4. Substantial Contribution

In evaluating whether a customer made a substantial contribution to a proceeding, we look at several things. First, did the 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 described in § 1802(i), the assessment of whether the customer 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.⁴

Even where the Commission does not adopt any of the customer's recommendations, compensation may be awarded if, in the judgment of the Commission, the customer's participation substantially contributed to the decision or order.⁵ 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 claimed contributions TURN and WEM made to the proceeding.

4.1 TURN

TURN states that its involvement was extensive, including: preparation of "voluminous" comments in response to a July 2003 ruling of the Assigned Commissioner; participation in workshops; filing of replies to motions; oral presentations at ex parte meetings; and filing of comments and reply comments on the proposed decisions and alternate proposed decisions that preceded D.03-08-067, D.03-12-060, and D.04-02-059. (TURN Request, p. 1.) Though TURN recognizes that its participation did not lead to success on every argument it presented, TURN points out that one or more of its recommendations was adopted in every major issue area that TURN addressed and specifically identifies its contribution to each of the three decisions to which it claims it contributed.

4.1.1 D.03-08-067

With respect to D.03-08-067, TURN identifies four areas where its proposals were adopted in whole or in part. First, in the area of program selection criteria, TURN points to: 1) Conclusion of Law 5, which adopts TURN's position that existing utility energy efficiency programs should not be automatically extended into 2004-05, but should be subject to the same evaluation criteria as new programs; and 2) language in the decision that retains long-term energy savings as a program selection criteria and increases the importance of peak demand reduction relative to the other selection criteria.

Second, regarding program selection and contract management processes, TURN points to decision language that, adopting TURN's position, rejects the proposal that utilities select non-utility 2004-05 programs.

Third, regarding program and funding allocation between utilities and non-utilities, TURN notes that D.03-08-067 adopts a flexible rather than firm 20% set-aside for non-utility energy efficiency programs. The decision concludes that the exact allocation of funds cannot be decided until the competing program proposals have been evaluated for consistency with established program criteria and goals. TURN had advocated abolishing any set-aside and instead, opening all funds to competition; D.03-08-067 does not do that, but changes made to the draft decision moved the adopted policy closer to TURN's position.

Fourth, in the area of energy efficiency program evaluation, measurement and verification (EM&V), D.03-08-067 moves closer to TURN's position than the draft decision. TURN urged the Commission to contract for independent M&E studies of utility and non-utility programs. While the decision retains a substantial M&E role for the utilities, it also states: "The Commission will also separately hire an independent entity to oversee and consolidate all evaluation efforts. The Commission may decide to transfer the responsibilities in the future to EM&V away from the utilities and to the Commission or an independent entity." (Id., p. 16.)

4.1.2 D.03-12-060

In D.03-12-060 and D.04-02-059, the Commission approved a portfolio of energy efficiency programs for the 2004-05 program cycle, involving disbursement of more than $800 million in ratepayer funds. TURN cites a number of examples reflecting its contribution to these decisions, as follows.

TURN advocated successfully that the Commission withhold a portion of the 2004-05 energy efficiency funding pending re-evaluation by the Commission's Energy Division of whether the program selection process had adequately adhered to adopted criteria and review processes. It urged the Commission to clarify the standards for EM&V of energy efficiency programs funded through the procurement surcharge (a different source of funding than normal energy efficiency programs, which are funded by the "public goods charge" which appears as a line item on customer bills). At TURN's urging, the Commission in D.03-12-060 included directives to the utilities requiring that procurement surcharge-funded EM&V be rigorous, independent and based on objective criteria.

4.1.3 D.04-02-059

In D.04-02-059, the Commission awarded some of the funds withheld in D.03-12-060 to a residential and small commercial HVAC (heating, ventilation and air conditioning) program. TURN had commented extensively in various pleadings on the dearth of residential HVAC programs in Commission-approved energy efficiency portfolios. TURN also successfully advocated for inclusion of language (Conclusion of Law 10) in D.04-02-059 to clarify the two-phased nature of the program proposal review process established by D.03-08-067. TURN also successfully opposed a PG&E motion to shift certain 2003 energy efficiency funding between programs; D.04-02-059 denied the motion.

