negotiations, reached a settlement, and noticed a settlement conference, pursuant to Rule 51.1(b), for April 7, 2006. Following that meeting, after the completion of hearings, the settlement was finalized and on April 18, 2006, PG&E and IEP filed and served a Joint Motion for approval of the Settlement Agreement and Associated Amendments. While TURN did not formally join in the settlement, it submitted comments supporting the procedural motions on April 24, 2006, and comments indicating support for the settlement itself on May 18, 2006. Subsequently comments were requested from the parties on the issue of ownership of Renewable Energy Credits (RECs) associated with existing QF contracts covered by the settlement; TURN filed comments on this issue as well.

D.06-07-032 approves the settlement and adopts TURN's position on the treatment of QF RECs.

4.2. Decision 07-09-040 (R.04-04-003 and
R.04-04-025)

TURN alleges that its involvement leading up to this decision was extensive. The record of this proceeding supports TURN's contention. TURN filed Rebuttal testimony on October 28, 2005, Opening and Reply Briefs on
March 3 and 17, 2006, respectively, and participated in oral argument before the Commissioners on July 10, 2007.

TURN's activities in the proceeding led to its making numerous recommendations and the text of D.07-09-040 confirms that TURN:

· Proposed Short-Run Avoided Cost (SRAC) energy pricing methodologies that utilize implied market rates and recommended use of the PG&E City Gate trading point price. (D.07-09-040 at 28.)

· Recommended basing SRAC payments on actual electricity prices, using publicly available on-site peak pricing data.
(D.07-09-040 at 36.)

· Argued that the current IER's exceed actual market rates and result in payments that exceed the short run avoided cost and recommended that day ahead market prices be used to determine SRAC payments because they more accurately reflect the utilities avoided costs. (D.07-09-040 at 47.)

· Recommended against the use of a Variable Operation and Maintenance adder. (D.07-09-040 at 69.)

· Recommended that no additional payments be made to QFs for as available capacity. (D.07-09-04 at 82.)

· Proposed two methodologies for calculating an adjustment to reflect that a dispatchable combustion turbine (CT), when not in operation can be bid into the Independent System Operator. (D.07-09-040 at 95.)

TURN's analysis and recommendations helped guide an ample part of the discussion in D.07-09-040.⁸ In its compensation request, TURN cites four particular instances wherein its recommendations were adopted in whole or in part. First, with regard to TURN's recommendation that SRAC payments be based on actual electricity market prices until the implementation of the California Independent System Operator's (CAISO) Market Design and Technology Update TURN notes that while the Proposed Decision (PD) would have adopted an SRAC price based on market prices alone, D.07-09-040 adopted a compromise approach and, consistent with its recommendation, ordered workshops to refine the adopted Market Index Formula. Consistent with TURN's claim, D.07-09-040 provides extensive references to the analysis of this issue provided by TURN. (D.07-09-040 at 57.)

TURN next points out that it supported (and explained the rationale for) use, on an interim basis, of a reasonable proxy price for the value of as-available capacity. Again, D.07-09-040 supports this contention. In addition to noting that payments for as-available, capacity should be based on the fixed cost of a combustion turbine less the estimated value of ancillary services and capacity value that is recovered in market energy prices (as proposed by TURN),
D.07-09-040 specifically identifies the rational provided by TURN as the basis for its decision where it states:

We agree with TURN, SCE, and SDG&E on this issue. The avoided CT cost should be based on an economic carrying charge rate, escalated for inflation over the life of the contract. Using a levelized nominal dollar value to compute the CT cost would overstate the avoided capacity cost as well as present additional cost and risk for utilities and ratepayers. A primary concern is that the use of a levelized nominal value would require higher capacity payments in early years, exposing the utilities and their ratepayers to the risk of non-performance if the QF went off-line or simply failed to perform. While termination penalties or the posting of security could mitigate some of the concern, calculating a CT cost based on an economic carrying charge rate and escalating for inflation would eliminate this concern. In addition, as pointed out by SCE and TURN, it would be inappropriate to use a 20-year levelized value for a contract of less than 20 years in length. Using an economic carrying charge rate, escalated for inflation over the life of the contract, allows us to provide more flexibility in contract terms, from one year up to five years with the same CT cost estimate. As-available capacity prices should be expressed in real dollars. (D.07-09-040 at 94.)

