V. Reasonableness of Requested Compensation
After we have determined the scope of a customer's substantial contribution, we then look at whether the compensation requested is reasonable. TURN requests $599,936.6947 for its participation in this proceeding, as follows:
Attorney/Advocate Fees |
|||||
Year |
Hours |
Rate |
|||
James Anthony |
2001 |
220.5 |
$190.00 |
$41,895.00 | |
2002 |
607.5 |
$205.00 |
$124,537.50 | ||
2002 (comp) |
3 |
$102.50 |
$307.50 | ||
Robert Finkelstein |
2001 |
5 |
$310.00 |
$1,550.00 | |
2002 |
330.25 |
$340.00 |
$112,285.00 | ||
2003 |
93.25 |
$365.00 |
$34,036.25 | ||
2004 |
9.5 |
$395.00 |
$3,752.50 | ||
2004 (comp) |
22 |
$197.50 |
$4,345.00 | ||
William Nusbaum |
2003 |
300.5 |
$340.00 |
$102,170.00 | |
2004 |
17.5 |
$365.00 |
$6,387.50 | ||
Christine Mailloux |
2001 |
2.75 |
$250.00 |
$687.50 | |
2002 |
3 |
$275.00 |
$825.00 | ||
Regina Costa |
2001 |
26.25 |
$180.00 |
$4,725.00 | |
2002 |
45.75 |
$200.00 |
$9,150.00 | ||
2003 |
15.85 |
$215.00 |
$3,407.75 | ||
2004 |
0.25 |
$230.00 |
$57.50 | ||
Hayley Goodson |
2002 |
96.5 |
$95.00 |
$9,167.50 | |
Mark Barmore |
2004 |
38.75 |
$125.00 |
$4,843.75 | |
Subtotal |
$464,130.25 | ||||
Expert Witness Fees and Expenses |
|||||
JBS ENERGY |
|||||
Gayatri Schilberg |
2001 |
26.42 |
$130.00 |
$3,434.60 | |
2002 |
529.93 |
$130.00 |
$68,890.90 | ||
2003 |
93.96 |
$140.00 |
$13,154.40 | ||
Deduction due to error in original request (see October 19, 2005 supplement) |
<6,269.00> | ||||
William Marcus |
2002 |
0.5 |
$175.00 |
$87.50 | |
Ron Faubion |
2002 |
4 |
$50.00 |
$200.00 | |
JBS Expenses |
$429.69 | ||||
Subtotal |
$79,928.09 | ||||
MURRAY & CRATTY |
|||||
Terry Murray |
54.75 |
$325.00 |
$17,793.75 | ||
Scott Cratty |
55.7 |
$200.00 |
$11,140.00 | ||
Elizabeth Kientzle |
4 |
$200.00 |
$800.00 | ||
Subtotal |
$29,733.75 | ||||
EXETER ASSOCIATES |
|||||
Tom Catlin |
28 |
$160.00 |
$4,480.00 | ||
Lafayette Morgan |
108 |
$105.00 |
$11,340.00 | ||
Subtotal |
$15,820.00 | ||||
Other Reasonable Costs |
|||||
Photocopying |
$6,615.57 | ||||
Postage |
$297.29 | ||||
Attorney travel |
$20.00 | ||||
Fax |
$100.20 | ||||
Federal Express |
$226.28 | ||||
Lexis |
$1,789.36 | ||||
Phone |
$927.86 | ||||
Miscellaneous |
$348.04 | ||||
Subtotal |
$10,311.85 | ||||
TOTAL |
$599,936.69 | ||||
The components of this request must constitute reasonable fees and costs of the customer's preparation for and participation in a proceeding that resulted in a substantial contribution. Thus, only those fees and costs associated with the customer's work that the Commission concludes made a substantial contribution are reasonable and eligible for compensation. The issues we consider to determine reasonableness are discussed below.
To assist us in determining the reasonableness of the requested compensation, D.98-04-059 directed customers to demonstrate "productivity" by assigning a reasonable dollar value to the benefits of their participation to ratepayers. The costs of a customer's participation should bear a reasonable relationship to the benefits realized through their participation. This showing assists us in determining the overall reasonableness of the request.
