3. Substantial Contribution to Resolution of Issues

Under Section 1802(h), a party may make a substantial contribution to a decision in one of several ways. It may offer a factual or legal contention upon which the Commission relied in making a decision, or it may advance a specific policy or procedural recommendation that the Administrative Law Judge or Commission adopted. A substantial contribution includes evidence or argument that supports part of the decision even if the Commission does not adopt a party's position in total.³

3.1 Contribution to D.01-03-082

TURN's contribution here was multi-faceted. TURN proposed changes to accounting rules we had adopted in Resolution E-3527 when TURN determined that those rules were leading to results that were inconsistent with the "rate freeze" principle embodied in AB 1890. TURN explained that it filed a petition to modify the Resolution, and the petition was subsequently consolidated with the Rate Stabilization docket. The Commission issued D.01-03-082 in which it adopted TURN's proposed accounting changes across the board.

In D.01-03-082, the Commission also granted the utilities a rate increase of three cents/kWh, despite TURN's objections. TURN points out, however, that the Commission also imposed a significant limitation on the use of the funds collected, namely, that the funds could only be used for power costs incurred after the effective date of the decision.

We conclude that TURN, through its filings and petition consolidated with the applications in this docket, made a substantial contribution to D.01-03-082.

3.2 Contribution to Other Decisions

In D.01-05-064, we addressed the revenue allocation and rate design issues created by the three-cent increase authorized by D.01-03-082. TURN stated that it substantially contributed to that decision because the Commission adopted TURN's positions on (1) definition of "equity" in rate design principles and goals, (2) revenue allocation methodology, (3) five-tier residential rate structure, and (4) non-residential rate spread, and several other smaller issues. We agree with TURN that its participation resulted in a far-reaching and substantial contribution to D.01-05-064. TURN also made substantial contributions to D.01-03-029, on the issue of the proper accounting for employee reductions and other cost-cutting measures, and to D.01-01-018, on the issue of utility shareholders bearing a share of the unanticipated costs of electricity procurement.

3.3 Contribution of TURN's Federal Court Work

TURN also has participated in federal court litigation⁴ initiated by the utilities and seeks compensation for this work. According to TURN, the utilities argued that under the filed rate doctrine, the Commission could not prevent the utilities from raising rates to collect increased wholesale procurement costs. TURN stated that its participation in the federal court litigation was necessary to ensure that the Commission could address the merits of the issues in the decisions covered by the present applications.

TURN stated that it made a substantial contribution to the federal court litigation by attaining, over the vigorous objection of both utilities, the status of formal intervenor pursuant to Federal Rule of Civil Procedure 24(b)(2). According to TURN, federal court intervention requires a far more rigorous showing than intervenor status at the Commission. TURN explained that initially the federal court only allowed it to participate as amicus curiae, with limited rights of participation. After reviewing TURN's motion to dismiss and opposition to SCE's motion for preliminary injunction (discussed in greater detail below), the court found that TURN's participation "would be helpful for the court in supporting the complex factual, legal issues involved in this case" and allowed TURN to participate as a formal intervenor.⁵

TURN also pointed out that it entered into a Joint Defense Agreement with the Commission on December 4, 2000. TURN stated that this agreement allowed TURN and the Commission to coordinate and share information related to the litigation without losing any claim of privilege. TURN said that counsel for TURN and the Commission consulted extensively on strategic and technical issues, to the mutual benefit of both parties.

In response to TURN's assertions of "coordination" with the Commission, SCE⁶ contended that TURN failed to identify any specific topic on which the parties consulted. SCE posited that the Commission and TURN might raise claims of privilege in regard to the details of these consultations.

We decline to open a new potential dispute regarding privilege. We are satisfied that the parties entered into an agreement to consult and coordinate because both parties perceived the agreement to be advantageous. Moreover, we note that the time records presented by TURN reflect numerous consultations between TURN's lawyers and the Commission's lawyers.

SCE also contended that TURN overstated its role in the federal litigation, particularly above and beyond that of the Commission. However, even SCE appears to acknowledge that TURN could present more specific arguments than the Commission. Some issues in the federal litigation were simultaneously before the Commission, and the Commission could not predetermine the outcome of these other proceedings by presenting definitive arguments in federal court. (See, e.g., § 454.) TURN was thus able to argue specific recommendations but the Commission was limited to hypothesizing a number of potential results. In this way, TURN could use its status to present arguments that complemented the Commission's.

TURN also emphasized its work in opposing SCE's motion for a preliminary injunction. Specifically, SCE had asked the court to require that:

Defendants [the Commission], or their agents, servants, employees, attorneys and all those in concert or participation with them shall:




a. Establish rates that will enable SCE to recover its future net wholesale power costs on a current basis, subject to refund; and




b. Establish rates that will enable SCE immediately to begin recovering its past wholesale procurement costs, subject to refund; and




c. Return to the Court within seven days with a specific rate plan that complies with these requirements; or




Defendants, their agents, servants, employees, attorneys and all those in concert or participation with them are hereby restrained and enjoined from enforcing the CPUC's January 19, 2001, order, or any other provision of state law, that would require SCE to continue to provide electricity to all customers, to the extent SCE cannot pay for the costs of such electricity from the corresponding portion of retail rates.

