4. Substantial Contribution

In evaluating whether a customer made a substantial contribution to a proceeding, we look at several things. First, we consider whether the Commission adopted one or more of the factual or legal contentions, or specific policy or procedural recommendations put forward by the customer.⁵ Second, we consider if the customer's contentions or recommendations paralleled those of another party, whether the customer's participation unnecessarily duplicated or materially supplemented, complemented, or contributed to the presentation of the other party or to the development of a fuller record that assisted the Commission in making its decision.⁶

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.⁷

Should the Commission 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. 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.⁸ With this guidance in mind, we turn to the claimed contributions TURN made to the proceeding.

4.1. D.06-06-014

PG&E sought to recover $155 million for contributions to its pension trust in 2006 and $217 million per year for contributions during 2007-2009. PG&E's pension issues were ultimately resolved in the Pension Settlement between PG&E, CCUE and DRA. Although TURN was not a party to, and did not take a position on, the proposed Pension Settlement, it did comment on the disparity between the projected earnings on PG&E's Pension trust fund equity investments and PG&E's authorized return on equity (ROE). Thus, TURN proposed that the Commission allow PG&E to place up to 50% of the trust fund's equity investments in the companies that PG&E used to support its ROE request.

In D.06-06-014, the Commission rejected TURN's proposal, but agreed that it was a topic worth exploring. Further, D.06-06-014 provided: "In future cost-of-capital proceedings, we will ask PG&E to explain and compare the equity markets data it used to prepare (1) its requested ROE, and (2) the pension costs reported in PG&E's most recent form 10-K."⁹ Since TURN's recommendation was adopted in part, we find that TURN made a substantial contribution to
D.06-06-014.

4.2. D.07-03-044

TURN claims substantial contribution to D.07-03-044 on a number of issues. Summarized below are the main areas which TURN included in its compensation request.

4.2.1. Electric Distribution Operation and Maintenance (O&M) Expenses

Late Payment Fee: TURN claims time to address PG&E's proposed late payment fee. The late payment fees portion was removed from consideration in this proceeding.¹⁰ Therefore, TURN's work on this issue did not substantially contribute to the resolution of issues in D.07-03-044. Accordingly, we disallow TURN's time spent on the late payment fee issue.

Not Sufficient Funds (NSF) Fee: PG&E proposed to increase its NSF fee from $8.00 to $11.50. TURN proposed that this fee be set either at $6.00 plus 1% of the check or at a flat fee by customer class. Although the Commission declined to adopt either of TURN's recommendations, it indicated that the issue of whether to adopt a separate, cost-based flat fee for each of the major customer classes would be considered as part of PG&E's next GRC proceeding.¹¹

Service Restoration Fee: PG&E requested that the existing fee be doubled. DRA proposed that the increase be limited to 25% for reasons of affordability. TURN's testimony supported DRA's proposal and provided further explanation why the increase should be limited. The GRC Settlement essentially adopted DRA's position.

Customer Service Standards: TURN proposed adding an erroneous shutoff guarantee of $100 to PG&E's Quality Assurance Program. PG&E agreed to this proposal, and the Commission found the GRC Settlement adopting this new standard to be reasonable.¹²

Bill Set-up Costs: PG&E proposed a one-time charge of $3.2 million for bill redesign. TURN proposed that this cost be recovered over three years. PG&E agreed to TURN's recommendation.

4.2.2. Gas Distribution O&M Expenses

Mark and Locate: PG&E projected a 7% annual increase in the number of underground service alert (USA) tags processed. For 2007, this represented a cost of $31.2 million. TURN proposed that this amount be reduced by $1.201 million due to a lower projected annual growth in the number of USA tags. The Settling Parties maintain that TURN's proposed disallowance is reflected in the GRC Settlement outcome for Gas Distribution O&M expenses.

Leak Survey: PG&E requested $6.271 million for Leak Survey expenses in 2007. This amount was based on a 12% increase in expenses over 2004. TURN proposed a 9% increase, and recommended that PG&E's request be reduced by $0.157 million. The Commission agreed with TURN's recommendation, but declined to reduce the GRC Settlement by $0.157, as it assumed that TURN's proposed disallowance was reflected in the settlement.

Operate Gas Systems (OGS): PG&E requested $3.3 million for OGS in 2007. TURN recommended a disallowance of $0.135 million because OGS costs generally declined during 2000-2005. The Commission generally agreed with TURN's recommendation, but declined to reduce the GRC Settlement, as it assumed that TURN's proposed disallowance was reflected in the settlement.

Corrective Maintenance: PG&E requested $19.266 million for corrective maintenance expenses in 2007. TURN recommended a disallowance of $0.539 million based on historical costs during 2000-2005. Although the Commission found some merit to TURN's recommendation, it ultimately determined that other historical measures of costs demonstrated that PG&E's forecast was reasonable.

