6. Reasonableness of Requested Compensation

UCAN requests $611,8725 for its participation in this proceeding. Included in the request6 was the following breakdown:

The components of this request must constitute reasonable fees and costs of the customer's preparation for and participation in a proceeding that resulted in a substantial contribution. Thus, only those fees and costs associated with the customer's work that the Commission concludes made a substantial contribution are reasonable and eligible for compensation.

To assist us in determining the reasonableness of the requested compensation, D.98-04-059 directed customers to demonstrate productivity by assigning a reasonable dollar value to the benefits of their participation to ratepayers. The costs of a customer's participation should bear a reasonable relationship to the benefits realized through their participation. This showing assists us in determining the overall reasonableness of the request.

D.04-12-015 identified four specific allowances within the Settlement that, according to the Settling Parties, are based on UCAN's specific litigation positions and intended to incorporate an allowance for UCAN's litigation positions within the development of the Settlement. Specifically, the Settlement includes a $2.337 million reduction in the test year forecast for Customer Accounts not otherwise based on the Settling Parties' litigation positions. The Settlement includes a $3.651 million reduction in the forecast for employee benefits not otherwise based on the Settling Parties' positions. The Settlement's forecast of working cash includes a $14.6 million reduction based on UCAN's litigation position that far exceeds ORA's proposal; use of the lower forecast results in a significant reduction in revenue requirement for test year 2004. Finally, the Settlement identified a $1.8 million reduction to the forecast of Corporate Center costs not otherwise based on the Settling Parties' litigation positions.

By contrast, UCAN spent a relatively modest amount on its analysis to develop these recommendations. UCAN assigns $87,000 in costs to reviewing SDG&E's Customer Accounts, $29,000 on its analysis of employee benefits and $208,000 on its review of working cash. When considered in conjunction with the $154,000 claimed for general participation and $90,000 on policy analysis, UCAN's participation was cost effective. These examples show that UCAN's costs were significantly less than the ratemaking value achieved through UCAN's participation.

For witness Navarro, UCAN seeks 66% of the billed costs7 because UCAN cannot cite definite impacts from his testimony in the adopted Settlement. Navarro's testimony on economic impacts was not adopted in D.04-12-015 or in either proposed decision. This one-third reduction is reasonable.

Next, we must assess whether the hours claimed for UCAN's efforts that resulted in substantial contributions to Commission decisions are reasonable. UCAN documented its claimed hours by presenting a daily breakdown of the hours of its attorneys and analysts, accompanied by a brief description of each activity. The detailed explanation of the hours UCAN spent on the proceeding is thorough and consistent with both the scope and the complexity of the issues considered in the proceeding. Therefore, the hourly breakdown reasonably supports the claim for total hours.8 Since we found that UCAN's efforts made a substantial contribution to the decision, we need not exclude from UCAN's award compensation for certain issues. However, we note that UCAN broke down its efforts by issue and had we needed to eliminate certain issues from the award this breakdown would have facilitated the process.

Finally, in determining compensation, we take into consideration the market rates for similar services from comparably qualified persons. Several of the experts and the attorney for UCAN have existing rates approved by the Commission for work performed in 2003 and 2004. We use those rates without further discussion.

In calculating compensation, we consider the approved rates for comparably qualified intervenors. Rates for specific consultants that have not been previously approved are discussed below.

The most recent rates for paralegals or law clerks range from $75 to $125 over the last several years. We will authorize $75 per hour for Mittendorff for non-attorney support staff duties.

Welchin, Miller, and Owens, of Overland Consulting, have not previously been included in a request for intervenor compensation; however, they have previously been engaged under contract to ORA. We will not rely on ORA's contract terms as proposed by UCAN.9 Overland Consulting provided expert testimony on ratemaking accounting and analysis, comparable to the nature of the work performed by JBS Energy, another consultant to UCAN.

Welchin holds a Master of Business Administration from St. Edwards University (1986), holds licenses as a Certified Public Accountant (CPA) in Kansas and Illinois, and has worked in the utility accounting arena since 1980 with utilities or consulting firms.10 By comparison, JBS Energy's Marcus holds a Masters in Economics, 1975, from the University of Toronto, and has worked in the utility sector since 1978.

Owens holds two Degrees from the University of Missouri - Kansas City including a Bachelors of Science Degree in Accounting and a Bachelors of Liberal Arts Degree. He has worked in public accounting or consulting for 10 years. The requested rates are comparable to those approved for JBS Energy's Nahigian and Schilberg.

Miller has a Master of Professional Accountancy, University of Nebraska - Lincoln, and is a licensed CPA in Missouri. He has worked in public accounting or consulting since 1999. The requested rate of $130/hour is in a range we have recently approved for other less experienced analysts. The requested rates for Overland Consulting are consistent with those approved for JBS Energy and their testimony in Phase 1 demonstrated qualifications and experience appropriate to justify these rates.

An hourly rate of $160 for Woychik was last adopted in D.03-05-065 for work performed in 2002. Using Resolution ALJ-184 as a guide, we will adjust the 2002 rate by approximately 8% to $175. We are not obliged to apply the ALJ-184 guideline to 2003, but the outcome is both a substantial increase, and less than the $185 rate (a 16% increase) sought by UCAN. The application of ALJ-184 in this instance does not preclude finding a different rate to be appropriate in some other application provided there is sufficient justification in that proceeding's record.

We will adopt the rates shown in the table below. Except for Overland Consulting and Strategic Integration, these rates have been previously approved by the Commission.

Adopted Compensation Rates and Allowances

Name

Year

Hours

Rate

Allowance

Cite

Shames

2003

832.9

$195

$162,415.50

D.03-12-014

 

2004

213.6

$250

$53,400.00

D.04-12-054

Mittendorff

2003

219.5

$75

$16,462.50

D.05-02-005

Welchin(a)

2003

607

$175

$106,225.00

n.a.

 

2004

9

$175

$1,575.00

n.a.

Miller(a)

2003

483

$130

$62,790.00

n.a.

 

2004

7

$130

$910.00

n.a.

Owens(a)

2003

117

$110

$12,870.00

n.a.

Marcus(b)

2003

161.7

$185

$29,914.50

D.03-10-011

 

2004

15.9

$195

$3,100.50

D.05-03-016

Nahigian(b)

2003

227

$125

$28,375.00

D.03-10-011

 

2004

12.5

$135

$1,687.50

D.05-04-041

Schilberg(b)

2003

13.8

$130

$1,794.00

D.04-10-031

Woychik(c)

2003

356.9

$175

$62,457.50

ALJ-184

Navarro(d)

2003

72.5

$300

$21,750.00

D.04-12-054

Total

      

$565,727.00

  

(a) Overland Consulting

(b) JBS Energy

(c) Strategic Integration

(d) Professor Peter Navarro

The itemized direct expenses submitted by UCAN include costs for: travel, photocopying, postage, etc., and total $9,763. The cost breakdown included with the request shows the miscellaneous expenses to be commensurate with the work performed. We find these costs reasonable.

5 Before adjusting for math errors, UCAN's request incorrectly tallied to $612,614.87.

6 Request, p. 8, and Attachment D.

7 Request, p. 11.

8 UCAN separated the hours associated with travel and preparation of this compensation request and requests compensation at half the usual hourly rate for this time.

9 Request, p. 11.

10 Data response, January 5, 2005.

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