4.1.4 Summary

We agree that these three decisions reflect the significant impacts of TURN's advocacy. TURN achieved a high level of success on the issues it raised. In the areas where we did not adopt TURN's position in whole or in part, we benefited from TURN's analysis and discussion of the issues TURN raised. TURN made a substantial contribution as described above.

4.2 WEM

WEM claims it made substantial contributions to D.02-07-040, D.03-01-038, D.03-04-055, D.03-06-077, D.03-07-034, D.03-08-067, D.03-12-060, D.04-01-032, and D.04-02-059, and several rulings issued in this proceeding.⁶ WEM states that it succeeded in preserving at least 20% of the energy efficiency funds for non-utility third party programs. WEM states that it has focused, among other things, on whether Commission-authorized energy efficiency programs are cost effective; EM&V is effective; energy efficiency funds are provided to residential and small business customers in proportion to the amount of public goods charge funds they contribute; the programs promote environmental and economic justice; and programs are implemented and evaluated in a manner free from conflicts of interest. WEM alleges it has broken new ground in bringing the Commission into direct contact with parties affected by and involved in the energy efficiency system, including San Francisco's low-income Bayview and Hunters Point districts.

In its supplement e-mailed on July 22, 2004, WEM broke its time records into several subparts. We will use these categories to analyze whether WEM made a substantial contribution to the various decisions WEM references:

· EM&V;

· Flex Your Power (FYP);⁷

· Pilot (referring to a $16 million San Francisco Department of the Environment/PG&E joint energy efficiency pilot program);

· Third Parties (referring to efforts to attain energy efficiency funding for third party programs not run by the large investor owned utilities);

· 2004-05 Solicitation (referring to applications for energy efficiency funding for 2004 and 2005);

· Community Choice (referring to the Commission's implementation of the energy efficiency aspects of Assembly Bill (AB) 117 (Stats. 2002, Ch. 838);

· Intervenor Compensation; and

· Travel.

Another document in the packet WEM submitted on July 22, 2004 lists the decisions and rulings to which its work contributed. WEM took all of its work on this proceeding for each of the years 2002, 2003, and 2004 and apportioned its time to decisions and rulings according to the percentage of time it spent on each. We analyze these percentages within our discussion below of the individual decisions for which WEM seeks compensation.

4.2.1 EM&V

WEM's work in this area focused on whether EM&V of energy efficiency programs would be independent (an issue we addressed in D.03-08-067, mimeo., pp. 16, 26, and D.03-12-060, albeit without reference to WEM's input); and whether the California Measurement Advisory Committee (CALMAC), a ratepayer-funded forum for addressing energy efficiency issues, was open to all (an issue ALJ Malcolm addressed, on WEM's motion, in a March 19, 2003 ruling).

The March 19, 2003 ruling denied WEM's December 2, 2002 motion, which alleged that utilities and some EM&V consultants had a conflict of interest and that CALMAC was excluding outsider participation. Despite denying the motion, ALJ Malcolm found not only that WEM's EM&V conflict of interest concerns were appropriate for Commission action, but also expressly addressed the issues raised by WEM:

Contracting Procedures. WEM is concerned that the utilities are managing consultants hired to evaluate utility performance. Logically, consultants hired to critique a utility's program should not also act as a consultant to the same utility on other matters. Many of WEM's concerns are likely to be obviated in the future. The Commission intends to hire and manage such contracts internally. In that context, Commission staff is considering ways to assure consultants do not have conflicts of interest. (3/19/03 Ruling, p. 4.)

With regard to the portion of WEM's motion alleging that CALMAC was operating too exclusively while expending ratepayer funds, ALJ Malcolm ruled as follows:

Because it is funded by the public goods charge, CALMAC may not, as PG&E suggests, exclude interested parties from meetings, conferences or gatherings where its members are discussing matters relevant to its public mission.

. . .

PG&E objects to WEM's participation on CALMAC by arguing that WEM has no technical expertise and has not followed a proper process. As an active participant in Commission energy efficiency proceedings, WEM is a "stakeholder" and would not need particular expertise to contribute to the discussion of ways to evaluate energy efficiency programs. If the process for joining CALMAC suggests CALMAC is an exclusive club, perhaps the Commission should reconsider the funding for and activities of the CALMAC. (Id., pp. 3-4.)