Gas Supply Administration: PG&E requested $3.344 million in 2007 for gas administration expenses, consisting of labor (excluding overhead) and computer system costs. TURN recommended that these expenses be reduced. The GRC Settlement reflected TURN's position on these issues.

4.2.3. Electric Generation O&M Expenses

Diablo License Renewal Feasibility Study: PG&E requested $16.8 million for a license renewal feasibility study to analyze Diablo Canyon equipment and operations to determine whether to apply for a 20-year extension of the Diablo Canyon licenses. DRA, Alliance for Nuclear Responsibility/Sierra Club (ANR/SC) and TURN all opposed the study on the grounds that it was premature. TURN alternatively proposed that the cost of the feasibility study be deferred as a regulatory asset. Funding for the study was subsumed in the GRC Settlement. TURN, along with ANR/SC, opposed this settlement provision. TURN recommended that certain conditions be attached to any funding.
D.07-03-044 adopted the settlement provision, but included the conditions advocated by TURN.¹³

Fossil Operations: TURN challenged a number of spending proposals associated with PG&E's Humboldt power plant on the grounds that PG&E was unlikely to spend the money due to the plant's projected closure in 2009 or earlier. As support, TURN pointed out that actual capital spending for Humboldt and Hunters Point was 37% less than what had been forecasted in PG&E's 2003 GRC. In response to TURN's arguments, the GRC Settlement provides for a one-way balancing account of certain costs that PG&E may be able to avoid depending on the timing of the plant closures.¹⁴

TURN also proposed that the Commission modify the GRC Settlement to reduce Fossil Generation O&M expenses by $2.58 million. Although the Commission agreed with TURN that PG&E improperly included $0.6 million for boiler recertification costs in 2008, it concluded that the GRC Settlement had subsumed that reduction in the overall adjustment to Generation O&M costs. The Commission declined to adopt the remainder of TURN's proposed disallowances on the grounds that TURN had failed to make a showing that they were warranted.¹⁵

Hydro Expenses: TURN opposed PG&E's requested amounts for "other regulatory fees" (OR fees), Federal Energy Regulatory Commission, and Other Federal Agency (OFA) fees on the grounds that the forecasted amounts were speculative and recommended that the funding be removed. Alternatively, TURN recommended that the Commission adopt balancing account treatment for OFA fees. Although the Commission did not adopt TURN's recommendations, D.07-03-044 requires PG&E to "report on the amount of actual payment of OR fees and OFA fees over the duration of this GRC cycle and provide a forecast of future OR and OFA costs based on its actual payment history" as part of its next GRC.¹⁶

TURN also recommended that the Commission modify the GRC Settlement to exclude $0.791 million for lead paint and Polychlorinated Biphenyls (PCB) abatement expenses on the grounds that PG&E had received funding for these expenses in its last GRC. The Commission agreed with TURN that PG&E had received funding for these expenses in its last GRC. However, it declined to modify the GRC Settlement on the grounds that the reduction in O&M expenses already excluded PG&E's lead paint and PCB abatement costs.¹⁷

Electric Supply Administration: PG&E requested $42.3 million to plan for and acquire electric supply-side and demand-side resources. TURN recommended that PG&E's request be reduced by $5.2 million, while DRA recommended a reduction of $4.3 million. DRA's recommended reduction is subsumed in the settlement outcome for Generation O&M expenses. The Commission declined to adopt TURN's recommended reduction, but considered TURN's recommendation in its determination of the reasonableness of the GRC Settlement.¹⁸

Nuclear Energy Institute (NEI) Dues: TURN recommended that the Commission disallow 50% of NEI membership dues. The Commission agreed this was consistent with its decision in SCE's recent GRC. The GRC Settlement included recovery of only 50% of NEI dues.

4.2.4. Common and Miscellaneous Revenues, Expenses, and Capital

Other Operating Revenues (OOR): PG&E's initial forecast of $113.9 million for OOR was subsequently revised to $114.8 million to incorporate several minor increases proposed by TURN. The GRC Settlement further increased OORs to $116.2 million. TURN recommended that the GRC Settlement be modified to increase the OORs for several items. The Commission declined to adopt TURN's recommendation, noting that "it is reasonable to assume that the amount of OORs adopted by the [GRC] Settlement in excess of PG&E's litigation position can only be attributed to TURN."¹⁹

Administrative & General (A&G) Expenses: PG&E requested $742.2 million for A&G expenses. TURN raised numerous issues regarding the requested expenses and proposed various adjustments. The GRC Settlement provided $709.4 million for A&G expenses, a reduction of $32.8 million. Although this amount was less than TURN's recommendations, the Commission concluded that the outcome reflected the Settling Parties' resolution of all issues raised by TURN.²⁰

Transportation Services Capital Expenditures: TURN recommended removing $54.1 million in fleet capital spending, comprised of two separate adjustments. PG&E and TURN agreed that PG&E would reduce fleet spending by $15.8 million to correct cost estimating errors. TURN's recommendation to reduce PG&E's rate base by $37.5 million due to improper accounting of rental savings was reportedly incorporated into the Comparison Exhibit.

