Elimination of Intervenor Compensation Fund
Under the current procedure adopted in D.00-01-020, all utilities in the affected industry pay intervenor compensation awards in quasi-legislative rulemaking proceedings where the Commission sets policy applicable to an industry or multiple industries. Specifically, we allocate a portion of the annual user fees collected from all regulated water, telecommunications and energy utilities to the intervenor compensation program fund, from which we direct payment to pay any intervenor compensation awards in quasi-legislative rulemaking proceedings where no specific respondents are identified.3
Now, after nearly five years of practical experience, we question the continuing need and practicality of paying eligible intervenors out of a user-fee funded intervenor compensation fund. We propose to modify D.00-01-020 to eliminate the intervenor compensation fund, and to instead allocate intervenor compensation payment responsibility among all utilities (in the affected industry or industries) with California jurisdictional revenues over a specified threshold. We propose a threshold of $10 million for water utilities and $50 million for all other utilities.
Our purpose when we adopted the current procedure in 2000 was to eliminate the former practice of obligating only one or two of the biggest utilities to bear the compensation responsibility when the rulemaking affects an entire industry or industries. The procedure acknowledged the increasing competitiveness in some of the industries we regulate, and tried to be more equitable to all service providers and their customers. Equally important, however, was that the procedure, while broadening the payment responsibility, not increase the administrative burden and the risk of non-payment borne by intervenors, who potentially must otherwise seek payment from all regulated utilities in a given industry.
Unfortunately, we have found the procedure to have significant problems. The intervenor compensation fund diverts user fee funds from other Commission budgetary expenses. In addition, although we were confident in 2000 that the cost of the fund was minimal and sufficiently predictable so that the impact on the Commission budget would be insignificant and easily managed, this has proven not to be the case.
The intervenor compensation fund has been allocated an annual budget of $750,000 under the State's budgetary process. From 2001 through 2003, and to date in 2005, the fund has paid out less than a third of that amount in each year. While for the most part, there were no shortfalls, we are concerned that this overfunding in effect diverted resources that could have been better used elsewhere in our administration. On the other hand, the amount of fund awards paid in 2004 exceeded the annual budget by well over $100,000.
We propose to eliminate the procedure, but in so doing, we face again the tension addressed in D.00-01-020 between placing undue administrative burden on utilities and intervenors, on the one hand, and inequitably allocating responsibility for payment to some, but not all, utilities affected by a rulemaking. The administrative burden on utilities and intervenors that would result from allocating payment responsibility to all utilities has not changed since our consideration of this issue in 2000. It would not be reasonable to expect intervenors to collect their awards from dozens or even hundreds of utilities, nor would it be reasonable to expect small utilities to calculate their small individual shares of awards in rulemaking proceedings in which they may not even have participated. The result of such a collection procedure would be that utilities and intervenors would incur substantial administrative costs, contrary to the legislative intent (see § 1801.3(b)) that the intervenor compensation program be run efficiently.
We believe the following proposal will equitably allocate payment responsibility without unduly increasing the administrative burden on utilities and intervenors. In any quasi-legislative rulemaking affecting an entire industry or industries, in which there are no named utility respondents, any water utility with California jurisdictional revenues (as most recently reported to the Commission) of more than $10 million, and/or any electricity, gas, or telephone utility with revenues of over $50 million, will be allocated a share of payment responsibility for any intervenor compensation awarded in the proceeding, based on the ratio of its California jurisdictional revenues to the revenues of all utilities with payment responsibility.
3 As noted, the procedure excepts those rulemakings in which the Commission names respondent utilities; in those rulemaking, the respondents must pay any awards to intervenors. In practice, we have found that naming respondents in broad policy setting rulemakings may be hard, precisely because our intent is to create rules for the entire industry.