TURN also claims to have substantially contributed to the development of a longer-term firm capacity payment structure in D.07-09-040. While TURN acknowledges that it did not specifically recommend a longer-term firm capacity payment structure based on the fixed costs of a baseload combined cycle gas turbine plant, TURN points out that when the PD proposed such a payment its comments helped guide the discussion and contributed to the resolution of this issue. Again, D.07-09-040 confirms TURN's contention. As stated therein:

In its comments on this Decision, TURN pointed out that the

$21/kW-year originally proposed in the draft decision for the economic value is the estimated value for a CT, not a CCGT. Based on the CAISO's 2004 Annual Report on Market Issues and Performance, SCE proposes that these savings are $55/kW-year for a CCGT. We find this to be a reasonable estimate, and thus will deduct this amount from the MPR capacity payment as well, resulting in a capacity value of $91.97/kW-year ($156.97/kW-year-$10/kW-year - $55.00/kW-year). (D.07-09-040 at 98-99.)

Lastly, TURN identifies small QF contracting options as another area where it made a substantial contribution. D.07-09-040 acknowledges TURN's contribution in this area where it states: " . . . we adopt contract provisions for `small' QFs under 20 MW as described by TURN and modified by EPUC/CAC." (D.07-09-040 at 121.)

4.3. Decision 08-07-048 (R.04-04-003 and
R.04-04-025)

D.08-07-048 resolves the joint applications for rehearing of D.07-09-040 filed by: 1) PG&E, Southern California Edison Company (Edison), SDG&E, TURN, and the Division of Ratepayer Advocates (Collectively, the Joint Applicants); 2) the Cogeneration Association of California (CAC) and the Energy Producers and Users Coalition (EPUC); and 3) the California Cogeneration Council. The group with which TURN jointly filed an application for rehearing sought elimination of the originally adopted changes to the utilities Time-of-Use (TOU) or Time of Delivery factors, modification of the 110% contracting requirement, permission for the investor-owned utilities (IOUs) to file applications for retroactive true-up of SRAC energy payments, and the opportunity for the IOU's to demonstrate that in specific instances the temporary extension of the non-price terms and conditions has caused the utilities to pay more than their avoided costs.

In D.08-07-048, the Commission modified D.07-09-040 to provide the relief requested by TURN and the other Joint Applicants.

4.4. Decision 08-09-024 (R.04-04-003 and
R.04-04-025)

In D.07-09-040, we adopted specific policies and pricing mechanisms applicable to the purchase of energy and capacity from QFs. During a technical workshop that preceded this decision, parties reached agreement on various issues. Among other things, parties agreed on how certain components of the SRAC formula should be determined. Energy Division, however, subsequently determined that there were discrepancies between the agreements reached during the workshop and the requirements of D.07-09-040. On February 6, 2008, Energy Division sent an e-mail to TURN and other parties listing the discrepancies and advised these parties to file a petition to modify D.07-09-040. In D.08-09-024, the Commission addressed a petition for modification of
D.07-09-040 filed by the CAC/EPUC and the IEP. TURN filed a response to the petition to modify that supported most of the proposed modifications and expressed its views on some questions on which there was disagreement.

D.08-09-024 essentially agreed with TURN's comments with regard to publications that would be used as the sources for market price data, and agreed not to lock in a particular set of publications. Also, with regard to the definition of a "Small QF," we agreed with TURN that the maximum annual energy deliveries allowable in order to meet this definition should be 131,400 MWh rather than the 175,200 MWh proposed in the petition to modify.

4.5. Decision 05-04-024 (R.04-04-025)

Among other things, we issued R.04-04-025 to develop avoided costs in a consistent and coordinated manner across Commission proceedings. As part of this rulemaking, we directed the Energy Division to conduct a workshop on the draft E3 report to allow parties to comment on the application of the E3 methodology and resulting forecasts for use in energy efficiency as well as other resource areas.⁹ Two days of workshops were held and post-workshop comments were filed on August 16, 2004.

