Involvement Pays for Consumer Groups : State PUC Granting Big Cash Awards to ‘Intervenors’ in Rate Cases

Public interest groups are finding that it sometimes pays to get involved with utility rate cases pending before the state Public Utilities Commission.

In the past two weeks, the PUC has awarded $188,458 to the Environmental Defense Fund in San Francisco for its role in a Pacific Gas & Electric case and more than $71,000 to the San Diego-based Utility Consumers Action Network, which intervened in a pair of rate cases involving San Diego Gas & Electric.

However, the big winner during the two years that the PUC has granted so-called intervenor awards has been San Francisco-based Toward Utility Rate Normalization, which has won more than $400,000 for its role in telephone, gas and electric utility rate cases. TURN also is awaiting PUC decisions on requests for $105,000 in additional awards and “is filing for more awards,” according to TURN founder and Executive Director Sylvia M. Siegel.

Intervenor awards grew out of the 1978 Public Utilities Regulatory Policy Act, which pressed state regulators to make it less costly for members of the public to get involved in often complex electricity rate cases. California, recognized as having the nation’s most creative intervention policy, has since expanded its intervenor awards program to include gas and telephone cases.

“The theory is that anyone who contributes on specified issues relating to (rate cases) is eligible for fees,” explained Robert Feraru, who since 1984 has acted as a public adviser for citizens or public interest groups that intervene in utility rate cases.

Although the theory suggests that fees will encourage individuals to get involved, that rarely has happened. In addition to a handful of consumer and public interest groups, a San Diego State University professor who has studied the utility business for nearly 50 years is one of the few individuals to have won awards.

In 1984, SDSU economics Prof. Edward J. Neuner was awarded $2,000 for supplying information that led the PUC to modify an SDG&E; conservation rebate program that Neuner had branded as not being cost-effective.

“The program was driven by a fashionable idea that energy conservation was the thing,” Neuner recalled. “It suggested that the more you spent, the better things would get. There was no effort to ascertain the costs and benefits.”

“The PUC got $20,000 worth of expert opinion for just $2,000, and that’s cost-effective,” quipped Neuner, who has studied the utility industry for nearly 50 years.

Neuner argued that the intervenor program is not likely to boost public involvement in PUC issues. Although he suggested that “most people will not have the technical know-how to make a contribution or will simply not be compensated for their effort,” he did add that public interest groups such as UCAN and TURN deserve intervenor awards.

“TURN, from the point of view of the utilities, has clearly been a thorn in the side . . . but it’s done things that I clearly think the consumer has benefited from,” said Neuner, who added that consumer groups often provide information that is not forthcoming from an over-worked PUC staff.

Siegel argues that intervenor fees likely will encourage more participation. She suggests that public involvement generally is stalled because “all of this (utility) stuff seems to be mysterious, which is nonsense. Once you get behind the buzzwords, all it takes is good plain common sense and the ability to put two and two together.”

Must Make Major Contribution

However, simply making a contribution to a rate case doesn’t ensure that an award will be granted. Commissioners will award fees only to intervenors who “demonstrate a financial need and make a significant and unique contribution to a decision,” according to Feraru.

Intervenors rarely are awarded the amount that they request, however. Environmental Defense Fund originally asked for more than $550,000 to cover part of the expenses generated by a long-running effort to force Pacific Gas & Electric to modify its capital plan to include less-expensive forms of electric power generation.

UCAN, which only recently began seeking awards, asked for more than $80,000 to cover some of the costs associated with a pair of SDG&E; rate cases. TURN’s original intervenor fee requests totaled several hundred thousand dollars more than the $400,000 eventually awarded.

Although intervenor fees represent a “substantial” part of TURN’s budget, the organization “certainly (doesn’t) plan on receiving them,” acknowledged Siegel, who said it would be “risky and a gamble” for a public interest group to count upon intervenor awards for its survival.

“As far as groups like UCAN are concerned, the intervenor awards are a very tenuous kind of thing,” said UCAN Executive Director Michael Shames, who soon will ask the PUC for an additional $40,000. “A group that (spends its) money . . . with the hope of eventually getting it back in an award would really be foolish.”

Although utilities would prefer that hostile consumer groups bow out of utility rate cases, they generally have not disputed awards once they are made--in part because the fees are ultimately paid by utility customers, not shareholders.

For Siegel, there is an easy defense for using utility rates to finance intervention awards.

“If we succeed in our intervention, there’s hundreds of millions of dollars (in rate decreases) at stake,” Siegel said. “What we get (in awards) is modest, very modest.”

Justified by Contribution

Shames suggested that UCAN’s $70,000 in awards was more than justified by the consumer group’s “substantial and unique contribution” to the two rate cases that reduced SDG&E; rates by $137 million.

“We’ve saved ratepayers $5 billion,” said David Roe, a senior attorney with the San Francisco office of the Environmental Defense Fund.

During a six-year period, EDF “presented exhaustive, documented, computer-generated data that proved that utilities like PG&E; would make out better financially by investing in other options than coal and nuclear,” Roe said. “It was an extraordinary thing at the time, but it’s (an idea) that’s gone from being extraordinarily radical to rather conventional.”

Although Shames said the awards will augment UCAN’s tentative $200,000 budget for the fiscal year that began last week, he suggested that they bring other, less tangible benefits.

“For a long time, UCAN has been saying that it’s been successful in keeping (SDG&E;) rates down, but we’ve had nothing to support us,” Shames said. “The intervenor fees are our a way to say to the newspapers and ratepayers that we’ve actually done what we’ve said.”