[Proposed] Order Granting Plaintiff Southern California Edison Company's Motion for Preliminary Injunction, Case No. 00-12056-RSWL (January 22, 2001) (emphasis omitted).

In response to SCE's request, TURN filed a 19-page brief in opposition. To provide factual support for the brief, TURN also supplied the court with declarations from Michel P. Florio (explaining the cause of the energy crisis), Peter Navarro (outlining the likely effects of rate increases sought by the utilities), and William Marcus (describing alternative means to meet SCE's revenue needs), and a supplemental declaration by Florio on SCE's risk of bankruptcy. The Commission in its brief cited to the Navarro and Florio declarations.

The court denied SCE's motion for a preliminary injunction. The court characterized SCE's requested injunction as violating the Eleventh Amendment to the Unites States Constitution because, in the court's view, the requested injunction would "effectively usurp the regulatory authority of the State over intrastate retail rates."⁷

TURN's request for compensation for its federal court work raises two fundamental questions. First, may the Commission, under the intervenor compensation statutes, compensate an intervenor for work done in a forum (here, federal court) other than a Commission proceeding? Second, if the answer to the first question is yes, did TURN's federal court work make a "substantial contribution" to the Commission decisions that are the subject of TURN's compensation request? As discussed below, we answer both questions in the affirmative. Our discussion begins with the threshold question of whether the intervenor compensation statutes authorize compensation for work in a forum other than a Commission proceeding.

In its Comments on the Draft Decision awarding TURN compensation, SCE challenged the Commission's authority to award compensation for TURN's work in the federal court. SCE argued that the intervenor compensation statutes, §§ 1801-1812, only provide for compensation for participation in Commission proceedings. SCE cited to § 1802(f), among others, where "proceeding" is defined as any of several kinds of proceedings "before the commission." From this language, SCE concluded that the Commission must deny TURN's request for compensation for the work in federal court.

In response, TURN pointed to § 1802 (a) where "compensation" is defined to include the costs of "judicial review." As judicial review is necessarily before an entity other than the Commission, TURN concludes that the Commission may grant TURN's request for compensation for the federal court work.

In analyzing this issue, we turn first to the plain words of the statute. With emphasis added, § 1803 states that:

The Commission shall award reasonable advocate's fees, reasonable expert witness fees, and other reasonable costs of preparation for and participation in a hearing or proceeding to any customer who complies with Section 1804 and satisfies both of the following requirements:




(a) The customer's presentation makes a substantial contribution to the adoption, in whole or in part, of the Commission's order or decision.




(b) Participation or intervention without an award of fees or costs imposes a significant financial hardship.

As noted by SCE, § 1802(f) defines "proceeding" as: "an application, complaint, or investigation, rulemaking, alternative dispute resolution procedures in lieu of formal proceedings as may be sponsored or endorsed by the Commission, or other formal proceeding before the Commission." However, the term "hearing" is not defined in the statute.

Because "hearing" is not defined in the statute, we must interpret the statute, guided by the legal principles of statutory construction, as well as our own precedent. We recently reviewed these principles:

[W]e look to the well recognized principles of statutory construction. The California Supreme Court has stated: "To interpret statutory language, the courts must ascertain the intent of the legislature so as to effectuate the purpose of the law." (California Teachers Assn. v. Governing Bd. of Rialto United School Dist. (1997) 14 Cal.4th 627, 632.) In determining the Legislature's intent, they are to "scrutinize the actual words of the statute giving them a plain and commonsense meaning." (People v. Vallodoli (1996) 13 Cal.4th 590, 597.) "In construing a statute, a court may consider the consequences that would follow from a particular construction and will not readily imply an unreasonable legislative purpose. Therefore, a practical construction is preferred." (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1147.) "In analyzing statutory language, we seek to give meaning to every word and phrase in the statute to accomplish a result consistent with the legislative purpose. . . ." (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1159.)

D.01-11-031 (modifying D.01-04-006, and denying rehearing as modified) (November 8, 2001).

Applying these principles to § 1803 requires that the Commission use the plain and commonsense meaning of "hearing" to achieve a reasonable and practical construction that is consistent with the legislative purpose. Giving effect to each word leads to the conclusion that the Legislature intended to allow compensation for (1) participation in "proceedings" before the Commission and (2) participation in "hearings" before other entities but only so far as such participation is linked to the "substantial contribution" for which compensation is claimed. Any other interpretation of "hearing" would render the word surplusage in contravention of the judicial precedent quoted above.

Our interpretation of § 1803 also harmonizes with § 1802(a), which allows compensation for "judicial review." As TURN correctly pointed out, this section clearly contemplates the Commission granting compensation for work done before other entities. Section 1802(a) defines "compensation" to include the costs "of obtaining judicial review." In its reply comments, TURN stated that the statute clearly provides for an award of costs for work during judicial review of Commission decisions, and does not distinguish between judicial review in the state courts and judicial review in the federal courts. TURN also stated that SCE's arguments to the federal court sought to prevent the Commission from enforcing its earlier decisions against SCE, such that the federal lawsuits amounted to judicial review of the earlier decisions.