We have found in the past, and § 1802(i) expressly states, that a party may be compensated for work on procedural aspects of a case, such as that leading up to a ruling.⁸ We therefore find that WEM made a substantial contribution on EM&V issues.

4.2.2 Flex Your Power - D.02-07-040

We addressed the FYP campaign in D.02-07-040. The decision involved a change in the party administering the program from the State of California's Department of Consumer Affairs (DCA) to Edison. We noted in approving the change that WEM had filed comments that were critical of the switch to Edison, but that, "we believe the original decision adequately addresses . . . the matters raised and make no changes [in the draft decision]."⁹

Edison claims that for this reason, WEM did not substantially contribute to the decision. It claims that WEM's comments on the decision were utterly without merit. For example, according to Edison,

WEM alleged that the draft decision was "bad precedent," as it involved the "associated giveaway" by the Commission of public funds to the IOUs and the Commission's "aiding and abetting of DCA in an illegal act of sweetheart, no-bid contracts." In fact, in D.02-07-040, the Commission found the reallocation was the result of a competitive bidding process, since [Edison] had bid for the funding that was originally awarded to DCA.¹⁰

WEM's comments also expressed concern that Edison would promote "utility branding" of energy efficiency.

We have examined D.02-07-040 and find that WEM did not make a substantial contribution. The decision takes care to explain that the transfer from DCA, a state agency, to Edison, an investor-owned utility, was justified and the result of competitive bidding. Such language addressed the types of criticism WEM leveled about the transfer prior to WEM making this argument. Therefore, WEM is not entitled to compensation for its work related to D.02-07-040.

4.2.3 Energy Efficiency Pilot Program

Much of WEM's claimed contribution was related to a $16 million pilot energy efficiency project PG&E proposed for San Francisco in 2003. "PG&E described the pilot program as addressing San Francisco's specific program needs in response to the prospect for San Francisco to experience an electricity shortage in 2004-2005 and a concern that statewide programs do not adequately address the city's unique needs." (D.03-04-055, mimeo., p. 8.) WEM objected to funding this program because the program would result in preferential treatment for the customers of a single community and would shift funding from residential customers to commercial and industrial customers. WEM also observed that it was unable to comment on program elements because PG&E did not provide a budget.

D.03-04-055 ultimately adopted the pilot but specifically required PG&E and San Francisco to file a program implementation plan and budget which was not required of any other adopted program. (See D.03-04-055, Ordering Paragraph 12.) In addition, the decision noted the serious concerns it had with the proposed program, consistent with the concerns raised by WEM. Thus, WEM made a substantial contribution to D.03-04-055.

After the Commission approved the PG&E/San Francisco pilot program in D.03-04-055, WEM sought rehearing of the decision. WEM alleged that most of the $16.3 million in funding for the pilot would be spent on downtown energy efficiency programs aimed at commercial and industrial customers based on the incorrect premise that the effect of the reduced demand for energy by these customers would allow the shutdown of the PG&E Hunters Point Power Plant. WEM also alleged that the decision erred by granting PG&E the flexibility to proceed with the proposal without first requiring the production of details of the program in violation of the open meeting requirements of Government Code § 11120. WEM also alleged violation of "environmental justice and bad faith" by PG&E in misleading the Hunters Point community that the program would lead to the closure of the Hunters Point Power Plant.

The Commission denied the application for rehearing in D.03-06-077, finding that WEM's application:

fails to demonstrate any legal error in the Decision. WEM has failed to support its contentions with any cited legal authority and without reference to any evidence in the record. It has not complied with or set forth a convincing showing under Public Utilities Code Section 1732, which requires that an application for rehearing "shall set forth specifically the ground or grounds on which the applicant considers the decision or order to be unlawful."

WEM's allegations primarily represent a re-argument of its position taken in the proceeding.