TURN notes that many of its arguments had a direct impact on the regulated operating expenses of the utilities (e.g., the VEBA 1 Trust issue and reported PBOP costs), although we will not know the full extent of the financial impact on many of these until we conclude subsequent proceedings. The VEBA 1 issue from Phase 2A resulted in a redirection to the trust of approximately $136 million. This money will now be used for the purposes originally ordered by the Commission. On this issue alone, TURN's participation was productive, given that the total amount of compensation sought is a fraction of the outcome on this issue.
On many other issues, TURN's contribution does not lend itself to such "monetization" (for example, enhancements to data gathering and ongoing reporting requirements for service quality). The Commission has previously recognized the overall benefit of TURN's participation where that participation assisted the Commission in developing a record on which to assess the reasonableness of the utility's operations, and particularly its preparedness and performance in the future.48 TURN asserts that a similar determination is appropriate here though it is difficult to put a dollar figure on the benefits from TURN's participation. We agree that TURN's efforts were productive based on its overall results, both quantifiable and non-quantifiable.
B. Hours and Costs Related to and Necessary for Substantial Contribution
Next, we must assess whether the hours claimed for the customer's efforts that resulted in substantial contributions to Commission decisions are reasonable. TURN documented its claimed hours by presenting a daily breakdown of the hours of its attorneys, accompanied by a brief description of each activity. The hourly breakdown reasonably supports the claim for total hours.49 Given the length and scope of the proceeding, the number of parties actively participating, the number of filings each intervenor was required to review in preparing its own comments and replies, and the number of filings TURN made, we agree that TURN's hours are commensurate with its contributions in the proceeding.
C. Market Rate Standard and Related Expenses
Finally, in determining compensation, we take into consideration the market rates for similar services from comparably qualified persons. We find, with minor exceptions, that TURN's requested rates are reasonable, as we discuss below.
TURN seeks an hourly rate of $190 for work performed by Attorney Anthony in 2001. The Commission has previously approved this rate for work performed by Anthony in 2001, and we find this rate reasonable.50
This is the first Request for Compensation in which TURN seeks an hourly rate for work performed by Anthony in 2002. TURN requests a 2002 rate of $205, an increase of 8% over 2001. TURN cites Resolution ALJ-184, issued on August 19, 2004.51 TURN notes that Resolution ALJ-184 was issued nearly two years after the period for which TURN is seeking to establish an hourly rate. The resolution states the Commission will consider an 8% increase presumptively reasonable for purposes of escalating 2003 hourly rates to cover work performed in 2004. It is reasonable here to use this approach, and we approve the 2002 rate of $205/hour.
TURN requests an hourly rate of $310 for Attorney Finkelstein's work in 2001, $340 for 2002, $365 for 2003, and $395 for 2004. The Commission previously has approved these same rates for Finkelstein, using the hourly rates requested for the years 2001-03, and we find these rates reasonable.52
TURN requests an hourly rate of $340 for Attorney Nusbaum's work in 2003 and $365 for 2004. We adopted these rates in D.04-12-054 and D.05-04-014, respectively, and find them reasonable here. Because D.04-12-054 did not set out Nusbaum's credentials in detail, and they may be necessary to assess future requests for compensation, we set them forth here.
Nusbaum is a 1976 graduate of New England School of Law and is a member of the California and District of Columbia bars. He also earned an MBA from the University of San Francisco in 1998. He has over 25 years telecommunications experience in both legal and business strategy positions.
As Assistant General Counsel for the National Association of Regulatory Utility Commissioners (NARUC) from 1977 to 1979, Nusbaum represented the interests of the state regulatory commissions before Federal agencies, courts and Congress on public utility law and telecommunications, energy and transportation issues. In that capacity, he worked closely with counsel from the CPUC. From 1979 to 1982 he served as a Communications Policy Specialist in the Office of Policy Analysis and Development at the National Telecommunications and Information Administration (NTIA) where he was responsible for identifying and developing Executive Branch telecommunications policy recommendations directed towards the FCC, courts, Congress and states. He also served as NTIA's principal liaison to the state regulatory commissions. From 1982 to 1984, Nusbaum served as telecommunications counsel for Bank of America where he provided regulatory, legislative, judicial and contract representation to the Bank's telecommunications, electronic banking, and investment banking departments. He also chaired the California Bankers Clearinghouse Association's Telecommunications Policy Committee where he helped manage the banks' participation in rate cases before the CPUC.
