5. Substantial Contribution

We look at several things in evaluating whether a customer has made a substantial contribution to a proceeding. First, did the administrative law judge (ALJ) or Commission adopt one or more of the factual or legal contentions or specific policy or procedural recommendations put forward by the customer? (See § 1802(i).) Second, if the customer's contentions or recommendations paralleled those of another party, did the customer's participation materially supplement, complement, or contribute to the presentation of the other party, or to the development of a fuller record that assisted the Commission in making its decision? (See §§ 1802(i) and 1802.5.)

As § 1802(i) explicitly recognizes, the assessment of whether the customer has 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.¹⁰

Even where the Commission does not adopt any of the customer's recommendations, compensation may still be awarded if, in the Commission's judgment, the customer's participation substantially contributed to the decision or order. For example, if a customer provided a unique perspective that enriched the Commission's deliberations and the record, the Commission could find that the customer made a substantial contribution. With this guidance in mind, we turn to the issue of what contribution, if any, TURN and AECA have made to this proceeding.

5.1. TURN's Contribution

As TURN points out in its compensation request, D.05-06-016 expressly describes the ways in which TURN's participation contributed to the decision. TURN provides the following comparison of its positions on various issues with how those issues were resolved in the decision:

"It is generally difficult to identify specific contributions to a settled outcome since Rule 51.9 precludes disclosure of settlement discussions. In Decision 05-06-016, however, the Commission approved the Settlement Agreement because of the reasonable balance it struck between the competing interests in the case and was therefore careful to specifically acknowledge[] how each party's concerns were addressed in the agreement. . . The following bullet points summarize how and where TURN's positions were reflected in the Settlement Agreement and final Commission decision.

"Line Extension Adder

- "TURN objected to flat line extension adders and argued that the adder should be tied to the actual amount of NO_x emissions reduced and the average cost for NO_x emission reductions. TURN proposed a cap of $200/kW or $40,000 per individual customer.

- "The Settlement Agreement sets maximum adders per customer based on the kilowatt rating of the electric motor connected to replace a qualifying internal combustion engine.

- "The Commission acknowledged that this item's inclusion into the settlement agreement specifically addressed TURN's comments.

"Total Capital Spending

- "TURN proposed a $20 million cap on total utility capital investment for each utility to mitigate the potential for large increases in capital spending from the program.

- "The Settlement Agreement capped total capital investment at $27.5 million for PG&E and $9.17 million for SCE.

- "The Commission acknowledged that the settlement agreement included the cap on total spending to address TURN's concern.

"Competitive Advantage

- "TURN expressed concern that the utilities could use the conversion program to gain a competitive advantage over municipal utilities and irrigation districts competing for the same load. To mitigate this concern, TURN proposed that if a territory serving a customer under the incentive rates program was taken over by a municipal utility or irrigation district, utility shareholders should be required to pay half the rate of discounts received by the customer back to ratepayers.

- "The Settlement Agreement limits the number of program participants in the southern San Joaquin County to 100.

- "The Commission points to TURN consultant Jeff Nahigian's explanation of this 100 participant limit and stated that it considered the approach to TURN's concern to be reasonable.

"Air Emissions Credits

- "TURN recommended that the Commission make a discrete finding that any emission credits generated by this program that revert back to the utility are an asset owned by the ratepayers.

- "The settlement specifically states this requirement.

- "The Commission acknowledges that this term was included to deal with TURN's concern." (TURN Compensation Request at 4-6; footnotes and citations therein omitted.)

We think this quotation accurately summarizes TURN's contributions to D.05-06-016. We also agree with TURN that "in light of the adoption of the settlement positions reflecting TURN's positions on a variety of issues," its work in these proceedings clearly made a substantial contribution to D.05-06-016. (TURN Request, p. 6.)

5.2. AECA's Contribution

AECA's request claims that its contributions, both before and after the filing of the PG&E and Edison applications, have been central to the engine conversion program, and thus "substantial" under § 1802(i). In its compensation request, AECA states:

"AECA spearheaded the effort to file these applications beginning in Summer 2004. AECA supplied valuable analysis and coordination with the utilities prior to the official filing of these applications on November 9, 2004. This coordination and support allowed the utilities to introduce applications which reduced the need for more extensive work later in the proceeding by all parties, as well as the Commission. This consultation and coordination also eliminated the need for AECA to file a protest and raise additional issues for resolution through the proceeding . . .