Edison argues that WEM is ineligible for compensation related to unsuccessful applications for rehearing. Edison cites D.98-05-014,¹¹ which found that intervenors' contentions and recommendations in an application for rehearing were wholly rejected, and thus the request for compensation for the hours spent on the application for rehearing should be denied. We agree that WEM may not obtain compensation for its application for rehearing in this case because it failed to expand or defend its contribution to the prior decision.

WEM explains in its July 22, 2004 supplement that much of its work in this area occurred after we approved the pilot (and after we denied its application for rehearing, discussed below):

The project sponsors have been making adjustments to the program based on our input-including prioritizing [energy efficiency] funds for Bayview Hunters Point (BVHP) residences and small businesses and providing job training and referrals for community members to work on the program.

Examination of WEM's timesheets for time after D.03-04-055 was adopted reveals that most of its work on the pilot involved contacting community members, providers, and others with regard to BVHP community efforts to close the Hunters Point Power Plant. While the pilot has some relationship to the power plant, to the extent that lowered energy usage through energy efficiency in San Francisco could reduce the need for an existing power plant, the relationship is tenuous at best. While WEM references the San Francisco Peak Energy Program (PEP, the name given the pilot program) in a large majority of its entries, the work appears to be an effort to connect general BVHP community activism with respect to the power plant-which may be laudable in its own right-to this energy efficiency proceeding. We find the connection of this outreach work to WEM's contribution in the energy efficiency proceeding indirect at best. WEM's efforts in this area are for the most part limited to community organizing that did not result in a substantial contribution because the PEP has not come back before the Commission for further proceedings.

Finally, several of WEM's entries reflect its work on a separate proceeding to consider the suitability of PG&E's application to construct a large electric transmission line, the Jefferson-Martin line (Application 02-09-043). The allegation in that proceeding is that installation of the line will hasten closure of the Hunters Point Power Plant. Such work is not compensable in this proceeding.

To summarize, only WEM's work leading up to D.03-04-055 made a substantial contribution. We find that WEM's work claimed after the pilot was approved did not contribute because it bears only a tenuous relationship to the energy efficiency proceeding or was not necessary to a fair determination of whether to award funding for the pilot, since it occurred after we approved the program. WEM's application for rehearing was wholly unsuccessful. Finally, some of WEM's hours relate not to this proceeding but to the Jefferson-Martin transmission line case. We discuss how much of the claim on this subject was reasonable below.

4.2.4 Third Parties

Whether and the extent to which to allow non-utility third parties to receive energy efficiency funding was a major issue in the early years of this proceeding. The utilities traditionally received all such funding, and any third parties receiving funding submitted bids to and were chosen by the utilities. Decision 01-11-066, D.02-03-056, D.02-05-046, ¹² D.03-01-038, D.03-04-055, and D.03-08-067 addressed this framework, and in some of the decisions we assigned interim responsibility for choosing third party programs to the Commission itself. This change was disputed, both by the utilities, resisting independent third party participation, and by third parties advocating that they receive a larger share of the pie.

A further issue was how to place the chosen third parties under contract. Ultimately, the Commission decided to have the utilities contract with the third parties, with Commission direction on the language of the contracts. This issue also raised concerns from both sides-from the utilities who were uncomfortable with having contract terms prescribed for them by the Commission, and from third parties who feared that the utilities would delay contract finalization and execution and therefore delay third parties' receipt of energy efficiency funding. WEM's records contain several entries related to the contracting issue.

WEM's time records also reflect that it spent significant time addressing ALJ Thomas' October 28, 2002 ruling setting forth the process she recommended for Commission evaluation of 2003 energy efficiency programs. The ruling apparently gave third parties concerns about their ability to continue receiving energy efficiency funding, and several parties, including WEM, filed comments on the ruling. The Commission ratified the approach ALJ Thomas took in her ruling in D.03-01-038.

Edison claims in opposition to WEM's request that all WEM did was to urge the Commission to closely scrutinize utility programs, and that the Commission deferred consideration of issues related to WEM's comments on independent administration of energy efficiency. Thus, Edison asserts, WEM did not contribute to a final order or decision with regard to the administration of energy efficiency programs.