TURN filed both post-workshop and reply comments. TURN urged the adoption of time-differentiated avoided costs for energy efficiency, based on the methodology proposed by E3. TURN also asked the Commission to act expeditiously to assure that the next cycle of energy efficiency programs would be designed with appropriate values for peak energy. We agreed that the E3 methodology should be immediately adopted for use in evaluating energy efficiency programs proposed for 2006 and noted that, as "TURN pointed out, the existing energy efficiency avoided costs are so dated that the current E3 avoided cost, even without further refinement, represent an improvement needed now to avoid inefficient energy efficiency program planning" in 2005 and 2006.¹⁰
(D.05-04-024 at 40.)

TURN also argued that distributed generation (DG) must be evaluated carefully, with avoided cost valuation parameters dependent upon the size and load shape of individual DG units (thus one avoided cost method would be inappropriate for all DG). Consistent with this analysis, TURN recommended that we consider the E3 Report's use in calculating QF payments and evaluating demand response and DG programs in a later phase of this proceeding or a new proceeding. Again, we agreed with TURN's recommendation; on February 18, 2005 (by Assigned Commissioner's Ruling) all QF issues were moved to Phase 2, and all long-run avoided cost issues other than energy efficiency valuation were moved to Phase 3.

4.6. Decision 06-06-063 (R.04-04-025)

In D.06-06-063, the Commission refined the E3 avoided cost methodology adopted in D.05-04-024 and addressed data consistency and quality control issues related to energy efficiency avoided costs.

TURN states that its involvement in this part of the proceeding was extensive. The record of the proceeding bears TURN's contention out. TURN submitted pre-workshop comments in response to the December 27, 2005 Assigned Commissioner's Ruling; participated in the January 24, 2006 public workshops and the two-day workshop held in March 2006; filed Opening and Reply Comments on the 2006 Update; and filed Reply Comments on the Draft Decision in this proceeding.

TURN made numerous recommendations over the course of its involvement in the issues leading to this decision. Among other things, TURN recommended that utilities include the data source and basis for the non-DEER energy and demand estimates endorsed; advocated increasing the present value of the generation avoided costs for residential and commercial air conditioning; argued that all utilities should be required to add to the top 100 hours the Combustion Turbine capital cost, calculated using a real economic carrying charge rate, minus the energy savings created by the Combustion Turbine; and argued that if updated electricity market data is used to calculate shareholder earnings under a future risk/return mechanism the utilities would receive a windfall.

As TURN notes, consistent with its recommendations, D.06-06-063 adopted the DEER definition of peak kW, subject to ex post true-up. D.06-06-063 also adopted TURN's recommendation that the utilities be required to provide the data source and basis for the non-DEER energy and demand estimates they provide. The Commission also adopted nearly all of TURN's recommendations regarding the load shape update initiative in D.06-06-063. Finally, TURN successfully opposed PG&E's argument that the Load Shape Update Initiative should be considered in Phase 2 of R.06-04-010 and not funded out of the 2006-2008 evaluation, measurement and verifications (EM&V) budgets.

Although TURN was not successful on every argument presented, the decision clearly reflects the significant impact of TURN's advocacy.¹¹ This Commission has awarded full compensation even where the intervenor's positions were not adopted in full, especially in proceedings with a broad scope. (D.98-04-028, 79 CPUC2d 570, 573-574.) Here, TURN achieved a high level of success on the issues it raised. In the areas where we did not adopt TURN's position in whole or in part, we benefited from TURN's analysis and discussion of all of the issues it raised.

4.7. Decision 08-01-006 (R.04-04-025)

In D.05-04-024, we adopted an avoided-cost methodology for the purpose of evaluating the 2006-2008 energy efficiency portfolio plans of PG&E, SCE, SDG&E, and SoCalGas (collectively, "the Utilities"). In D.06-06-063, we refined these avoided costs and addressed other issues related to the calculation of energy efficiency cost-effectiveness. In D.08-01-006, we responded to the Utilities Joint Petition for Modification requesting substantive modifications to the treatment of energy efficiency costs addressed in D.06-06-063.