* * *

"Throughout the proceeding, the testimony and detailed economic analysis supplied by Dr. Richard McCann served as the catalyst for refining the rate proposals outlined by the utilities in their applications. Dr. McCann also supplied invaluable expertise and analyses with respect to contribution to margin analysis and the line extension proposal. The ability to reach a settlement on this issue, given the complexity of the economic issues in this case and the expedited schedule, was dependent on the spreadsheets and analysis conducted by Dr. McCann on behalf of AECA. This analysis was accepted into the record in this proceeding." (AECA Request, pp. 5-6.)

AECA's description of its contribution is reasonable, especially with regard to the work done by McCann. At the April 7, 2005 hearing on the settlement agreement, for instance, AECA attorney Hanschen noted that McCann and AECA Assistant Executive Director Dan Geis, rather than himself, had been principally responsible for representing AECA in the settlement negotiations. (April 7 Transcript, p. 5.) Further, all parties at the April 7 hearing appeared to agree that McCann's analytical work had contributed significantly to the settlement negotiations. For example, when the assigned ALJ asked how the settlement's $26.5 million and $9.17 limits on PG&E's and Edison's respective capital spending had been reached, Edison witness Garwacki replied:

"Based on some material that's both included in Dr. McCann's testimony and available from [CARB,] if you look at the potential participants with diesel pumps, both in PG&E's service territory and our service territory, there's approximately a three-to-one ratio, three times as much in PG&E's [territory.]

"So we've targeted a total dollar amount [of capital spending, $36.67 million,] and then we've pro rata adjusted it based on the estimated volume of pumps in each service territory." (Id. at 36.)

As indicated by the quotation at the beginning of this subsection, AECA claims that its contribution to this proceeding should be deemed to include the work it did before, as well as after, the filing of the PG&E and Edison applications. (AECA Request, p. 5.) The itemization of hours that AECA has furnished shows that the amount of this pre-application work was substantial. For example, of the 188.75 hours of work performed by Geis for which AECA is seeking compensation, 37.5 of those hours, or about 20%, were invested before the applications were filed.

As we have recently stated, "there is limited precedent for the Commission to award compensation for an intervenor's work preceding the opening of a Commission proceeding to which the work ultimately contributed." (D.05-05-046, mimeo. at 7.) D.04-08-025 represents one of the rare instances in which a party has been awarded compensation for such work. In that case, the issue was whether TURN should be compensated for the work it did in analyzing PG&E's proposed plan of reorganization prior to the commencement of Investigation (I.) 02-04-026, a proceeding that resulted in D.03-12-035.

D.03-12-035 approved the Modified Settlement Agreement (MSA) entered into between Commission staff and PG&E in connection with the latter's 2001 filing under the U.S. Bankruptcy Code. In holding that TURN was eligible for the work it performed prior to the commencement of I.02-04-026, we emphasized the close relationship between this work, TURN's position in the proceeding, and the result ultimately adopted by the Commission:

"TURN's time records show that its attorneys and an outside expert worked on preparation of a public report, which TURN released on January 29, 2002, on the PG&E bankruptcy and alternatives, including use of a [dedicated rate component, or DRC]. TURN attached this report to its May 10, 2002 opening comments on the OII. The position outlined in the report, and the analysis underlying it, formed the foundation of TURN's participation in this proceeding prior to the [proposed settlement agreement's, or PSA's] negotiation. TURN argues that the work it did, beginning in September 2001 and continuing until review of the PSA commenced in June 2003, should be deemed compensable because it was necessary to the formulation of TURN's position on the DRC, which D.03-12-035 adopts. TURN argues that if it had not prepared the report before the OII issued, it would have had to do the same review and analysis to support the position it advanced after the OII issued. TURN also argues that its participation in the early part of this proceeding (prior to June 2003) was integral to its ultimate success on the DRC issue in the later part of this proceeding. (Mimeo. at 20.)

