AB 995 attacks vital consumer utility protection program (2-yr bill)

Update: AB 995 failed deadline and has been made into a 2-year bill.

The Consumer Federation of California (CFC) opposes AB 995 (Frasier) that will eviscerate the California Public Utilities Commission’s (CPUC) much-needed intervenor compensation program.

The intervenor program compensates nonprofit organizations that represent residential and small business ratepayers against utility companies at the CPUC – and has helped to level the playing field for California’s hard-working ratepayers. Rigorous program rules are already in place, and organizations seeking to be compensated for their advocacy must meet stringent rules before compensation is granted.

Whenever a multi-billion dollar utility company brings a rate case to the CPUC, AB 995 will reduce or eliminate the ability of organizations, including CFC, to stand up for consumers, our health, safety, privacy, the environment, and the “voiceless”: immigrants, the poor, and the disabled.

People typically lack the financial ability to hire experts and lawyers to argue against utility companies, but utility companies have seemingly limitless resources to bring lawyers, economists, geologists, and other professional experts to make their case to the CPUC. With AB 995, the CPUC regulatory process will be dominated by large gas, electric, telecomm, and water utilities companies at the expense of consumers.

CFC is an active participant in the intervenor program and has saved ratepayers over two billion dollars in their utility bills during the past seven years. The return for ratepayers – pennies for every hundred dollars saved – has made the intervenor program an effective investment in consumer and public protection.

For example, CFC and other nonprofit organizations that represent residential ratepayers successfully opposed a rate hike application by PG&E, Southern California Gas Company and San Diego Gas and Electric to raise natural gas fees charged to residential ratepayers by $90 million a year. Over a ten-year period the cost to residential ratepayers, had these for-profit gas utilities succeeded in their scheme, would have been $900 million. CFC and the other nonprofit consumer advocacy groups successfully documented to the CPUC that the rate application was without merit.

In another proceeding, CFC persuaded the CPUC to reject a scheme to bill PG&E, Southern California Edison, and SDG&E electric ratepayers about $60 million per year to fund a think tank, after the legislature had rejected funding this project through the state budget process. CFC saved electric utility consumers $600 million over the project’s proposed 10-year life.

AB 995 is a direct attack on consumer organizations and ratepayers. This bill only benefits the giant utilities by freezing out consumer, environmental, safety, health, and the disadvantaged communities that deserve effective representation before the CPUC.

Organizations opposed to AB 995 (partial list):

Consumer Federation of California
The Utility Reform Network
California Labor Federation
San Bruno Mayor
Consumer Action
Communications Workers of America
Disability Rights Advocates
Center for Biological Diversity
National Resources Defense Council
Sierra Club California
Center for Accessible Technology
National Asian American Coalition
Sustainable Conservation
Mussey Grade Road Alliance
Utility Workers of America
American Association of Retired Persons
Agriculture Consumer Association

*More about AB 995

•    AB 995 is inconsistent with the purpose of the CPUC intervenor program, which is intended in part to “[encourage] the efficient and effective participation of all groups that have a stake in the public utility regulation process.” AB 995 is at odds with the intent of the current law by raising additional barriers and by creating doubts about a group’s ability to demonstrate that an award of compensation is appropriate.

•    AB 995 caps the intervenor compensation at an average of the previous 3-years. This bill induces utilities to load up any future year with massive rate hike and rule change proposals. It will squeeze out smaller intervenors who lack the financial resources to intervene if there is a new funding cap established – thereby silencing groups that speak out for the disadvantaged.

•    Current law already requires that an intervenor demonstrate its “substantial contribution” to a CPUC order or decision. AB 995 adds to the definition of ‘substantial contribution” that an intervenor’s participation must “[promote] a public purpose that directly benefits other customers,” yet the bill lacks any explanation of what the additional contribution would entail or how the new standard is intended to be different.

•    AB 995 adds confusing and unnecessary language regarding potential duplication of the work of the Division of Ratepayer Advocates (DRA), a division of the CPUC. The current intervenor compensation statute already discourages unproductive or unnecessary duplication of effort among parties and also addresses overlap with the work of DRA. By contrast, AB 995 declares an intervenor’s work might be ineligible for compensation not only where it directly overlaps with the DRA’s efforts in the particular proceeding, but also where the intervenor’s participation “falls within the scope and purview of the division.” The scope of DRA’s charge of consumer representation is very broad and could cover very nearly every matter that comes before the CPUC.

Adding the restrictions and requirements set forth in AB 995 will severely undermine the intervenor compensation program in a way that would weaken consumer rights on vital utility regulatory matters.