6. Reasonableness of Requested Compensation

Aglet-TURN request $150,185⁸ for their joint participation in this proceeding. 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. The issues we consider to determine reasonableness are discussed below.

6.1. Productivity

Aglet-TURN, one of three parties opposing the consolidated applications, contends that they contributed to the productivity of the proceeding and that their costs of participation were small compared to a combined $79.1 million of observed savings for ratepayers, relative to the utilities requested amounts.

Aglet-TURN quantified the most observable dollar benefit of their joint participation in terms of the adopted ROEs being lower than those requested by the utilities. SCE's ratepayers saved approximately $23.2 million due to the adoption of an 11.50% ROE over SCE's requested 11.80%. SDG&E's ratepayers saved approximately $14.8 million due to the adoption of an 11.10% ROE over SDG&E's requested 11.60%. PG&E's ratepayers saved approximately $41.1 million due to the adoption of an 11.35% ROE over PG&E's requested 11.70% ROE.

The annual ratepayer revenue requirement benefit identified by
Aglet-TURN substantiates that the costs of their joint participation in those issues which Aglet-TURN have been found to have substantially contributed are reasonable in relationship to the benefits ratepayers will realize through that participation.

6.2. Hours and Costs Related to and Necessary for Substantial Contribution

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.

Aglet-TURN documented their claimed hours by presenting a daily breakdown of the hours, major activity, and description of work their attorneys and advocates devoted to the proceeding. ⁹ The following tabulation summarizes the direct time Aglet-TURN spent by major issues and professionals.¹⁰

	General11	Financial Models & Workshop12	Risk Analysis	Pension Returns	Credit Quality	SDG&E Capital Structure	Total
Weil	94.7	108.1	116.9	3.6	4.3	20.3	347.9
Goodson	3.0	17.8	19.3	0.6	0.7	3.3	44.7
Hawiger	0.5		1.3				1.8
Reid	6.7	84.6					91.3
Czahar		55.5					55.5
Marcus		8.7		5.5			14.2
Jones				43.8			43.8
Total	104.9	274.7	137.5	53.5	5.0	23.6	599.2

Aglet-TURN believes that the total number of their claimed direct hours is reasonable given the scope of this proceeding. Our prior discussion of Aglet-TURN's substantial contribution and productivity substantiate that their requested time related to general activities and the issues of risk analysis, credit quality, and SDG&E capital structure are reasonable.

The 53.5 hours allocated to pension returns is not eligible for compensation because they did not make a substantial contribution on this issue, as addressed in the prior pension returns discussion.

A portion of the 274.7 hours Aglet-TURN allocated to financial models and workshop is also not eligible for compensation because their financial models did not result in a substantial contribution to a decision, as addressed in our prior financial model discussion. All of the 25.7 hours devoted to the financial model workshop should be compensated, of which 10.5 hours was applicable to Weil, 6.5 hours to Goodson, and 8.7 hours to Marcus. The remaining 249 claimed hours (274.7 total hours minus 25.7 allowable workshop hours) needs to be allocated between their financial models work found not to have substantially contributed to a decision and the non-utility financial and Fama French model issues, work found to substantially contribute to a decision.

A review of Aglet-TURN's detailed time records showed that 84.6 hours of Reid's time and 55.5 hours of Czahar's time were spent on Aglet-TURN's financial models. Therefore, none of Reid and Czahar's time spent on financial models resulted in a substantial contribution to a decision.

Weil spent 24.8 hours (14.3 hours on modeling inputs and 10.5 hours on modeling comments) on their financial models. However, those detailed time records did not show how much time was spent on reviewing, preparing to testify or testifying on those financial model results. Those records also did not break out time spent on the non-utility financial model or Fama French model issues. Based on a review of Weil's detailed time record and the evidentiary record 49.6 hours (24.8 hours of identified modeling inputs and comments times two) of his time should be allocated to Aglet-TURN's financial models which did not substantially contribute to a decision and the remaining 58.5 hours (which includes his 10.5 workshop hours) to the non-utility financial model and Fama French model issues which Aglet-TURN substantially contributed to a decision.

