6. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner, and Anne E. Simon and Burton W. Mattson are the assigned ALJs in this proceeding.

Findings of Fact

1. Category 1 customers must meet the significant financial hardship requirement of the intervenor compensation program by presenting data pursuant to the undue hardship test.

2. Sustainable Conservation's significant financial hardship showing presents comparison test information, not the undue hardship information required of customers claiming eligibility under Category 1.

3. The financial data cited by Sustainable Conservation in reference to customer status, even if used to evaluate undue hardship, plus the Declaration with additional financial information, fail to establish that Sustainable Conservation meets the undue hardship test (i.e., that Sustainable Conservation cannot afford, without undue hardship, to pay the costs of effective participation).

Conclusions of Law

1. The April 14, 2008 motion of Sustainable Conservation to augment record should be granted, but the request for a finding of significant financial hardship should be denied.

2. Sustainable Conservation has not fulfilled the requirements of §§ 1801-1812, which govern awards of intervenor compensation, in that it fails to establish that it will suffer significant financial hardship if not compensated for its participation here.

3. Sustainable Conservation's Amended Claim should be denied.

ORDER

IT IS ORDERED that:

1. The April 14, 2008 motion of Sustainable Conservation to augment record is granted, but the request for a finding of significant financial hardship is denied.

2. Sustainable Conservation's Amended Claim for $30,394.50 in intervenor compensation for contributions to Decision 07-07-027 is denied.

3. Rulemaking 06-05-027 remains open.

This order is effective today.

Dated July 10, 2008, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

APPENDIX 1

Compensation Decision Summary Information

Compensation Decision:	D0807021	Modifies Decision? No
Contribution Decision(s):	D0707027
Proceeding(s):	R0605027
Author:	ALJ Mattson
Payer(s):

Intervenor Information

Intervenor	Claim Date	Amount Requested	Amount Awarded	Multiplier?	Reason Change/Disallowance
Sustainable Conservation	2/21/08	$30,394.50	$0	No	Fails to establish significant financial hardship

Advocate Information

First Name	Last Name	Type	Intervenor	Hourly Fee Requested	Year Hourly Fee Requested	Hourly Fee Adopted

(END OF APPENDIX 1)

APPENDIX 2

COMMMENTS REGARDING

SUSTAINABLE CONSERVATION'S

ADDITIONAL SHOWING ON

SIGNIFICANT FINANCIAL HARDSHIP

Each intervenor has the responsibility to establish eligibility for intervenor compensation. The April 14, 2008 Declaration (with greater detail on its financial position), along with other items discussed below, fail to establish Sustainable Conservation's eligibility. Several (but not necessarily all) examples follow.

Restricted Funds and Reasonable Discretion

Sustainable Conservation declares, for example, that most funds are restricted. It says that carryover restricted funds will appear on the books as assets available, but those funds must be directed to specific purposes. (Declaration, p. 1, paragraph 3.)

The Statement of Activities, however, separates total funds into three components, with columns titled "unrestricted," "restricted for future use," and "permanently restricted." While we accept Sustainable Conservation's assertion that most funds are restricted, Sustainable Conservation fails to convincingly explain why its accounting of carryover restricted funds shows such funds as "unrestricted" rather than "restricted for future use" or "permanently restricted." Even if we accept that most of the funds in the column titled "unrestricted" are in fact restricted, Sustainable Conservation fails to clearly show how much of that "unrestricted" money is actually restricted.

In further explanation, Sustainable Conservation asserts that it "obtains most of its funding from government grants and private foundations, and further that most of the grants are restricted funds for dedicated projects, programs and activities." (Declaration, p. 1, paragraph 2.) Assuming all (not just most) grants are restricted, grant funds listed on the Statement of Activities in the unrestricted column total $650,632. This leaves available funds of up to $1,644,972. The approximately $30,000 of funds sought here is a small percentage (less than 2.0%) of these available funds.⁸ The percentage is even smaller upon accepting Sustainable Conservation's assertion that not all grant funds are restricted.

Sustainable Conservation states that its policy is to establish a budget for each of its three programs annually, and each program must operate within the available funds.⁹ The financial data, however, does not clearly show the current year restricted amounts. For example, the amounts awarded to each program (including prior year balances but net of amounts restricted for future use), plus funds allocated to administration and fundraising, for 2007 were:

Line No.	Program or Item	Dollars
		Program	Other/Total
1	Restoration on Private Land	$642,112
2	Sustainable Agriculture	555,549
3	Sustainable Business	340,670
4	Total Program		$1,538,330
5	Administration and Fundraising		757,274
6	Total		$2,295,604

Sustainable Conservation fails to establish that its Board of Directors did not have reasonable discretion to allocate about $30,000 of funds differently within the total allocation of over $2 million. We do not consider whether or not Sustainable Conservation's budgets are reasonable or unreasonable. Rather, we consider the showing as it is but are unable to conclude that Sustainable Conservation would suffer undue hardship.