Company Airplane: PG&E requested $18 million to replace its Company airplane. TURN, along with Aglet Consumer Alliance (Aglet) and DRA, opposed this request. TURN further recommended that if PG&E were allowed to acquire a replacement plane, then PG&E should lease rather than buy the plane, that certain policies governing use of the Company airplane be adopted, and that rate base be reduced to include PG&E's estimated salvage value for the existing airplane. The Commission agreed with TURN's recommendation concerning salvage value, and concluded that it was reflected in the GRC Settlement.²¹ Further, the settlement established a written policy concerning personal use of the company airplane, as recommended by TURN.

4.2.5. Transfer of Customer Advances for Construction (CAC) to Contributions in Aid of Construction (CIAC)

Although PG&E forecasted CAC based on 2004 recorded data, it did not forecast CIAC on the grounds that the CAC to CIAC transfer has no effect on rate base. TURN argued that by ignoring the cumulative effect of this transfer, PG&E's forecasted rate base was too high and recommended that the 2007 rate base be reduced by $3.784 million. Although the Commission agreed with TURN, it declined to reduce the 2007 rate base, noting that the associated reduction in PG&E's 2007 revenue requirement was de minimis.²²

4.2.6. Working Cash

TURN points out the following major contributions in the area of working cash. First, TURN, along with Aglet, recommended that customer deposits be included in the calculation of working cash. Although the Commission found some of the arguments raised by TURN and Aglet to have merit, it did not find them sufficient to overcome the presumption of reasonableness of the GRC Settlement outcome.²³ TURN next proposed that the lead-lag calculation of working cash be adjusted to use a longer period to calculate the revenue lag and to adjust the savings fund contribution lag computation be accorded the same number of lag days as payroll. Although the Commission agreed with the logic of TURN's proposal, it did not adopt the recommendation due to technical objections raised by PG&E. However, the Commission directed PG&E to incorporate into the calculation of working cash a lag for employer savings-fund contributions in its next GRC proceeding.²⁴

4.2.7. Depreciation Expense

Regulatory Liability for Removal Costs: TURN proposed that the Commission create a regulatory liability for ratemaking purposes for the already collected for, but not yet spent, removal costs. The Commission adopted TURN's recommendation and ordered PG&E to classify pre-funded removal costs as a regulatory liability for ratemaking purposes.²⁵

Normalized Net Salvage Proposal: TURN objected to the way future removal costs were estimated in the GRC Settlement as current removal costs were based on future-year dollars. In particular, TURN criticized the method for estimating inflation to calculate future-year dollars. Instead, TURN recommended that removal costs be based on a rolling three-year or five-year average of PG&E's recorded removal costs, which it called the "normalized net salvage approach." Although the Commission did not adopt TURN's approach, it did express concern about the growing balance of pre-funded removal costs. Consequently, PG&E was required to provide certain information in its next GRC proceeding to permit TURN, DRA and others to carefully analyze pre-funded removal costs.²⁶

While we find that TURN made a substantial contribution on this issue, we note that it had made a similar proposal in SCE's GRC proceeding
(A.04-12-014/I.05-05-024). TURN did not prevail in the SCE proceeding and the issue is no longer novel. Accordingly, we shall disallow half of the time TURN spent addressing this issue.

4.2.8. Taxes

TURN objected to PG&E's income tax treatment of the deduction for dividends paid on PG&E Corporation stock held in the Employee Stock Ownership Plan (ESOP). It recommends that the tax deduction for dividends paid to the ESOP should be passed through to ratepayers, consistent with the treatment for ESOP dividends in SCE's GRC. The Commission declined to adopt TURN's proposal, noting that the GRC Settlement, which reduced PG&E's requested revenue requirement by $181 million, represented a reasonable approximation of the likely litigation outcome of all issues raised by TURN and other parties regarding ESOPs.²⁷

4.2.9. Discussion

As summarized above, although we did not adopt TURN's recommendations in most instances, we agreed with many of the concerns expressed by TURN and incorporated aspects of its recommendations as requirements in PG&E's future GRC filings. Further, while TURN's compensation request addressed a limited number of issues, there are many other issues and sub-issues where TURN's participation contributed to the resolution of issues in this proceeding. For example, TURN worked with PG&E and Western Manufactured Housing Communities Association to propose the agreement for billing-related services to mobile home park owners who have submetered tenants.²⁸

As TURN points out, the Commission has previously awarded full compensation even where the intervenor's position on certain issues was not adopted in full.²⁹ Here, TURN provided important contributions on the issues it raised. Indeed, in the areas where we did not adopt TURN's position in whole or in part, we benefited from TURN's analysis and discussion.

