3. Significant Financial Hardship
The intervenor compensation statute is designed to facilitate participation in Commission proceedings by individuals and groups who would otherwise suffer significant financial hardship absent an award of fees and costs. (§ 1803(b).) Sustainable Conservation has not demonstrated that it meets this requirement. In particular, the statute provides:
" `Significant financial hardship' means either that the customer cannot afford, without undue hardship, to pay the costs of effective participation, including advocate's fees, expert witness fees, and other reasonable costs of participation, or that, in the case of a group or organization, the economic interest of the individual members of the group or organization is small in comparison to the costs of effective participation in the proceeding." (§ 1802(g).)
3.1. Use of Wrong Test
Meeting one of the two statutory tests stated above is necessary to establish significant financial hardship: either an "undue hardship" test for Category 1 and 2 customers, or a "comparison test" for Category 3 customers. (Pub. Util. Code §§ 1802(g), 1803(b); D.98-04-059: 79 CPUC2d 628, 650.) In its Amended Claim, Sustainable Conservation asserts it is a Category 1 customer and we evaluate its claim under that category.4 For its significant financial hardship showing, Sustainable Conservation offers a comparison test, which applies only to Category 3 customers, saying, for example:
"For Sustainable Conservation, the cost of the organization's participation in Commission proceedings substantially outweighs the benefit to the individual donors it represents. Sustainable Conservation is supported in part by individual donors who are residential customers of California's investor-owned utilities and whose individual interests in this proceeding are small relative to the costs of participation." (Amended Claim, p. 8.)
The comparison test is for Category 3 customers. As required by statute, Category 1 customers must meet the "undue hardship" test. (Pub. Util. Code § 1803(b).) We have considered and rejected use of the comparison test for Category 1 customers. (D.98-04-059, 79 CPUC2d 628, 650-52.) By employing the wrong test, Sustainable Conservation fails to meet its burden to establish significant financial hardship.
We have specifically addressed the necessary showing of "not-for-profit corporations, and other organizational customers" who file as Category 1 customers. (Id., 651.) In particular, we require documentation, noting that they "have ready access to their annual income and expense statements and year-end balance sheets." (Id.) Sustainable Conservation fails to provide such documentation as part of its significant financial hardship showing, and thereby fails to meet its burden of proof.
3.2. Undue Hardship
We are also unable to find compliance with the statute even if we evaluate Sustainable Conservation's significant financial hardship using the undue hardship test as required for Category 1 customers. For example, as part of its customer status claim (not its financial hardship claim), Sustainable Conservation provides a copy of its 2006 Annual Report.5 The Annual Report includes Sustainable Conservation's "2006 Financial Highlights." This includes information on income, expenses and change in net assets.
The 2006 Annual Report shows "Total Support and Revenue" of $2,069,820. Absent other information, we are unable to conclude that the $30,394.50 cost of Sustainable Conservation's participation here (i.e., less than 1.5% of its Total Support and Revenue) would create significant financial hardship such that Sustainable Conservation "cannot afford, without undue hardship, to pay the costs of effective participation." (§ 1802(g).)
Sustainable Conservation states in its Amended Claim that "most of its grants are restricted funds..." (Amended Claim, p. 3.) In such cases, we require that the customer distinguish between discretionary and committed funds. (D.98-04-059, 79 CPUC2d 628, 652.) Sustainable Conservation fails to do so. Nonetheless, from its "Statement of Activities" we see that $1,077,696 is from grants. Even if 100% of its grant funds are restricted, a balance of $992,124 remains. Again, absent other information, we are unable to conclude that Sustainable Conservation cannot afford without undue hardship to pay the $30,394.50 cost of its participation here from a balance of $992,124 (i.e., less than 3.1% of the balance).
3.3. Further Information
On April 14, 2008, Sustainable Conservation moved to augment the record with a Declaration, including further financial information. While we allow the material, it fails to cure the defect. The defect is that Sustainable Conservation's Amended Claim (at pages 7-9) continues to use the wrong test to establish significant financial hardship.
Even if we consider the additional material in the context of undue hardship, however, it fails to establish significant financial hardship. Sustainable Conservation has the burden to establish its significant financial hardship. The showing must be understandable, unambiguous and clear. Sustainable Conservation fails to make a convincing showing, as explained in Appendix 2. We do not conclude that Sustainable Conservation cannot establish significant financial hardship going forward, only that it has failed to do so here.
4 We note that although the ALJ ruled that Sustainable Conservation was not a Category 3 customer, it may be possible for that defect to be cured through a modification of its bylaws. Sustainable Conservation would still need to demonstrate significant financial hardship, which, given its somewhat unique organizational structure, might change on a case-by-case basis depending on the positions being advocated and the impact of the proceeding's outcome on Sustainable Conservation's donors.
5 Sustainable Conservation uses its 2006 Annual Report as part of its customer status showing. (Amended Claim, pp. 2-7; in particular, p. 3.) Sustainable Conservation does not cite its 2006 Annual Report in support of its significant financial hardship showing. (Amended Claim, pp. 7-9.)
