5. Reasonableness of Requested Compensation

TURN requests compensation in the amount of $144,503.87. Once we establish that an intervenor is eligible for compensation and has made a substantial contribution, we evaluate the reasonableness of the intervenor's request. Specifically, we look at the productiveness of the participation; the number of hours and hourly rates claimed; other costs, which in this proceeding included work done in separate but related proceedings; and TURN's request for a 1.5 "lodestar multiplier" to the base fee level for its attorney time.

5.1 Overall Benefits of Participation

In D.98-04-059, the Commission adopted a requirement that a customer must demonstrate that its participation was "productive," as that term is used in §1801.3, where the Legislature gave the Commission guidance on program administration.⁸ Participation must be productive in the sense that the costs of participation should bear a reasonable relationship to the benefits realized through such participation. In this instance, TURN's efforts in the rehearing phase resulted in the core customers receiving an $88.1 million reduction in allocation of step-down costs. Consequently, TURN's participation was productive in that the costs claimed for its participation are reasonable in light of the benefits realized.

5.2 Hours Claimed

TURN documents the claimed hours by presenting a summary of hours, billing rates, and amounts billed for each participating attorney. In addition, TURN attaches a detailed contemporaneous time log for each attorney. TURN also separated out the outside consultant fees from TURN's other direct expenses. The hourly breakdown presented by TURN reasonably supports its claim for total hours.

5.3 Hourly Rates

TURN requests hourly rates of $275 (1996-97), $290 (1998-99), and $300 (1999-00) for professional work performed by Michel Florio; $195 (1996-97) and $205 (1997-98) for professional work performed by Theresa Mueller; and $160 (1998) and $175 (1999)⁹ for professional work performed by Marcel Hawiger.

The requested rates reflect rates the Commission has previously awarded for those individuals, with one exception. Specifically, for Hawiger'' work in 1999, TURN has previously requested that the Commission adopt an increase in the hourly rate to $175. Based on his training and experience, and inflation, the Commission, in D.00-04-007, adopted an hourly rate of $170 for his work in 1999. Therefore, the hours billed for Hawiger in this proceeding in 1999 will be compensated at an hourly rate of $170, and the compensation award will be reduced accordingly.

5.4 Other Costs

TURN requests $36,845.31 for direct expenses; of these, $7,227.81 is for copying, fax charges, Lexis research, and postage. Based on the service list in this proceeding, TURN's request for these costs appears reasonable.

TURN is also requesting $29,617.50 as direct expenses for the consulting fees of Ian Goodman of the Goodman Group, Ltd. This request is unusual because Goodman only billed $8,085 for work conducted in this proceeding, and billed $21,532.50 for work in A.97-12-048, the SoCalGas interstate capacity unbundling proceeding. A.97-12-048 was terminated without a decision; thus TURN did not seek any compensation for work performed in that proceeding.¹⁰

Normally, fees billed to another matter would not be a proper compensation request. However, TURN argues that the focus of Mr. Goodman's research in A.97-12-048 was on the economic impacts of the stepdown surcharges. Since the issue was substantially the same in this proceeding, Mr. Goodman was able to update his analytical and mathematical analysis from A.97-12-048, and utilize it in this matter.

SoCalGas, however, argues that TURN should not be compensated for Goodman's work conducted in A.97-12-048 since his testimony and analysis were performed without the scope of issues contemplated for this proceeding in mind. Under the intervenor compensation statute, §1801, et seq., compensation is allowed for costs expended in that proceeding, not an unrelated proceeding. SoCalGas cautions that to allow Goodman's fees for A.97-12-048 would open the flood gates to requests for research or work done in earlier proceedings that somehow contribute to the witness' learning experience or professional background. In effect, it gives an intervenor a "second bite at the apple" for fees earned, but not requested, in an earlier proceeding.

We are conscious of the concerns raised by SoCalGas, but find that under the unusual and limited factors present in this case, we will allow Goodman's fees in their entirely. Goodman could have disregarded the analysis he did in A.97-12-048; if so, he would have had to repeat in the present proceeding his analysis of the economic impacts on noncore customers and the regional economy of allocating stepdown surcharges to core customers. Instead, Goodman utilized his research and analysis from A.97-12-048 to develop his testimony here.

In light of the facts that Goodman's analytical work regarding economic impacts, was responsive to the analysis the Commission requested here, his total fee bill is in line with what other experts would have charged for the same work. The Commission benefited from his work, and we find it is reasonable to allow the full amount of $29,617.50 for Goodman's services.

