ALJ/SRT/hkr Mailed 8/25/2006

Decision 06-08-007 August 24, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Own Motion to Assess and Revise the New Regulatory Framework for Pacific Bell and Verizon California Incorporated.

Rulemaking 01-09-001
(Filed September 6, 2001)

Order Instituting Investigation on the Commission's Own Motion to Assess and Revise the New Regulatory Framework for Pacific Bell and Verizon California Incorporated.

Investigation 01-09-002
(Filed September 6, 2001)

OPINION GRANTING INTERVENOR COMPENSATION
TO THE UTILITY REFORM NETWORK
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION (D.) 02-10-020,
D.03-10-088, D.04-02-063, D.04-07-036 AND D.04-09-061

TABLE OF CONTENTS

Title Page

OPINION GRANTING INTERVENOR COMPENSATION
TO THE UTILITY REFORM NETWORK
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION
(D.) 02-10-020, D.03-10-088, D.04-02-063, D.04-07-036 AND D.04-09-061 2 2

II. Requirements for Awards of Compensation 4 4

III. Procedural Issues 5 5

IV. Substantial Contribution 6 6

A. D.02-10-020 7 7

B. D.03-10-088 9 9

1. TURN's Assertions 10 10

a. Claims Adopted in PD, But Not in Commission Decision 10 10

b. Claims Adopted in Commission Decision 12 12

c. Claims Adopted Neither in PD Nor in Commission Decision 14 14

2. Discussion 14 14

a. Issues on Which PD and Commission Decision Agree 14 14

b. Issues on Which PD and Commission Decision Diverge 14 14

(1) Precedent Allowing Compensation 14 14

(2) Intent of Statute to Encourage Participation 17 17

(3) Intervenor's Efforts Persuade Neither ALJ
Nor Commission 19 19

C. D.04-02-063 21 21

D. D.04-07-036 23 23

E. D.04-09-061 24 24

V. Reasonableness of Requested Compensation 27 27

A. Productivity 29 29

B. Hours and Costs Related to and Necessary
for Substantial Contribution 30 30

C. Market Rate Standard and Related Expenses 31 31

1. TURN's Staff 31 31

a. James Anthony 31 31

b. Robert Finkelstein 32 32

c. William Nusbaum 32 32

d. Christine Mailloux 34 34

e. Hayley Goodson 34 34

f. Regina Costa 34 34

g. Mark Barmore 37 37

h. TURN's Expenses 37 37

2. TURN's Outside Experts 37 37

a. JBS Energy, Inc. 37 37

(1) Gayatri Schilberg 38 38

(2) William Marcus 38 38

(3) Ron Faubion 38 38

(4) JBS Expenses 39 39

b. Murray & Cratty LLC 39 39

(1) Terry Murray 39 39

(2) Scott Cratty 40 40

(3) Elizabeth Kientzle 41 41

c. Exeter Associates 41 41

(1) Tom Catlin 42 42

(2) Lafayette Morgan 43 43

VI. Award 44 44

VII. Comments on Draft Decision 47 47

A. Disallowance Where TURN Did Not Prevail 47 47

B. Hourly Rates for Murray, Cratty, and Kientzle 50 50

VIII. Assignment of Proceeding 50 50

Findings of Fact 50 50

Conclusions of Law 51 51

ORDER 51 51

APPENDIX

OPINION GRANTING INTERVENOR COMPENSATION
TO THE UTILITY REFORM NETWORK
FOR SUBSTANTIAL CONTRIBUTIONS TO DECISION (D.) 02-10-020, D.03-10-088, D.04-02-063, D.04-07-036 AND D.04-09-061

This decision awards The Utility Reform Network (TURN) $519,012.49 in compensation for its contributions to Decision (D.) 02-10-020, D.03-10-088, D.04-02-063, D.04-07-036 and D.04-09-061. This amount is $80,924.20 less than TURN requests.¹ We make this reduction because TURN did not prevail on all issues, and because we adopt lower hourly rates than requested for three of TURN's experts. TURN's request for compensation is uncontested. This proceeding is closed.

I. Background

TURN seeks compensation for its contributions to the decisions issued in the Commission's New Regulatory Framework (NRF) proceeding for Pacific Bell Telephone Company (Pacific)² and Verizon California Inc. (Verizon). The five subject NRF decisions address an audit of Pacific's and Verizon's financial results for 1997-99, and the companies' service quality for the 12 years after the Commission adopted NRF. Because of the complexity of the proceeding, it was bifurcated into phases. The decisions for which TURN now seeks compensation arose from Phases 1, 2A and 2B of the proceeding. D.06-05-024 closed these proceedings. A brief description of each decision for which TURN seeks compensation follows.

A. D.02-10-020

In D.02-10-020, the Commission addressed 144 issues arising from the audit of Verizon that was conducted by the Commission's Office of Ratepayer Advocates (ORA).³ The parties, including TURN, resolved most of the issues in a stipulation that was approved by D.02-10-020 in accordance with Rule 51.1(e) of our Rules of Practice and Procedure (Rules).

B. D.03-10-088

In D.03-10-088, the Commission evaluated and made findings on the quality of Verizon's and Pacific's service to telephone customers for the period 1990, when NRF became effective,⁴ to the time of the hearing in 2002.

C. D.04-02-063

Decision 04-02-063 addressed four of 72 issues arising from an audit of Pacific's financial performance in 1997-99. These four issues pertained to (1) pensions; (2) post-retirement benefits other than pensions (PBOPs); (3) write down of plant assets; and (4) income taxes.

D. D.04-07-036

In D.04-07-036, the Commission granted an application for rehearing filed by TURN and ORA regarding certain evidence the Assigned Commissioner's office admitted into the record after the hearings were concluded.

E. D.04-09-061

In D.04-09-061, the Commission addressed the remaining 68 issues raised in the audit of Pacific's financial results for 1997-99.

¹ In the course of preparing a supplement to its compensation request, TURN discovered that its request for compensation had inadvertently included hours for an expert witness's work despite TURN's intent to exclude all such hours from the Request for Compensation. The appropriate adjustment would reduce the hours for Gayatri Schilberg of JBS Energy by 39.5 hours in 2002, and 8.1 hours in 2003, for a total reduction of $6,269.00. Thus, while TURN's initial request was for $606,205.69, we have revised that request downward to ($606,205.69 minus $6,269.00, or $599,936.69).

² Pacific is now known by its d.b.a., AT&T. We use the Pacific name throughout this decision.

³ The Office of Ratepayer Advocates became the Division of Ratepayer Advocates, effective January 1, 2006, pursuant to Senate Bill 608. We use the name ORA throughout this decision.

⁴ D.89-10-031, 1989 Cal. PUC LEXIS 576, 33 CPUC 2d 43 (1989), 107 PUR 4^th 1 (1989).