TURN further asserts that its efforts critiquing and opposing the GRC Settlement should also constitute substantial contribution. We agree. TURN, along with Aglet and ANR, were the only parties to oppose the settlement. In many instances, TURN was the sole party to oppose certain settlement provisions. Although we ultimately adopted the GRC Settlement, these protests assisted us in developing a full record on the settled issues and determining the reasonableness of the settlement provisions.

For these reasons, we find that TURN made a substantial contribution to D.07-03-044. Accordingly, with the exception of the disallowances discussed herein, TURN's contribution warrants full compensation for all the reasonable hours and expenses incurred.

4.3. D.07-05-058

TURN claims substantial contribution to D.07-05-058, as it actively participated in settlement negotiations and helped shape the Front Counter Settlement. It notes that its advocacy reduced the number of front counter closures from 84 to 9 and included provisions to mitigate the impacts of closure on the nine affected communities. Further, it points out that the Front Counter Settlement reduced PG&E's revenue requirement by a total of $2.757 million through 2010.

TURN's participation on this issue clearly contributed to a settlement agreement which fairly balanced the interests at stake. As D.07-05-058 notes, all active parties on this issue, including TURN and PG&E, compromised their litigation positions concerning the number of front counters to be closed.³⁰ Further, with respect to the front counters that will be closed, the Front Counter Settlement provides that the resultant savings will be passed through to PG&E ratepayers and that the customers who use the nine front counters to be closed will have reasonably comparable alternatives.³¹ Clearly as a party to the settlement agreement, TURN helped shape this outcome. Consequently, we find that TURN made a substantial contribution to D.07-05-058.

4.4. Contributions of Other Parties

Section 1801.3(f) requires an intervenor to avoid participation that unnecessarily duplicates that of similar interests otherwise adequately represented by another party, or participation unnecessary for a fair determination of the proceeding. Section 1802.5, however, allows an intervenor to be eligible for full compensation if its participation materially supplements, complements, or contributes to that of another party if that participation makes a substantial contribution to the Commission order.

In its May 21^st Request, TURN states that it coordinated closely with other parties with similar interests in order to maximize issue coverage and minimize any duplication. It points out that many of its recommendations on issues in D.07-03-044 were unique and did not overlap with the recommendations of DRA or Aglet. Further, TURN notes that where its recommendations did overlap with those of other parties, it sought to bolster the other party's showing by emphasizing different points. In its July 30^th Request, TURN states that while it and DRA represented overlapping interests, TURN's specific recommendations regarding front counter closures did not overlap with the recommendations proposed by DRA.

We recognize that even with coordination among parties, it would be virtually impossible to avoid completely some duplication in a proceeding involving numerous interconnected issues and multiple participants. In this instance, TURN took all reasonable steps to keep duplication to a minimum and to ensure that its work served to supplement, compliment or contribute to the showing of other parties. Thus, we find that there was no unnecessary duplication.

⁵ Pub. Util. Code § 1802(j).

⁶ Id. §§ 1801.3(f) and 1802.5.

⁷ D.98-04-059, 79 CPUC 2d 628 at 653.

⁸ D.03-12-019, citing to D.89-03-063, 31 CPUC 2d 402, awards San Luis Obispo Mothers for Peace and Rochelle Becker compensation in the Diablo Canyon Rate Case on the basis that their arguments, although ultimately unsuccessful, forced the utility to thoroughly document the safety issues involved.

⁹ D.06-06-014, p. 19. See also D.06-06-014, pp. 24 COL 24 & 26 OP 10.

¹⁰ D.07-03-044, pp. 31 (fn. 33) & 34.

¹¹ Id., p. 37.

¹² Id., pp. 26 - 27.

¹³ Id., pp. 102-104.

¹⁴ Id., p. 107; settlement, ¶ 30.

¹⁵ Id., pp. 109-110.

¹⁶ Id., p. 92.

¹⁷ Id., pp. 94-95.

¹⁸ Id., pp. 113-117.

¹⁹ Id., p. 135.

²⁰ Id., p. 150.

²¹ Id., p. 181.

²² Id., p. 193.

²³ Id., p. 202.

²⁴ Id., p. 206.

²⁵ D.07-03-044, pp. 216-218.

²⁶ Id., pp. 228-229.

²⁷ Id., p. 238.

²⁸ Id., pp. 18-22.

²⁹ See, e.g., D.98-04-028, 79 CPUC 2d 570, 573-74.

³⁰ D.07-05-058, p. 12.

³¹ Id., p. 14.