5.5 Lodestar Multiplier

TURN is requesting that the Commission grant a 1.5 multiplier for compensation for professional time in this proceeding. In summary, TURN argues that a multiplier of 50% is justified in this case for several reasons. It was the first case in which the Commission had to interpret the application of its transition cost allocation policies to the surcharge costs resulting from capacity step-downs. Also, TURN was the only party to provide an analysis that quantified the benefits to noncore customers that formed the basis of the Commission's conclusion that the stepdowns made the noncore customers better off. Finally, TURN achieved a very favorable result for core customers (a savings of $88.1 million).

SoCalGas, on the other hand, argues that no multiplier is warranted since the proceeding consisted of a limited rehearing on a single issue; the issue was not novel; TURN's contribution to the proceeding was ordinary and expected and not special; and the results were simply a reallocation of costs from one class of customers to another.

In its establishment of intervenor compensation rules (D.83-04-017, 11 CPUC2d 177, 203-204), the Commission did not rule out the possibility of using the "Lodestar" method approved by the California Supreme Court in Serrano v. Priest, 20 Cal.3d 25 (1966). However, the Commission is very judicious in applying a multiplier to intervenor compensation. Before awarding a multiplier the Commission has analyzed a number of factors to determine whether the multiplier is appropriate, and if so, what is the proper multiplier.

To begin just as in any intervenor compensation request, the Commission determines an appropriate base level of compensation. Then the Commission has, in certain cases, awarded an upward adjustment to that base level. In D.88-02-056, slip op. at pp. 3-4, the Commission set forth and discussed factors that can be considered in making this determination.

"A. Fee Level

1. The experience, reputation, and ability of the attorney.

2. The skill required to perform the legal service properly.

3. Customary fee.

"B. Compensable Hours

4. The time and labor required (reasonable number of hours to present the case).

5. Efficiency of presentation.

6. Novelty and difficulty of the issues.

7. Duplication of effort.

"C. Degree of Success

8. Dollar amount involved.

9. Degree of importance of the issue.

10. The result obtained (partial or complete success on the issue)."

"Of course, these factors are not to be applied to a rigid manner. Some factors will apply to particular elements at times and at other times the factors will be considered in adjusting the overall award. These final adjustments can logically take the form of flat dollar amounts, percentage increases/decreases to either the base award or number of hours, and finally the hourly fee can be enhanced or reduced."

The Commission has awarded TURN an enhancement to all or part of its base compensation on many occasions. (See D.88-02-056 [25% enhancement]; D.93-04-048 [20% enhancement]; D.94-09-022 [35% enhancement]; D.96-09-024 [25% enhancement].

The Commission did rely on TURN in this case, adopted many of its positions, and even quoted extensively from TURN's briefs in the decision. Based on Commission guidelines as set forth above, an enhancement is justified, but TURN's requested 50% enhancement is not justified. We find, applying the factors from D.88-02-056 to the facts of this case, that a 25% enhancement is supportable and warranted. In particular, TURN achieved a remarkable degree of success on the allocation issue, because without TURN's work, core customers would have paid $122 million of the $161.8 million surcharge costs, which is $88.1 million more than the $33.9 they will now pay. Also, as TURN set forth in its request for the enhancement, the issues were novel and difficult, and the testimony of the TURN's expert was uniquely valuable. On balance, TURN has met the quality of work guidelines.

The Commission is mindful that this case is not like D.99-04-023, where a 500% multiplier was allowed because the practice of slamming telephone customers was exposed and consumers received restitution and the wrongdoer was fined. In this case there was no "wrongdoer." However, the core customers in this case, like the consumers in D.99-04-023, did receive an economic benefit. Because of TURN's efforts, the Commission changed its position and followed TURN's recommendation that $88.1 million of the costs allocated to core customers should be shifted to noncore customers. The Commission relied on the testimony and briefs submitted on economic impacts, the economic benefits of step-downs to noncore customers, and the policy reasons why the surcharges should be allocated as ITCS costs.

The Commission therefore grants a multiplier of 1.25 for the professional time in this proceeding, subject to adjustments to the hourly rate for Hawiger. No multiplier was allowed for the fees billed on the preparation of the compensation request, nor was it allowed for consultant fees or any other of the direct expenses. In summary, the total award of attorney fees is $70,815.50, the multiplier of 1.25 is applied to $69,774.25, for a total attorney fee award of $87, 217. 81. The final award of $124,063.12 includes total direct expenses of $36,845.31.