Black's Law Dictionary, 7^th ed. (1999), defines "judicial review" as "a court's review of a lower court's or an administrative body's factual or legal findings." As SCE's lawsuit illustrates, in addition to the state courts, the federal courts may also review the Commission's actions. Furthermore, judicial review of our "findings" occasionally is sought, as SCE did here, during a proceeding rather than after a final order. Accordingly, we agree with TURN that the only logically consistent interpretation of §§ 1802(a) and 1803 is that the Commission, under certain circumstances, may grant compensation for work before other entities.

The circumstances under which we can compensate work done before other entities are narrow, however. As quoted above, § 1803 requires that the customer's presentation make a "substantial contribution to adoption, in whole or in part, to the commission's order or decision." Thus, the work before the other entity must have a direct effect on the Commission's decision.⁸ We view this limitation as key to our ability to evaluate whether the work has met the standards of § 1803. This limitation is a formidable impediment to obtaining compensation for work before other entities. Only extraordinary circumstances would support the findings necessary for such an award. Drawing on D.89-09-103, discussed in footnote 3, as well as our precedent, discussed below, we find that such an award may be proper where (1) a strong public policy exists to encourage intervenor participation due to factors not present in the usual Commission proceeding, (2) the intervenor's participation in the non-Commission forum was necessary and not the intervenor's choice of forums, and (3) the case is of unusual importance due the scope of its potential impacts.

The Commission has previously awarded compensation for work done outside the Commission, specifically before the California Legislature and the Federal Energy Regulatory Commission (FERC). The Commission authorized compensation for activities before the Assembly Committee on Utilities and Commerce and the Senate Committee on Energy and Public Utilities held in response to allegations of irregularities in the decision-making process for the Implementation Rate Design (IRD) decision. In addition to the Commission and its senior staff, several parties to the underlying proceeding appeared to offer testimony and recommendations for changes to the Commission's decision-making process. In considering the ensuing intervenor compensation request from one of the appearing parties, the Commission stated: "We believe that time devoted to these hearings was properly chargeable for intervenor compensation. The procedural matters discussed and advice obtained were a part of the guidance that went into the eventual decision in this matter." (D.95-08-051, Re Alternative Regulatory Frameworks for Local Exchange Carriers, (1995) 61 CPUC2d 142, 148.)

D.98-10-030 also involved a unique set of facts, where the FERC was addressing the then-proposed structure of the Power Exchange (PX) and the Independent System Operator (ISO), entities critical to the operation of newly deregulated energy markets. The Commission sought comments from parties to assist in developing the Commission's comments to FERC. In a subsequent request for internvenor compensation, the Commission found that the work performed in preparing the FERC comments could be included:

We made it clear then that we were a party to the FERC proceedings wherein ISO and PX final policy and implementation details were being established. However, in our role of shepherd, we solicited and received comments from parties in this docket on the ISO and PX applications filed by the utilities before FERC. These comments were relied upon by the Commission in preparing its August 14 comments to FERC. We agree with UCAN and, for purposes of evaluating the compensability of WEPEX working group activities, regard our August 14, 1996, comments to FERC as an "order or decision" under § 1802(h).




TURN's interpretation of § 1802(h) strays too far from a plain reading of the statute. It would have the Commission compensate participation occurring after August 14, 1996, without any link to a future Commission product against which substantial contribution could be evaluated. That being said, we do not rule out the possibility that such a product exists or may come to exist in the future. Therefore, we will deny without prejudice compensation requested for ISO, PX, and WEPEX activities which occurred after our August 14, 1996, filing to FERC.

Order Instituting Rulemaking on the Commission's Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulation, Order Instituting Investigation on the Commission's Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulation, D.98-10-030 (October 8, 1998).

Here, the utilities sought to use the federal court to undermine this Commission's authority over retail ratemaking. As TURN noted in its request for compensation, these issues represent literally billions of dollars for the utilities' customers and arise under the well-known financial and power supply emergency conditions that resulted from deregulation. These circumstances fit well within the standards set out above to guide our exercise of discretion under § 1803. Due to the financial and power supply emergency, the public interest is well-served by the participation of experienced and knowledgeable intervenors, such as TURN, before all tribunals whose jurisdiction is involved. The utilities chose the federal court forum, not TURN, and it cannot be disputed that this is a case of unusual importance to all Californians.

In sum, TURN's participation in the federal court forum was helpful in protecting the Commission's authority to act as it eventually did. In this way, TURN's federal court actions significantly contributed to "the eventual decision in this matter." Accordingly, we will recognize TURN's expenses for participation in the federal court as part of its intervenor compensation claim.

We believe this outcome is consistent with the letter, spirit, and intent of the intervenor compensation statute. The federal court litigation was an essential component of these consolidated proceedings and the Commission decisions that are the subject of TURN's compensation request. As such, TURN could not practically or effectively advocate its position before the Commission without first helping to overcome utility litigation intended to prevent the Commission from acting on the very points TURN was seeking to raise at the Commission.