State Auditor vindicates CPUC Intervenor Compensation Program

The Intervenor Compensation Program is intended to ensure that utility ratepayers have effective representation in proceedings of the California Public Utilities Commission. Qualified intervenors that participate in commission proceedings may request reimbursement for their costs associated with participating.

Today the California State Auditor released a report that reviewed five years of intervenor compensation that was awarded to the top ten advocacy groups participating – and whether that program is properly managed by the CPUC.

The audit, ordered by the Joint Legislative Audit Committee at the request of Assemblyman Henry Perea, found the Intervenor Program has a “robust process” to determine whether intervenor costs and expenses are reasonable, and has a process to evaluate whether intervenors represent the interests of utility ratepayers before it awards compensation.

AT&T, Verizon, PG&E and other big utilities had great hopes that the audit would help strangle a program that has saved California consumers billions of dollars by scaling back outlandish rate hike proposals. Instead the audit found that the Intervenor Compensation Program is well managed.

Last year, AT&T and Verizon endorsed Assemblyman Perea’s call for the audit, and PG&E lobbyists worked behind the scenes to win its passage by the Joint Legislative Audit Committee.

Consumer Federation of California was one of the ten intervenors selected for this audit, based on the highest cumulative compensation awards approved from 2008 through 2012. The program provides consumers an effective voice before state regulators when for-profit gas, electric, telecommunications or water utilities seek unwarranted rate hikes, or rules that harm residential ratepayers.

The program helps to level the playing field for California’s hard-working ratepayers. Individual consumers 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. Nonprofit organizations intervene on behalf of consumers, our health, safety, privacy, the environment, and the voiceless, such as immigrants, the poor, and the disabled, when a profit-hungry utility company brings a rate case or rulemaking to the CPUC. The results of the intervenor program are typically lower rates, saving consumers hundreds of millions of dollars every single year.

For example, the Consumer Federation of California and other non-profit organizations that represent the interests of residential ratepayers successfully opposed an application by PG&E, SoCal Gas and SDG&E to raise natural gas fees charged to residential ratepayers by $90 million a year. Over a 10-year period, the cost to consumers would have been $900 million. For CFC’s work, the CPUC ordered PG&E, SDG&E and SoCal Gas to pay an award of $218,216.20, which cost about two-one hundredths of a penny (0.00024) for every dollar that was saved for residential customers.

Instead of casting aspersions against a law that has given consumers an effective voice in standing up against the arrogance and greed of the gigantic utility corporations, the audit’s appraisal of the program was favorable.

The audit made several recommendations for improvements. We salute these findings of shortcomings with the CPUC’s implementation of the program:

  • The PUC does not comply with a requirement that it issue a preliminary ruling concerning the intervenor’s eligibility to receive compensation within 30 days of its petition to intervene in a proceeding.

CFC believes that this creates great uncertainty for intervenors, which discourages participation.  A preliminary ruling would not guarantee compensation.  It would let an intervenor know if the subject matter of the proceeding falls within the jurisdiction of the Intervenor Compensation Program before it incurs substantial expense throughout the lengthy duration of a proceeding.

  • In 94% of all claims submitted, the PUC violated the requirement to issue a decision on a request for intervenor compensation within 75 days.

The CFC and other consumer groups are routinely left uncompensated for a year or more following the conclusion of a one to two year proceeding.  We pay our costs as they are incurred. These lengthy delays in awarding compensation means that CFC and other consumer groups are collectively awaiting payments of millions of dollars at any point in time, which only discourages participation by consumer advocates – much to the delight of the highly profitable utilities against whom we intervene.

  • The PUC has not conducted the required market rate studies to establish hourly rates for intervenors.

CFC suspects that the rates the PUC has approved for attorneys and expert witnesses are low by comparison to rates that prevail in the marketplace. The PUC recently froze these rates for three years, which added to the disparity between compensation for consumer advocates and their opposite numbers from the utilities.

Through the Intervenor Compensation Program, advocacy organizations have strengthened safety enforcement, protected access to services for disadvantaged communities, and improved environmental standards.

The audit report should bring to a screeching halt Assemblyman Jim Frazier’s AB 995, which would eviscerate the CPUC Intervenor Compensation Program.

CFC plans to work with our allies to introduce legislation to implement the audit’s recommendations.

Click here for the State Auditor Report:


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