While it is true that the Commission had not finally decided whether a party other than the utilities should administer energy efficiency programs, it had in the past taken steps to involve third parties in the programs, and in D.03-01-038 it assigned partial interim administrative responsibility to the Commission's Energy Division. Thus, it is not correct that the Commission deferred consideration of all administrative issues. We find WEM did make a substantial contribution in this area because its recommendations to move to independent administration were acted upon by the assignment of partial administrative responsibility away from the utilities, a change from the status quo at the time.

4.2.5 2004-05 Solicitation

WEM's request at p. 2 states that "this request does not include work on . . . selection of 2004-05 programs," but WEM does include these hours in its July 22, 2004 supplement. In the original request, at pp. 10-12, WEM also lists a number of comments, motions, and other filings it made leading up to D.04-02-059, in which we approved the selection of 2004-05 programs. Thus, we will now address WEM's participation regarding the 2004-05 programs.

WEM cites comments it made on the draft interim opinion establishing selection criteria for 2004-05 programs (ultimately adopted as D.03-08-067). As recited in D.03-08-067, WEM objected to limiting non-utility funding in any way, suggesting such limits conflicted with AB 117. WEM also suggested the Commission conduct a "blind" program proposal review process to avoid any favoritism in the selection process. Although the Commission did not adopt WEM's position, we find that WEM's arguments added to the Commission's consideration of important issues and thus contributed substantially to the Commission's decision.

As noted, WEM lists a number of filings it made "prior to" D.04-02-059, but many of them had nothing to do with that decision. D.04-02-059 cites only one WEM filing, a petition to modify (earlier styled as an application for rehearing of) D.03-08-067, related to the Commission's interpretation of AB 117. The interpretation was for the most part unrelated to issues the Commission resolved in D.04-02-059. The Commission noted in D.04-02-059 that the petition and related matters were being handled elsewhere, and therefore denied WEM's petition. Thus, the petition was irrelevant to D.04-02-059. We find WEM made no substantial contribution to D.04-02-059.

4.2.6 Community Choice

We stated in D.03-07-034:

In response to the state's energy crisis, the Legislature passed AB 117 [(Stats. 2002, Ch. 838)], permitting cities and counties to become [community choice aggregators] CCAs and thereby purchase energy supplies on behalf of utility customers in their respective jurisdictions. The bill also permits CCAs to apply to the Commission for energy efficiency program funding so that they may implement energy efficiency programs in their areas.

WEM proposed that the Commission articulate a preference to CCAs for energy efficiency program funding. The Commission rejected this suggestion, but nonetheless left the issue open for future consideration:

[W]e are not prepared to treat CCAs any differently from other parties at this time. While we may ultimately find that CCAs are appropriately independent agencies that should have considerable deference to use Section 381 funds, we leave the issue of CCA's role and discretion to our broader rulemaking. To treat them differently at this time would presume a policy direction that we are not prepared to address in the narrow context of this inquiry. We may reconsider the process and criteria for reviewing CCA applications for energy efficiency program funding. Until and unless we do, we will apply the same procedures and criteria for review that we apply now to all Third Party applicants for energy efficiency program funding, including EM&V requirements.¹³

In response to AB 117's requirement that "The commission . . . direct the administrator to work with the community choice aggregator, to provide advance information where appropriate about the likely impacts of energy efficiency programs," D.03-07-034 noted that WEM sought information about "what the utilities have collected in each local jurisdiction." In that decision, we ordered the utilities to provide, among other things, "Public Goods Charge customer payments by zip code and city." Thus, the Commission accepted WEM's input on this issue.

"Substantial contribution" includes providing assistance in the ways mentioned in § 1802(i) (i.e., causing us to adopt, in whole or in part, a factual or legal contention or policy or procedural recommendation made by the intervenor). Moreover, within the meaning of § 1802.5, a party may make a substantial contribution if it "materially supplements, complements, or contributes to the presentation of another party." Most of WEM's claimed compensation on the community choice issue made a substantial contribution, within the meaning of the statute. The exception, time on an unspecified lawsuit in civil court, is not time that relates to a Commission proceeding, and we deduct it. We agree with Edison's comments on the draft decision that WEM's efforts towards rehearing of D.03-07-034 also did not result in a substantial contribution to D.04-01-032 and we will remove the hours in August 2003 from the compensation award.