The following table summarizes the allowable time for recovery:

	General	Financial Models & Workshop	Risk Analysis	Pension Returns	Credit Quality	SDG&E Capital Structure	Total
Weil	94.7	58.5	116.9	0.0	4.3	20.3	294.7
Goodson	3.0	17.8	19.3	0.0	0.7	3.3	44.1
Hawiger	0.5		1.3				1.8
Reid	6.7						6.7
Czahar
Marcus		8.7					8.7
Jones				0.0
Total	104.9	85.0	137.5	0.0	5.0	23.6	356.0

The following tabulation summarizes the indirect time by hours preparing their joint NOI and compensation request:

Intervenor	NOI13	Compensation Request14	Total
Weil	5.8	33.7	39.5
Goodson	.3	2.3	2.6
Reid		1.3	1.3
TOTAL	6.1	37.3	43.4

No party objected to the requested 43.4 hours of time spent preparing a joint NOI and compensation. However, the total indirect hours should be reduced by Reid's 1.3 hours to 42.1 hours on the basis that none of his time was found to have substantially contributed to a decision.

6.3. Market Rate Standard

Finally, in determining compensation, we take into consideration the market rates for similar services from comparably qualified persons.
Aglet-TURN seek an hourly rate of $280 for work performed by Weil in 2007 and $300 for 2008, and half those rates for his work on the NOI in 2007 and preparation of the compensation request in 2008; $210 for Goodson in 2007 and half that rate for compensation-related work in 2007 and 2008; $300 for Hawiger in 2007; $170 for Reid and half that rate for input into a compensation request in 2008; $220 for Czahar in 2007; $223 for Marcus in 2007; and $110 for Jones in 2007.

The Commission has previously approved these rates for work performed in 2007 by Weil, Goodson, Hawiger, and Reid.¹⁵ Czahar was previously awarded a $220 hourly rate and does not seek an increase in the rate for this proceeding.¹⁶ We find these rates reasonable and adopt them here. In light of our disallowance of Jones' hours, the corresponding rate request is moot.

Aglet-TURN also seeks a $15 increase in the Marcus' $220 rate awarded in 2006 to $235 for his work in 2007 and a $20 increase in Weil's $280 hourly rate awarded in 2007 to $300 for his work in 2008. In support of these requested increase in rates, Aglet-TURN cited D.07-01-009 which authorized 3% cost-of-living adjustments for intervenor work performed in 2006 and 2007, and up to two 5.0% step increases within each of three experience levels. Both of these requested hourly rate increases are within the guidelines set forth in D.07-01-009. Marcus' $15 increase equates to a 1.7% cost-of-living increase and a 5.0% step increase and Weil's $20 increase equates to a 2.0% cost-of-living increase and his second and final 5.0% step increase. We find that a $235 hourly rate for work performed by Marcus in 2007 and $280 hourly rate for work performed by Weil in 2008 are reasonable and adopt them here.

6.4. Direct Office Costs

Aglet-TURN seeks recovery of office costs incurred as a result of their participation in this proceeding. These costs totaling $731 consist of reproduction (copy), postage, and travel.¹⁷ These costs represent less than a half of 1.0% of the total compensation request. Aglet-TURN adequately substantiated their office costs and should be compensated for the full $731.

⁸ When calculating this amount, Aglet-TURN made a minor math error. The correct amount is $150,190.55. We corrected the error when we computed our award.

⁹ All time is rounded to a tenth of an hour.

¹⁰ Individual hours may not equal total hours due to rounding.

¹¹ Hours allocated to general consist of activities that Aglet-TURN could not reasonably assign to substantive issues. Those hours pertain to initial review and discovery attendance at the prehearing conference, work on confidential agreements, coordination among intervenor parties, review of rebuttal testimony, review of the proposed decision that preceded D.07-12-049, and preparation and review of ex parte notices.

¹² Workshop activity pertains to a Commission held financial modeling workshop in January 2007, prior to utilities filing of their cost of capital application.

¹³ Hours incurred in 2007.

¹⁴ Hours incurred in 2008.

¹⁵ See D.07-05-037 for Weil and Reid, and D.07-12-026 for Goodson and Hawiger.

¹⁶ See D.06-06-049.

¹⁷ Total direct expenses include $9 of copy and postage costs incurred by Aglet-TURN to reply to SCE's response to their compensation request.