3. 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.3
With this guidance in mind, we turn to the claimed contributions made to the proceeding. The entirety of PG&E's request in this proceeding was resolved by the MCRA settlement agreement, five supplemental rate design settlement agreements, and the supplemental MM settlement agreement. The MM settlement agreement was contested by TURN, while all other settlement agreements were uncontested.
It can be difficult to identify specific contributions to a settled outcome since Rule 12.6 precludes disclosure of settlement discussions, and because each settlement term reflects a negotiated compromise between various parties. D.07-09-004 does not provide a summary of the various parties' positions regarding marginal costs, revenue allocation, and rate design prior to settlement making it harder to assess the substantial contribution of each of the intervenors to these uncontested settlements. However, it is undisputed that TURN, VSI, and AECA each participated in negotiations that led to one or more of the settlements adopted. Further, the Commission found that, "[E]ach settlement included participation and agreement from each of the parties that prepared testimony related to the particular customer class being addressed." (D.07-09-004 at 20.)
For example, D.07-09-004 identified 22 parties representing all affected rate classes that participated in negotiations related to the primary MCRA settlement and described some contribution from each of these parties:
While there were a number of differences in the marginal costs and revenue allocations proposed by the various parties in prepared testimonies, settlement appears to provide a reasonable compromise of parties' positions in developing marginal costs and calculating revenue allocation for this proceeding. The settlement does not adopt any of the Settling Parties' marginal cost principles or proposals, but the Settling Parties do agree that it is reasonable for the Commission to approve the marginal costs in the settlement for the purposes of establishing unit costs in the development of revenue allocation and rate design in this proceeding and for customer-specific contract rate floors for customer retention and attraction. (D.07-09-004 at Subsection 5.2.)
Although the Commission has held that "mere participation in settlement negotiations" is not sufficient to guarantee productive participation, it has recognized that active participation in settlements does justify compensation, especially when it contributed to the development of a record that assisted the Commission. (D.00-07-047, p. 6; D.00-07-015, p. 5.) The particular contributions of TURN, VSI, and AECA in relation to the settlements adopted by the Commission are discussed below.
3.1. Contributions of TURN
TURN regularly intervenes in Commission proceedings on behalf of ratepayers, primarily on the issues of consumer rights and affordable rates. TURN's activities included extensive testimony on a wide range of the marginal cost, revenue allocation, and rate design issues, and participation in lengthy settlement negotiations related to all these issues, particularly the impact on residential customers. Following testimony served by PG&E in March 2006 regarding marginal costs, revenue allocation, and rate design, TURN served extensive testimony by two experts, William B. Marcus and Michel P. Florio. No party served rebuttal testimony. From September 2006 through April 2007, TURN's attorneys and experts engaged in settlement discussions with various parties and devoted substantial time and resources to the review and revision of proposals for marginal cost principles, revenue allocation, and rate design. Although it was not successful on every argument presented, the settlements and Decision reflect the significant impacts of TURN's advocacy. TURN was successful, in cooperation with DRA, in minimizing large rate increases for residential customers. The successful negotiations led to three settlement agreements joined by TURN that reflect TURN's contributions. TURN opposed a fourth settlement, as described below.
TURN had a substantial role in the MCRA settlement process as reflected by adoption of marginal cost values solely for settlement purposes without vigorously contested calculation principles (MCRA Settlement, p. 5) and a related impact on revenue allocation principles (MCRA Settlement, p. 6) that limited the increase in costs assigned to residential customers. PG&E proposed to increase the residential class average bundled rate by 3.9% above system average percent change, with a 4.4% increase for non-CARE customers (PG&E Update Testimony, 6/26/06, p. 2-2). The MCRA Settlement provided for a lower 2.8% increase for residential class and 3.2% increase for non-CARE residential customers. (MCRA Settlement, pp. 13-14.) TURN also submitted testimony on revenue allocation principles and proposing revenue allocation for generation costs instead of PG&E's proposal to bundle generation and Department of Water Resources costs. TURN argued against CARE rate increases and changes to the CARE allocation methodology as proposed by PG&E, instead advocating the long-standing equal cents per kWh allocation. Both TURN positions were incorporated into the settlement. (MCRA Settlement at 12-13.) TURN also successfully advanced a modification to PG&E's proposal that non-CARE public purpose costs be allocated by total system average percentage (SAP) so that Direct Access (DA) loads are included for costs collected through Public Purpose Program rates. (MCRA Settlement, p. 13.) The MCRA Settlement also reflected movement towards TURN's position about how certain costs-interruptible rate credits, energy efficiency incentives, and solar programs-were allocated to residential customers that resulted in a substantial reduction from that proposed by PG&E. (MCRA Settlement, p. 12.)