In 1984, Nusbaum began working at Pacific Telesis (now SBC) in the office of Corporate Strategy. He held numerous senior level positions for the next thirteen years both at the holding company (Pacific Telesis) and the operating company (Pacific Bell). In these positions, he was involved in major strategic issues from a public policy and a business perspective. In addition, he managed initiatives including the spin-off of AirTouch Communications, the Pacific Telesis Group's wireless business, and the sale of Bellcore (now Telcordia Technologies), the $1B telecommunications software and professional services company jointly owned by the Regional Bell Holding Companies. In the late 1990s and early 2000s, Nusbaum worked as a management consultant, first with Deloitte Consulting and then on an independent basis where he advised senior management of telecommunications companies, as well as numerous Internet and broadband start-ups.
In January 2003, Nusbaum joined TURN's staff as Senior Telecommunications Attorney. Since his arrival at TURN, Nusbaum has assumed lead responsibility for a number of substantial proceedings, including not only this proceeding, but also the Triennial Review Order phase of R.95-04-043, and the Voice Over Internet Protocol investigation (I.04-02-007).
TURN seeks an hourly rate of $250 and of $275 for Attorney Mailloux in 2001 and 2002, respectively. The Commission has previously approved these rates for work performed by Mailloux in 2001 and 2002,53 and we find these rates reasonable.
TURN is seeking an hourly rate of $95 for work performed by Goodson in 2002. During this time, Goodson was a law student. She performed research on tax flow-through and service quality issues, and assisted with TURN's participation in the Phase 2B service quality hearings, including cross-examining witnesses. This rate previously was approved in D.03-05-065, and we find it reasonable here.
TURN requests an hourly rate of $180 for work policy expert Costa performed in 2001, $200 for work in 2002, $215 for work in 2003, and $230 for work in 2004. We previously approved these rates for Costa, and find them reasonable here.54 Because D.04-12-054 did not set out Costa's credentials in detail, and they may be necessary to assess future requests for compensation, we set them forth here.
Costa received a Bachelor of Arts degree in Communication from Simon Fraser University, Burnaby, British Columbia, in 1984 and an MA Degree from that same university in 1989. She has worked in the telecommunications field for nearly 20 years. From 1984 to 1985, she was a telecommunications analyst in the Litigation Support Department of MCI Communications, Inc. From 1985 to 1987, she was a teaching and research assistant in the Department of Communication, Simon Fraser University, lecturing in and preparing courses on North American telecommunication policy and regulation. During this period, she worked on reports commissioned by the Government of Canada analyzing communication regulatory and policy issues. She was also employed by the British Columbia Public Interest Advocacy Centre (BCPIAC) to assist with their participation in telecommunications hearings before the Canadian Radio-television and Telecommunications Commission (CRTC).
From 1985 through 1988, she was research assistant to Professor William H. Melody, in his capacity as Director of the Programme on Information and Communication Technology (PICT) of the Economic and Social Research Council in Great Britain and Visiting Senior Fellow at St. Antony's College, Oxford. During this time, she also worked for Dr. Robin Mansell, Head of the Centre for Information and Communication Technologies at the Science Policy Research Unit at the University of Sussex. They prepared a report commissioned by the Organization for Economic Cooperation and Development (OECD) analyzing telecommunication policies and rates among OECD member nations.
From January 1989 to August 1991, Costa was employed by the Washington Utilities and Transportation Commission (WUTC) as a Policy Research Specialist. Her duties included drafting Commission comments in an FCC proceeding and the National Telecommunications and Information Administration (NTIA) Notice of Inquiry on the future of the national telecommunications infrastructure, as well as serving as staff lead on open network architecture tariff proposals and telephone company rate restructuring cases. She also lectured on the "Principles, History and Economics of Public Utility Regulation" at the April, 1990 National Association of Regulatory Utility Commissioners (NARUC) Introductory Training Course in San Francisco.