TURN reviewed the petition then discussed the issues raised and coordinated its response with Division of Ratepayer Advocates (DRA). Rather than file a separate pleading, TURN filed a joint response with DRA. This filing supported the Commission's directives in D.06-06-063 and the Compliance Ruling on how to calculate the TRC test. Specifically the TURN/DRA filing argued that foundational documents, including the Standard Practice Manual (SPM) and the policy rules, define the correct treatment of program costs for all distribution methods (traditional rebate, direct-install and upstream/midstream programs), and confirmed that no one method is either advantaged or disadvantaged by the application of the TRC prescribed in D.06-06-063. However, noting that D.06-06-063 is silent on how to treat "free rider" costs in calculating TRCs, the TURN/DRA filing pointed out that there could be a disadvantage imposed on non-direct rebate programs, and recommended that specific clarifications to the SPM or policy rules be made to reflect the proper treatment of program costs, and to develop additional numerical examples for direct rebates, direct-install and upstream/midstream programs to facilitate comparisons under various scenarios.

While we did not adopt the latter recommendation,¹² we generally agreed with the assessment of the other issues addressed in comments filed by TURN/DRA (D.08-01-006 at 22), and denied the Utilities Joint Petition for Modification. Like with D.06-06-063, TURN achieved a high level of success on the issues it raised. In the areas where we did not adopt TURN's position in whole or in part, we benefited from TURN's analysis and discussion of the issues.

4.8. Decision 06-02-032 (R.04-04-003)

Starting On March 7, 2005, the Commission convened a three-day workshop to consider the potential interactions between strategies for GHG reduction and financial incentives for procurement performance that would apply to the four major IOUs. TURN participated in these workshops. After the workshops parties, including TURN, submitted comments and reply comments on the staff issued workshop paper. Subsequent to the events outlined above:

1) Governor Schwarzenegger announced his statewide GHG reduction targets.¹³

2) In September and October 2005, the California Energy Commission and the Commission adopted the Energy Action Plan II.¹⁴

3) On October 6, 2005, the Commission issued a Policy Statement on GHG Performance Standards and stated its intent to investigate the integration of GHG emissions standards into its procurement policies.¹⁵

Thus, rather than deciding a particular issue or resolving a dispute between particular parties, D.06-02-032 is a broad policy decision. While TURN actively participated in the proceeding by attending workshops, filing comments and reply comments on the workshop report, and filing comments on the draft decision, for the most part, TURN's significant contributions were made in workshops and are not specifically identified in D.06-02-032.¹⁶

4.9. Mohave Alternatives/Complements Study (R.04-04-003)

On December 20, 2004, the Commission issued D.04-12-048 which adopted Long-Term Procurement Plans (LTPP) for PG&E, SCE and SDG&E and provided direction to the utilities on the procurement of the resources identified in the LTPPs. In Ordering Paragraph 3 of D.04-12-016, we also directed SCE and the other stake holders to study alternatives to Mohave's continuing operation as a coal-fired plant [MACS Study] and to report on the study in R.04-04-003.

TURN asserts that it actively participated in reviewing and providing verbal and written comments on the draft MACS study. In particular, TURN's consultant "traveled to Phoenix for a workshop regarding the draft study, and met with NRDC to discuss potential strategies."¹⁷ TURN then notes that the issues regarding Mohave alternatives were not resolved in this docket, and are still under consideration in A.06-12-022, where TURN remains an active participant. Thus, TURN requests compensation for a purported substantial contribution to a proceeding that did not result in a subsequent decision.

Citing D.06-11-038 at 5-6, TURN correctly points out that because "[t]he post-decision phase of the Mohave proceeding did not result in a subsequent decision by the Commission, so the typical method of analyzing an intervenor's contributions to determine if they assisted the Commission in making a decision is not applicable." However, in contrast to TURN's application which states only that TURN reviewed the draft MACS study and provided verbal and written comments, and that TURN's consultant "traveled to Phoenix for a workshop regarding the draft study, and met with NRDC to discuss potential strategies," the NRDC request at issue in D.06-11-038 provided specific details of NRDC's work and contribution. Among other things, D.06-11-038 notes that:

NRDC provided written and oral comments on SCE's plans for the study, participated in all {sic} meeting of the stakeholders with the contractors, submitted written comments on three drafts of the study, provided oral input to the contractors, and coordinated with other stakeholders to avoid duplication of effort. (Id. at 6.)