Sustainable Agriculture Program

Sustainable Conservation asserts that the work for which it seeks compensation here was funded via its Sustainable Agriculture Program. Further, Sustainable Conservation asserts that income accounted on the profit and loss statement for its Sustainable Agriculture Program in all but the "other" category is restricted for specific programs with specific timelines. (Declaration, p. 1, paragraph 4.) The "other" category totals only $1,297 over the last two years, clearly not enough to fund the approximately $30,000 sought here.

Nonetheless, the profit and loss statement for the Sustainable Agriculture Program includes the expenditures of about $30,000 for which intervenor compensation is sought here (some in 2006 and the rest in 2007).¹⁰ The profit and loss statement shows expenditures of $941,715 in 2006 and 2007 out of a total expense of $1,121,292 in the largest six out of 24 expense categories.¹¹ The showing does not, however, adequately establish that Sustainable Conservation's Board of Directors failed to have reasonable discretion or ability to renegotiate or reallocate these funds to secure about $30,000 for its intervention here. This discretion appears reasonably available, however. For example, the approximately $30,000 sought here is in expense categories and apparently was funded from "restricted funds," since only $1,297 is in the "other" (unrestricted) income category for 2006-2007.¹²

Moreover, the total Sustainable Agriculture Program two-year deficit (for 2006-2007) is $15,432. Accepting Sustainable Conservation's assertion that the $30,000 sought here caused that deficit, about half of the $30,000 was funded by Sustainable Conservation and only about half caused a deficit. It is unclear that Sustainable Conservation could not secure the approximately $15,000 needed to fund its intervention from other sources within its $2 million total budget and thereby eliminate this Program deficit.

Similar to our statement above regarding budgets, we do not consider whether or not Sustainable Conservation's profit and loss statement is reasonable or unreasonable. Rather, we consider the showing as it is but are unable to conclude that Sustainable Conservation would suffer undue hardship.

Operating Reserve

Sustainable Conservation asserts that it has an annual operating budget in excess of $2 million but only has 3 months operating reserve. (Declaration, p. 2, paragraph 6.) Sustainable Conservation does not identify the page or line in its financial data showing this operating reserve. If the operating reserve is 3 months (25%) of the annual (12 month) operating budget, its operating reserve may be about $500,000 (25% of $2 million). Alternatively, its operating reserve may be the $109,569 Sustainable Conservation shows as actual 2007 end of year surplus. Either way, Sustainable Conservation does not establish that it could not fund about $30,000 out of an operating reserve of something over $100,000.

Sustainable Conservation asserts that best practice in the nonprofit sector calls for nonprofits to have 6 months operating reserve. At the same time, Sustainable Conservation has operated successfully with only 3 months reserve. While best practice may be 6 months, it is unclear that a reduction from 3 months to slightly less than 3 months creates a significant financial hardship.¹³ Moreover, even without reaching the "best practice" for operating reserves in the nonprofit sector, Sustainable Conservation reports that it earned the highest rating from Charity Navigator, an independent evaluator of financial strength and management of nonprofit organizations. (Amended Claim, p. 6.) Receipt of the highest rating from Charity Navigator is not consistent with a finding of significant financial hardship.

Financial Interest

Even if a group or organization offers proposals that the Commission ultimately adopts, the Commission does not burden ratepayers with the costs associated with that group's participation when the group has the type of financial interest in the outcome of the proceeding that is contemplated by the intervenor compensation statute. For example, we recently denied a claim for intervenor compensation by San Francisco Community Power (SFCP) for its participation in a consolidated proceeding that involved demand response programs. (Application (A.) 05-06-006, A.05-06-008, A.05-06-017.) We did so on the basis that SFCP financially benefited from the Commission's adoption of SFCP's proposal to implement the Small Customer Aggregation Pilot Program (SCAPP). In particular, SFCP entered into a contract with PG&E to implement the program that SFCP urged that we adopt. We found that SFCP was not entitled to intervenor compensation even though SFCP made a valuable contribution to our final decision, D.06-11-049. Specifically, we found as follows:

"SFCP is correct that the Commission adopted [in D.06-11-049] its SCAPP proposal and [SFCP's] stated support for load shifting programs. However, SFCP is not eligible for compensation for its work on either of these issues...SCAPP is now an existing program that SFCP implements under contract to PG&E. D.06-11-049 authorized PG&E to pay SFCP an additional $650,000 for [SCAPP] program implementation. SFCP benefited materially and directly from this portion of D.06-11-049. SFCP here acted in its own self interest when it advocated for additional contract funding [for SCAPP]. The Commission has held that the Legislature intended the Commission proceedings to grant `customer' status `only to parties (or their representatives) whose self interests and participation in the proceeding arise directly from their interests as customers' (see D.96-09-040 and D.92-04-051). SFCP's advocacy [for SCAPP] put it in the position of being more of a contractor or consultant than a customer. Accordingly, we deny any compensation to SFCP for its work in this proceeding that concerns the program for which it receives funding [through PG&E], the SCAPP." (D.07-06-023, p. 8.)