In finding that TURN's work prior to June 2003 substantially contributed to D.03-12-035, we noted that "unlike [other intervenors] Aglet and Greenlining, TURN did not merely monitor the early stage of this proceeding; as an active participant at that stage, TURN advocated a position that D.03-12-035 adopts. TURN's involvement in this proceeding from the outset enabled thorough vetting of the DRC proposal, on which TURN prevailed." (Id. at 20-21.) We also emphasized the close nexus between TURN's pre-proceeding work and the conclusions in D.03-12-035 that made compensation for the pre-proceeding work reasonable:

"Given the enormous stakes the bankruptcy case presented and the attendant time pressure, TURN's efforts prior to the commencement of the investigation were logical. In its NOI, TURN properly informed us that it had performed analysis of PG&E's plan of reorganization prior to our investigation being opened and that it planned to seek compensation for that work in this proceeding... The quality of TURN's pre-investigation analysis and the inseparable relationship of the analysis to its position in our proceeding and our ultimate adoption of the DRC in D.03-12-035 create the nexus of TURN's pre-investigation work with the substantial contribution requirement. We find that work TURN did prior to the issuance of the investigation substantially contributed to
D.03-12-035 and should be compensated to the extent TURN's time records reflect no double counting and are reasonable otherwise." (Id. at 20-21.)¹¹

TURN's work prior to the commencement of R.04-01-025, the proceeding that resulted in D.05-04-046, is another instance in which we deemed it appropriate to grant intervenor compensation for pre-proceeding work. In awarding compensation to TURN for its work prior to the rulemaking, D.05-04-046 noted that TURN's early meetings with Southern California Gas Company (SoCalGas) and the ORA had helped to flesh out the details of SoCalGas's proposal in the rulemaking, including limited pre-approval of contracts designed to take quick advantage of capacity releases, as well as a review process intended to expedite approval of other kinds of contracts. (Mimeo. at 7.) Like D.04-08-025, D.05-04-046 also pointed out that if TURN had not performed this work prior to issuance of the rulemaking, the work would have been necessary later:

"The pre-filing meetings and discussions shaped SoCalGas' application and our resolution of the proceeding. Had those meetings occurred in the context of e.g., post-filing settlement conferences, TURN's work would be compensable. Thus, we find that TURN's participation in this proceeding prior to January 2004 substantially contributed to D.04-09-022, and that TURN's work should be compensated." (Id. at 7.)

We conclude that AECA's work prior to the filing of the PG&E and Edison applications here satisfies the criteria in D.04-08-025 and D.05-04-046 for awarding compensation for pre-proceeding work. As AECA has pointed out in its request, its extensive consultations with PG&E and Edison "allowed the utilities to introduce applications which reduced the need for more extensive work later in the proceeding," and also "eliminated the need for AECA to file a protest and raise additional issues," procedural steps that would have delayed the issuance of D.05-06-016. In addition, it seems evident that if AECA had not extensively conferred with the utilities prior to the filing of their applications, such consultation would have been necessary in the context of "post-filing settlement conferences," and the work would clearly be compensable. For all of these reasons, we conclude that AECA made a substantial contribution to D.05-06-016 and is eligible for compensation for the work it did on the engine conversion program prior to the filing of the utilities' applications.¹²

¹⁰ D.98-04-059, 79 CPUC2d 628, 653.

¹¹ However, D.04-08-025 also cautioned intervenors that they should not assume that work done prior to the commencement of a proceeding, even if clearly related to that proceeding, would automatically be compensable:

"No intervenor should presume, however, that a document prepared to support independent advocacy in advance of the issuance of a Commission proceeding, such as TURN's report, will warrant intervenor compensation. We caution intervenors that producing such a document under the assumption that it will be paid for by a substantial contribution award in a future Commission proceeding is a highly speculative-and potentially expensive--undertaking." (Mimeo. at 21.)

¹² In its compensation request, AECA argues that its work prior to the filing of the applications here should be eligible for compensation because Pub. Util. Code § 1802(a) "specifically states that intervenor compensation may be awarded for reasonable costs `in preparation for and participation in a proceeding' (emphasis added)." (AECA Request, p. 5.)

Even though we agree that AECA's pre-proceeding work is eligible for compensation here, this statutory argument is clearly without merit. When read in context, it is obvious that § 1802(a) refers to preparatory work performed after the Commission proceeding to which the work relates has been commenced, not before.