4. Financial Hardship Showing by AECA

Under Pub. Util. Code § 1802(g), "significant financial hardship" is established when, "in the case of a group or organization, the economic interests of the individual members of the group or organization is small compared to the costs of effective participation in the proceeding."

Since AECA is a membership organization, the Commission has customarily evaluated its financial hardship claims by reviewing the annual utility bills of its individual members to determine whether the cost of effective participation in a proceeding is large in comparison to the economic interests of these individual members. In D.96-08-040, we described the process we have used for evaluating AECA's hardship claims as follows:

"Rather than granting the full amount of AECA's requests . . . the Commission has first carefully identified those AECA members for whom the cost of participation far outweighs the prospective economic benefit. This requires estimating the amount of savings each member stands to realize as a result of the proceeding based on their annual utility use, and then comparing it to the estimated cost of participation for these members. After determining the percentage of AECA's membership that faces a significant financial hardship, the Commission has reduced AECA's final compensation on a pro-rata basis." (Mimeo. at 10.)

In its request here, AECA points out that in several decisions over the past decade, the Commission has found that where an individual AECA member has annual electricity bills of less than $50,000, that member's economic interest has been considered small in comparison to the costs of participation. See, D.95-02-093 (mimeo. at 8-13); D.96-02-011 (mimeo. at 2-4); D.96-08-040 (mimeo. at 10-16); D.96-11-048 (mimeo. at 4-8). Although AECA does not cite them, two more recent decisions have also applied the $50,000 annual bill test to compensation requests. See, D.02-06-014 (mimeo. at 3-4); D.03-09-067 (mimeo. at 4-5).

In this case, AECA argues that more than 78% of its members have annual electricity bills of less than $50,000. Noting that "over the past few years, AECA has pushed to expand the participation of smaller, individual family farmers" in the organization, AECA presents the following breakdown of its members' bills:

Although AECA acknowledges that the Commission has used the percentage method described in D.96-08-040 to evaluate its previous compensation claims,5 AECA argues that such an analysis is difficult here because the principal benefit resulting from the engine conversion program will be clean air rather than dollars:

"In determining the benefit to agricultural ratepayers from this proceeding, it may appear `on its face' to provide a significant rate decrease to these new customers. However, given the fact that these customers are not currently electricity customers, it is only appropriate to compare their internal costs of operating their pump on this program against their current cost of operating an internal-combustion engine. Since this program was specifically designed to provide a cost-competitive option to these growers, they will realize insignificant energy cost savings, if any, as a result of this program. In fact, as the rate increases annually at 1.5%, it becomes clear that there is not pecuniary benefit to these ratepayers.

"The benefits of this program are largely defined by the air quality benefits that will accrue to all ratepayers and citizens as a result of this program. In fact, in agreeing to this program, growers will be required to forego claims for emission reduction credits, thus giving up any monetary benefits available from such reductions." (AECA Request, p. 4; emphasis in original.)

Although we do not necessarily agree with every assertion in this quotation, we agree with AECA that the monetary benefits resulting from the engine conversion program are both difficult to quantify and probably quite modest. We also note that based on the table set forth above, the estimated average cost of participation in the proceeding for the 740 AECA members with annual bills of less than $49,0006 was $216.22 (based on the $160,000 estimate contained in the NOI).7 In view of our past rulings comparing the costs of participation for small AECA members against the benefits they were likely to obtain, we conclude that if these 740 members had been required to bear the costs of participating in this proceeding alone, it is unlikely that a significant number of them would have participated.8 Thus, we conclude that for AECA customers with annual electric bills of less than $49,000, the financial hardship test has been satisfied in this proceeding.9 Using the pro-rata discount method described in D.96-08-040, we thus conclude that AECA is entitled to 77.3% (740 ÷ 957) of the total compensation we find reasonable for its work in this proceeding.

4 This is the figure that appears in the table on 3 of AECA's request. We presume it is a typographical error and that $150,000 was intended.

5 For example, in D.96-11-048 we described how the comparison had been done in D.95-02-093:

"In D.95-02-093, we concluded that the maximum economic interest of AECA members with bills greater than $50,000 was $2,369 to $20,542, compared with $165 in actual costs and $605 in estimated costs if the case had been fully litigated. For members with bills less than $50,000, we found that their economic interest in the outcome of the proceeding was relatively small ($316 to $1,284) in comparison to the costs of effective participation. Accordingly, we found that AECA was eligible to recover 86.05% of costs found reasonable. This percentage was derived by dividing the number of AECA members in SCE's territory with annual bills less than $50,000 (77) by the total number of AECA members in SCE's service territory (86)." (Mimeo. at 5.)

6 As the billing categories indicate, the table does not tell us how many AECA members, if any, have annual electricity bills between $49,001 and $49,999.

7 Based upon the actual participation costs of $115,868.68 appearing on page 8 of AECA's compensation request, the actual per-member cost of participation for the 740 members was $156.58.

8 In D.96-08-040, even though we concluded that AECA members with annual bills between $25,000 and $49,000 "could conceivably fund an effort at the Commission" because their average economic interest ranged from $368 to $1104, we nonetheless found that the average participation cost of $102 constituted a significant financial hardship because "the Commission in the past has recognized that the smaller the economic interest, the less incentive individual members have to support participation `at any but a modest level.'" (Mimeo. at 15-16.)

9 In its request, AECA asks that we "clearly determine that agricultural customers with annual electricity bills of less than $50,000 specifically qualify as `small commercial' customers under [Pub. Util. Code §§] 1802 and 1812." (AECA Request, p. 5.)

We decline to issue such a general ruling for two reasons. First, Pub. Util. Code § 1802(h) uses a benchmark definition of the "small commercial customer" as "any nonresidential customer with a maximum peak demand of less than 50 kilowatts." Although we have discretion under the statute to depart from this definition in appropriate cases, the fact that many of the electric engines expected to be used for agricultural pumping will apparently be larger than 50 kW does not support using this case to develop a special definition of the small commercial customer in an agricultural context. (See, D.05-06-016, mimeo. at 15, 22, 28-29.) Second, as we said in D.96-08-040 when AECA protested our decision to award only 69% of its compensation request rather than the 86% we had previously awarded, "significant financial hardship must be determined for each group of customers in each proceeding," regardless of changes in the composition of an organization's membership. (Mimeo. at 16.)

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