Thus, although SFCP made a significant contribution to D.06-11-049, SFCP's financial interest in the contract with PG&E based on the outcome of the proceeding rendered SFCP ineligible for intervenor compensation.

Similarly, the Commission routinely relies upon the participation of many groups or organization when making final decisions on matters. However, because these groups or organizations have potential or actual financial interests in our final decisions, these groups either have not requested intervenor funding or we have denied such requests. These groups include, but are not limited to: California Manufacturers & Technology Association, Alliance for Retail Energy Markets, California Biomass Energy Alliance, Independent Energy Producers Association, California Retailers Association, California Large Energy Consumers Association, Center for Energy Efficiency and Renewable Technologies, Southern California Generation Coalition, RCM International, California Wind Energy Association, Silicon Valley Manufacturers Group, Americans for Solar Power, California Forestry Association, California Farm Bureau Federation, and, as noted above, SFCP.

Based on the information before us, we are unable to determine whether Sustainable Conservation has the type of financial interest in the outcome of this proceeding that may render it ineligible for intervenor compensation to fund its participation should it pursue eligibility as either a Category 1 or 3 customer. Accordingly, we make no conclusions here as to whether such financial interests exist or not. However, because we encourage Sustainable Conservation to continue to participate in our proceeding and have found such participation useful, Sustainable Conservation may want to further explain whether any donors or members of its Board of Directors have a financial interest in a proceeding in which Sustainable Conservation is seeking intervenor compensation should it pursue eligibility as either a Category 1 or 3 customer.¹⁴

As mentioned above, we have found Sustainable Conservation's participation in this proceeding useful. We have no reason to doubt that its participation was, and continues to be, guided by a talented and dedicated Board of Directors. Many persons and groups appear before us wherein they may, directly or indirectly, have a financial interest in the matter. Our responsibility includes examining that interest to determine if it is one that permits ratepayer funding for the cost of the intervention.

Conclusion

We welcome Sustainable Conservation's future participation. We also welcome clarification at the appropriate time of matters related to undue hardship and financial interest, some (but not necessarily all) of which are discussed above. Sustainable Conservation, as does each intervenor, has the burden to establish its eligibility, and must do so by a showing that is as simple and direct as possible while being understandable, unambiguous, clear and persuasive.

(END OF APPENDIX 2)

⁸ Source: Statement of Activities FYE 12/31/2007, Support and Revenues. The $1,644,972 is the sum of entries for "contributions," "client services," "mitigation funds," "interest and dividends," "other," and "net release from restriction." Even if we remove the amount for "net release from restriction" assuming it is released from "restricted for future use" but remains "restricted for current use," the revised total is $886,716. The request of about $30,000 is a small percentage (less than 3.5%) of the total available.

⁹ The three programs are: Restoration on Private Land, Sustainable Agriculture and Sustainable Business.

¹⁰ Sustainable Conservation notes that it initiated its intervention in October 2006; the costs for the intervention are not part of the organization's regular budget; and, according to Sustainable Conservation, one could argue that the intervention costs have contributed to the program's operating deficit for the past two years. (Declaration, p. 2, paragraph 5.)

¹¹ These are expense categories of: salaries, other benefits, project support, contractual expenses, subgrants, indirect costs.

¹² Customer "does not include any state, federal or local government agency." (§ 1802(b)(2).) To the extent Sustainable Conservation is using government grants to fund approximately $29,000 of its request here ($30,000 less $1,000 in the "other" category), those funds may or may not be reimbursable via the intervenor compensation program. Should Sustainable Conservation submit a future claim for intervenor compensation, Sustainable Conservation should consider addressing how this use of government money relates, if at all, to its customer status and assertion of significant financial hardship.

¹³ That is, funding the approximately $15,000 deficit in the Sustainable Agriculture Program out of an operating reserve of something over $100,000 would reduce the operating reserve from about 3 months to something slightly less than 3 months.

¹⁴ Sustainable Conservation does not claim to have any members, and describes itself as "a formally organized donor and grants supported corporation...[with] approximately 515 individual donors..." (Amended Claim, p. 3.) In its use of the comparison test, Sustainable Conservation says it represents "individual donors." (Id., p. 8.) See 2006 Annual Report, pp. 6-7, for a list of donors.