TURN's claim lacks both the depth and detail of that submitted by NRDC. Absent a more detailed discussion of what contributions were made, we cannot find a substantial contribution to this proceeding. Our inability to determine that a substantial contribution has been made is not analogous to a finding that no substantial contribution has been made. Since work on this issue continues, in A.06-12-022, TURN is advised to resubmit its claim, albeit with more detail and documentation, when a decision issues in that proceeding.

4.10. Decision 05-12-022 (R.04-04-003)

On December 20, 2004, we issued D.04-12-048, a decision adopting LTPP and providing direction on procurement resources for PG&E, SCE, and SDG&E. TURN was an active participant in, and has already received compensation for, the earlier phase of this proceeding that resulted in D.04-12-048. Several parties filed Petitions to Modify (PTM) D.04-12-048. In its PTM, PG&E asked for the elimination of the cost cap established in D.04-12-048 and the reaffirmation of the cost-of-service ratemaking for reasonably incurred cost of new generation.
(D.04-12-048 at 9.) In its PTM, IEP requested that all costs be reflected in bids, that the cost cap be applied not only to capital costs but to all cost components, and that any cost savings be allocated to the shareholders only. (D.04-12-048
at 10.)

On March 30, 2005, TURN filed a response to these petitions. As set forth in D.05-12-022:

TURN supports PG&E's PTM in part and opposes IEP's PTM. TURN supports a hybrid-market consisting of both utility-owned and non-utility owned resources, and a diversified portfolio of PPAs and utility-owned resources. TURN opposes IEP's PTM because IEP's proposal would "convert the utility into just another market bidder," eliminating "the ability to obtain power at the cost of providing it." TURN does not support other aspects of PG&E's PTM. TURN prefers that the Commission allow for cost-based utility-owned generation, but subject to balanced reward and penalty structures that are developed on a case-by-case basis. TURN is concerned that under the mechanism set by the Commission, the utility will either refuse to propose any new generation or bid high to cover all foreseeable risks, and that the symmetrical sharing may help mitigate the problem only to a certain extent. TURN recommends that utilities be allowed to propose cost-based generation through a CPCN and the application include an opportunity for competitors to offer alternatives to the proposed utility project. (D.05-12-022 at 10, citations omitted.)

Consistent with TURN's recommendations, D.05-12-022 denied both PG&E and IEP's PTMs. In adopting these recommendations, D.05-12-022 specifically embraced TURN's rationale and noted:

We agree with TURN that diversified portfolios help to minimize market risk as well as other types of risk. Both utility-owned and IPP-owned generation bring unique benefits and risks. Therefore, it is important that we sustain the cost cap to help keep the playing field level, but, as TURN suggests, we will not treat the regulated utilities as simply another bidder in the market. (D.05-12-022 at 11.)

We therefore find that TURN made a substantial contribution to
D.05-12-022.

⁷ D.98-04-059, 79 CPUC2d 628 at 653.

⁸ TURN is quoted and/or its contribution is specifically acknowledged in D.07-09-040 at 2, 52, 53, 57, 67, 91, 96, 98-99, 122, 139, and 147.

⁹ The E3 methodology was described in a report called, Methodology and Forecast of Long-Term Avoided Cost(s) for the Evaluation of California Energy Efficiency Programs (E3 report).

¹⁰ TURN also cautioned against using the E3 methodology to evaluate avoided costs of any resources other than energy efficiency programs.

¹¹ See also D.06-06-063 at 42, 48, 51, 92 (COL #5), and 93 (COL #8).

¹² Instead, we directed Energy Division to update the 2001 SPM so that it includes numerical examples for various program delivery strategies.

¹³ See Executive Order S-3-05.

¹⁴ See D.06-02-032 at 9-10.

¹⁵ The GHG Policy Statement can be viewed at: http://www.cpuc.ca.gov/PUBLISHED/Report?50432.htm.

¹⁶ D.06-02-032 did embrace "TURN's observations that, to the extent that ratepayer-funded projects are creating such allowances, we should not preclude from consideration the concept of `shared-savings,' whereby both ratepayers and shareholders benefit from the sale of them." (D.06-02-032 at 34.)

¹⁷ The NRDC is the National Resource Defense Counsel.