Total bundled residential CARE rates remain unchanged consistent with TURN's position. (RRD Settlement, p. 6.) TURN recommended that solar program costs associated with the Commission's implementation of the CSI should not lead to any rate increase for first 130% of baseline usage because the rates already include an excess share of solar rebate costs. This view is reflected in the RRD Settlement provision for only a minimal increase to baseline rates for CSI costs. (RRD Settlement, p. 9.) The RRD Settlement also reflects TURN's view that revenue increases to the residential class be implemented as proportional changes to the generation surcharges in Tiers 3, 4, and 5 as required to collect revenue allocated to the residential class. (RRD Settlement, p. 8.) Together with DRA, TURN reached agreement with PG&E to consult with DRA and TURN if it expects revenue allocation decreases to the residential class of more than 3%. (RRD Settlement, p. 8.) Additionally, TURN worked with PG&E and Western Manufactured Housing Communities Association (WMA) to resolve issues relating to the master meter discount for submetered mobilehome parks to preserve the discount agreed to by TURN, PG&E, and WMA in PG&E's 2004 GRC Phase 2 (A.04-06-024) and to protect residential ratepayers from significant increases advocated by WMA. (RRD Settlement, pp. 6-8.)
TURN had limited participation in the SLP Settlement and didn't offer testimony on small light and power rates. However, TURN claims it addressed minimum charges and intra-class revenue allocation for small commercial customers during settlement discussions. Some elements of the SLP Settlement, such as calculation of the CARE discount based on a rate per kWh discount, are consistent with positions TURN took in RRD testimony.
TURN opposed the MM settlement proposed by PG&E and BOMA and, in comments argued that: 1) the MM Settlement lacked sufficient information for the Commission to evaluate it; 2) the MM Settlement provided no guidance regarding how the master meter customer would allocate electricity costs between submetered and nonsubmetered tenants in a partially submetered building; 3) the Commission had already expressed concerns with meter accuracy and reliability, meter reading, billing and adjustments in prior decisions; 4) tenants would receive bills from building owners that might not provide clear and useful information to allow a tenant to verify charges; 5) claimed benefits related to dynamic pricing were speculative; and 6) the MM Settlement primarily benefited building owners. TURN argued the Commission should find the MM Settlement was not in the public interest and recommended the MM Settlement be rejected or, if the Commission were inclined to adopt it, TURN urged the Commission to condition approval on PG&E's and BOMA's acceptance of certain modifications as proposed by TURN.
The Decision stated TURN raised legitimate issues and questions related to the reasonableness of the settlement, particularly as to costs to commercial tenants and whether they would have an effective opportunity to more efficiently meet their electricity needs. (D.07-09-004, p. 35.) The Commission agreed with some of the concerns raised by TURN and conditioned adoption of the MM Settlement on PG&E's and BOMA's agreement to conduct a statistically significant survey regarding commercial building master metering and also adopted many of the consumer protections TURN recommended. (D.07-09-004, pp. 39-42.) The Commission clearly noted the substantial contribution of TURN to its treatment of the MM Settlement:
In its comments, TURN has raised legitimate issues and questions related to the reasonableness of the settlement. While the replies of BOMA and PG&E adequately address many of TURN's concerns, imposition of certain conditions related to monitoring and customer information are necessary to support a finding that the settlement is reasonable in light of the record. (D.07-09-004, p. 35.)
As described above, we concur that TURN made a substantial contribution to D.07-09-004. The Commission benefited from TURN's participation, analysis, and discussion of the issues.
3.2. Contributions of VSI
When VSI filed a Motion to Intervene and requested appearance status in June 2006, it stated it planned to participate in this proceeding by attending workshops, preparing written testimony, presenting witnesses, reviewing documents, attending hearings, and filing briefs on issues of rate design relating to use of renewable resources by PG&E customers. An ALJ Ruling issued June 16, 2006 granted VSI's Motion. On June 9, 2006, to support its eligibility to claim intervenor compensation, VSI filed authorization from Michael Meyers and Catharine Sutker, jointly a "customer," to represent their concerns in proceedings before the Commission. VSI provided their personal financial information under seal. On the same day, VSI also filed a motion requesting a protective order directing that the personal financial information be withheld from public inspection. The Motion was granted by ALJ Ruling issued June 21, 2006.