In late 1991, Costa joined TURN's staff. Since 1993, she has served on the telecommunications subcommittee of the National Association of State Utility Consumer Advocates (NASUCA), of which TURN is a member. The committee is responsible for analyzing telecommunication issues, such as universal service, and drafting NASUCA's comments on such issues to Congress and the FCC. She has authored NASUCA resolutions pertaining to DSL service, cost allocation, and open access to telecommunications networks. As a member of the telecommunications committee, she has prepared comments for FCC proceedings pertaining to issues such as telecommunications cost studies, universal service, and carrier access charge reform. She has organized and participated in numerous NASUCA panel sessions, making presentations on issues such as price cap regulation, local competition for telecommunications services, universal service and service quality. She was invited to present testimony before the FCC regarding the SBC/Ameritech merger. Most recently, she was invited to testify before the Federal-State Joint Board on Universal Service with regard to the Rural Task Force Report on Universal Service. She has testified before the California legislature on proposals to extend telecommunications service to rural areas and on telephone number conservation issues.
TURN seeks an hourly rate of $125 for Attorney Barmore's work in 2004. TURN engaged Barmore to prepare its compensation requests for this and other proceedings. We typically determine that compensation request preparation does not require attorney qualifications and therefore normally reduce the rate by 50%. TURN states that it would not be appropriate for the Commission to apply the typical 50% reduction to the relatively low $125 rate it now seeks for Barmore. We previously agreed with that assertion in D.04-12-054, and we accept it here.
TURN seeks to recover related miscellaneous expenses of $10,324.60 for photocopying, postage, delivery costs, and the preparation and distribution of TURN's testimony, briefs, pleadings and other documents and correspondence in the case.
We recognize the photocopying costs are higher than typical for the level of participation in this proceeding, due to TURN's reliance on outside copying firms to handle production of service quality testimony and supporting documents. The telephone and facsimile charges are exclusive to this proceeding. TURN also incurred related legal database research costs.
Overall, we find that TURN's costs are reasonable, were necessarily incurred to enable TURN to participate in this proceeding, and should be compensated in full.
TURN seeks to recover $86,197.09 in related fees and expenses of JBS Energy, Inc., which worked on service quality issues.
TURN requests an hourly rate of $130 for work Gayatri Schilberg performed in 2002, and $140 for 2003. These rates previously were approved for Schilberg and we adopt them here.55
TURN requests an hourly rate of $175 for work William Marcus performed in 2002. This rate was previously approved and we adopt it here.56
TURN requests an hourly rate of $50 for work Ron Faubion performed in 2002. The Commission previously approved an hourly rate of $45 for Faubion's work in 1998 and 1999 as an analyst.57 However, in D.01-06-076,58 we disallowed recovery for Faubion's time for failure to demonstrate whether his work was other than clerical in nature. Clerical time is normally considered as overhead built into substantive experts' rates.
In this case, we have examined the entry for Faubion's time (four hours total) and find that the work was more than clerical. Faubion worked on "tally[ing] CPUC Service Quality failure reports by type of interruption." This is substantive work, and we therefore grant TURN's request, at the $50/hour rate. In the future, TURN shall more fully document this type of work and experience in order to justify compensation.
TURN has supported all of the hourly rates it seeks for JBS Energy's individual participants, and we grant them without modification.
TURN also seeks recovery of the $429.69 in related expenses JBS Energy incurred.59 These expenses include facsimile costs, expedited delivery fees, mileage, transit fares, tolls, and parking, as well as lodging for one trip to appear during the service quality portion of the Phase 2B hearings. These expenses are directly related to TURN's participation, and we find them reasonable.
TURN retained Murray & Cratty LLC, to assist on the service quality issues in Phase 2B, with a small amount of work on more general NRF and audit issues. Murray's service quality testimony focused on TURN's concerns that the deployment of advanced services would result in an inappropriate distinction in the quality of service received by those with access to such advanced services, and by those lacking such access. TURN is seeking compensation for the first time for the Murray & Cratty expert witnesses for work performed in 2002.