VSI offered testimony by Edward Smeloff, Robert Redlinger and two PG&E customers but filed no other documents or comments in the proceeding. VSI asserts it made a substantial contribution to the proceeding as a result of participation in three of the settlement agreements approved by D.07-09-004 and that its efforts will result in benefits to ratepayers, particularly by creating important new incentives for ratepayers to install solar systems. A description of VSI's contributions is set forth below.
VSI testified about the role rate design can play in encouraging energy efficiency and customer-sited renewable energy investments. Similar to the stated positions of DRA & TURN, VSI advocated a 2% cap on revenue allocation. This position was reflected in the lower rates adopted in the MCRA Settlement than originally sought by PG&E. (MCRA Settlement, pp. 13-14.)
VSI testimony described and discussed PG&E's residential TOU rates. It focused on changes since the 2003 GRC wherein PG&E closed the E-7 tariff to new customers and opened E-6 tariff which is more complex and has lower on-peak to off-peak ratio of energy charges that don't send clear price signals to customers to reduce peak consumption. This view was supported by testimony from PG&E residential customers who decided not to install solar photovoltaic systems due to lower savings and longer cost recovery periods with the E-6 tariff. VSI recommended modifications to the E-6 tariff to reflect higher ratios of peak to part-peak and off-peak energy charges to send clear price signals to customers to reduce peak consumption and invest in solar systems. The RRD settlement incorporated VSI's recommendations to reopen the E-7 rate and provide a time-variant tariff for E-6 and EL-6 customer classes that creates incentives for ratepayers to install solar systems. (D.07-09-004 at 23.) Along with TURN and DRA, VSI also argued that revenue for CSI and other charges should be collected through an equal-cents/kWh charge. This position is reflected in the RRD Settlement. (RRD Settlement at 9.)
VSI testified about how small and medium commercial tariffs should be revised to satisfy SB1 (CSI), similar to its position in RRD Settlement discussions. VSI recommended changes to tariffs to reflect higher ratios of peak to part-peak and off-peak energy charges to send clearer price signals to customers to reduce peak consumption and invest in solar systems. VSI also argued customer charges shouldn't be increased and explained how energy efficiency projects are negatively impacted by fixed customer charges. The SLP Settlement reflects VSI influence where revised TOU tariffs are deemed to fulfill the requirements of SB1 in terms of "creating the maximum incentive for ratepayers to install solar systems...." (D.07-09-004 at 12; SLP at 9.) The SLP Settlement also expanded solar incentives for small and medium commercial customers by creating a limited pilot program that doubled the maximum demand limit for Schedule A-6 customers that install a solar photovoltaic system. (SLP Settlement at 7-8.) In addition, to the extent there were small increases to SLP fixed monthly customer charges, they reflect the expected give and take among various parties including VSI and were found reasonable by the Commission. (SLP Settlement at 8.)
As described above, we concur, in part, that VSI made a substantial contribution to D.07-09-004. The Commission benefited from VSI's participation, analysis, and discussion of the issues.
3.3. Contributions of AECA
AECA is a non-profit organization representing the energy interests of "California Agriculture" including growers, cattle ranchers, county farm bureaus, and agricultural water districts. AECA, found eligible as a Category 3 customer, has already been granted intervenor status and compensation in this proceeding for its contribution to D.06-11-030.
In its initial filing, PG&E proposed to increase agricultural rates by more than 14% overall, and by 25% for some customers, in what AECA characterized as the largest price increase imposed on any customer class since the 2001 energy crisis. AECA offered testimony by Richard McCann, PhD., who argued that PG&E's rate design proposals were punitive to California agriculture customers, who have shifted consumption to off-peak periods and PG&E over-allocated revenue responsibility to the agricultural class. AECA recommended the Commission either freeze agricultural marginal costs until further studies could be done to develop a long-term solution or alternatively adopt the DRA proposal to cap all class allocation rates to 2% increase. AECA suggested several theories for the over-allocation including PG&E's failure to recognize TOU load-shifting by agricultural customers, a decline in the number of agricultural customers, and excessive customer service costs allocated to the agricultural class. The ARD Settlement reflected the concerns of AECA in establishing an overall 4% rate increase, rather than 14% as proposed by PG&E. It also included a modification of the rate design to expand TOU energy charge differentials to enhance load-shifting off-peak thereby reducing costs to the agricultural class.
As described above, we concur that AECA made a substantial contribution to D.07-09-004. The Commission benefited from AECA's participation, analysis, and discussion of the issues.
3 D.98-04-059, 79 CPUC2d 628, at 653.