Murray, president of Murray & Cratty, sponsored TURN's testimony on service quality issues and provided general support to TURN's work on related issues. The Commission awarded compensation for Murray's 2001 work on behalf of TURN at $320 per hour.60 TURN seeks compensation for her work, performed entirely in 2002, at an hourly rate of $325.
Murray is an economist, the former director of the Commission's Division of Ratepayer Advocates (now ORA), and a former Commissioner advisor.61 Murray has 20 years of experience in her field testifying before this Commission, either for Commission staff or as a consultant for other parties.62 In recent years, she has provided expert consulting services in many major telecommunications proceedings before this Commission, as well as other state commissions and the FCC, on behalf of various clients.
TURN therefore asserts that the $325 per hour rate it now seeks is reasonable because of Murray's increased experience, inflation, and the demand for telecommunications experts. This is too arbitrary a means to increase an award, and we are concerned with the precedent it might set. A prior increase of a certain amount does not necessarily justify an increase in hourly rates without further justification. Therefore, we set Murray's 2002 rate at $320, the same rate previously adopted for 2001.
Cratty is vice president of Murray & Cratty. According to TURN, he supported Murray's testimony through reviewing the utilities' testimony drafting discovery requests and testimony, assisting with hearing preparation and reviewing draft briefs on service quality issues. TURN is requesting $200/hour for Cratty's work performed in 2002. The Commission awarded $185/hour for Cratty's work in 2001.63
Cratty has 20 years experience in telecommunications. He has served as an expert (including testifying expert) in approximately 100 proceedings before more than 20 state and federal regulatory agencies, the majority involving regulation of incumbent local exchange carriers.
As with Murray, TURN did not provide adequate justification to increase Cratty's 2001 rate. Therefore, we adopt a rate of $185 for work performed in 2002.
Kientzle worked four hours to assist TURN in its initial review of the audit results for Pacific in Phase 2. TURN is requesting a rate of $200/hour for Kientzle's work in 2002. We previously awarded $185 for Kientzle's work performed in 2001,64 and similar to Murray and Cratty, adopt that rate here for 2002.
TURN retained the services of Exeter Associates, Inc. (Exeter) to review the audit report and the "shadow audit" performed for ORA, and prepare cross-examination. Exeter provides economic and financial consulting services in the area of public utility regulation, energy, telecommunications and antitrust economics. The firm provides expert testimony and other litigation support in utility regulatory proceedings, as well as antitrust cases and arbitration proceedings on a variety of matters including traditional ratemaking issues, regulatory restructuring, alternative regulation plans, and other regulatory issues.
TURN requests an hourly rate of $160 for Tom Catlin for work performed in 2002-03. These are the same rates Exeter Associates billed TURN for the firm's work on these matters.
Catlin is a Principal and Vice-President of Exeter. He is a senior utility rate analyst with a combination management and analytical background. His areas of specialization include revenue requirements, cost allocation and rate design. Catlin has nearly thirty years of experience in the review and analysis of the operations of public utilities. The emphasis of this work has been on utility rate regulation and has involved telephone, natural gas, electric, wastewater and storm water companies. Catlin's work in utility rate filings has focused on revenue requirement issues, but has also addressed cost allocation and rate design matters. In addition, Catlin has experience involving affiliate relations, alternate regulatory mechanisms and regulatory restructuring issues. Catlin has provided expert testimony before more than twenty state public utility commissions as well as before the Federal Energy Regulatory Commission.
Catlin holds a B.S. in physics and mathematics from the State University of New York at Stony Brook, and an M.S. in water resources engineering and management from Arizona State University.
TURN asserts that Catlin's training and experience, as well as the services he offers, are very similar to those offered by William Marcus, Principal Economist for JBS Energy. As noted above, the Commission awarded compensation using a $175 hourly rate for Marcus's work in 2002. For 2003, the Commission increased that rate to $185.65 TURN states that Catlin's credentials also are comparable to those of Eric Woychik, for whom we approved an hourly rate of $160 for 2002 work and $170 for 2003 work.66 TURN states that the Commission should find reasonable the $160 hourly rate that Exeter charged for Catlin's work during 2002 and 2003 based on the comparison to these Commission-approved rates for comparable witnesses during that same time frame. We agree and find the $160/hour rate for Catlin reasonable.
TURN seeks $105 per hour for work Lafayette Morgan performed in 2002 and 2003. Morgan is a Senior Regulatory Consultant with Exeter involved in the analysis of the operations of public utilities with particular emphasis on rate regulation.
Prior to joining Exeter approximately ten years ago, Morgan spent four years as a Senior Financial Analyst with Potomac Electric Power Company (Pepco), where he prepared cost of service, rate base, and ratemaking adjustments supporting the company's request for revenue increases in its retail jurisdictions. Before joining Pepco, Morgan worked for six years as a Staff Accountant with the North Carolina Utilities Commission-Public Staff. He was responsible for analyzing testimony, exhibits, and other data presented by parties before the Commission. In addition, he performed examinations of the books and records of utilities involved in rate proceedings before the North Carolina Utilities Commission. Morgan also participated in several policy proceedings involving regulated utilities.
Morgan holds a B.A. in accounting from North Carolina Central University and an M.B.A. in Finance from the George Washington University. Morgan is also a licensed C.P.A. in the State of North Carolina.
TURN states Morgan's training and experience, as well as the services he offers, are very similar to those offered by Jeff Nahigian, Senior Economist for JBS Energy. The Commission has awarded compensation using a $115 hourly rate for Nahigian's work in 2002 and $125 for 2003.67 TURN asserts that Commission should find reasonable the $105 hourly rate that Exeter charged for Morgan's work during 2002 and 2003 based on the comparison to these Commission-approved rates for comparable witnesses during that same time frame. We agree and find the $105/hour rate for Morgan reasonable.
47 Note that this is the corrected total reflected in TURN's October 19, 2005, supplement.
48 D.99-12-005, mimeo., pp. 6-7 (1995 Storm Phase of PG&E GRC A.97-12-020); D.00-04-006, mimeo., pp. 9-10 (Edison PBR Midterm Review A.99-03-020).
49 TURN separated the hours associated with travel and preparation of this compensation request and requests compensation at half the usual hourly rate for this time.
50 D.02-04-013, mimeo., p. 10.
51 An 8% increase to Anthony's 2001 hourly rate of $190 yields an hourly rate of $205.20. TURN has rounded that figure to the nearest $5 increment.
52 D.02-06-070, mimeo., p. 21 (2001 rate); D.03-01-074, mimeo., p. 7 (2002 rate); D.03-08-041, mimeo., p. 7 (2003 rate); D.05-03-016 (2004 rate).
53 D.03-01-074 and D.03-05-027 (2001); D.03-07-014 and D.04-02-014 (2002).
54 D.01-08-011 and D.04-09-017 (2001); D.01-08-011, D.03-05-027 and D.03-07-014 (2002); D.04-02-014 (2003); and D.04-12-054 (2004).
55 D.02-11-017, mimeo., p. 9 (2002 rate); D.05-06-031 (2003 rate).
56 D.02-11-020, mimeo., pp. 7-8, D.03-04-011.
57 D.00-09-068.
58 2001 Cal. PUC LEXIS 603, § 6.3.3.
59 Consistent with JBS' normal billing practice, TURN was billed for only half the time JBS employees spent traveling in relation to this case.
60 Approved in D.05-12-038.
61 According to TURN, Murray has expertise in NRF-related issues, as she drafted the order that opened the investigation leading to the establishment of NRF. Later, as director of DRA, she oversaw the office's litigation efforts in Phase II of the original NRF investigation.
62 D.04-08-020, 2004 Cal. PUC LEXIS 429, at *20-21.
63 D.05-12-038.
64 D.05-12-038.
65 D.03-10-011, mimeo., p. 11.
66 D.04-08-042, mimeo., p. 19.
67 We approved the 2001-02 rate of $115 for Nahigian D.02-11-017, mimeo., p. 9, and the 2003 rate in D.03-10-011, mimeo., p. 11.
