Audit Vindicates PUC Intervenor Compensation Program


Posted on 24 July 2013

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By Richard Holober
Consumer Federation of California

The California State Auditor’s has reported that the Public Utilities Commission’s Intervenor Compensation Program “has generally awarded compensation to intervenors – individuals and groups that represent the interests of utility ratepayers – in accordance with state law.”

The audit report - long awaited by consumer groups and utility corporations - surely dismays AT&T, Verizon and PG&E. The Intervenor Compensation 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 Intervenor Compensation Program has saved California consumers billions of dollars by scaling back outlandish rate hike proposals, and by reining in bait and switch advertising and other deceptive industry practices. Through the Intervenor Compensation Program, advocacy organizations have strengthened safety enforcement, protected access to services for disadvantaged communities, and improved environmental standards.  

Utility lobbyists and utility-friendly lawmakers had teed up the audit as an opening salvo against a consumer representation program they hope to strangle. They hinted loudly that the Intervenor Compensation Program was an out of control giveaway of utility dollars to shady organizations. Instead, the audit found that the Intervenor Compensation Program is well managed.

Instead of casting aspersions about a program established under California law to give consumers an effective voice in standing up against the arrogance and greed of the gigantic utility corporations, the audit’s appraisal of the Intervenor Compensation Program was favorable.

The audit, ordered by the Joint Legislative Audit Committee at the request of Assemblyman Henry Perea, found the Intervenor Compensation 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 and Verizon endorsed Assemblyman Perea’s call for the audit, and PG&E lobbyists worked quietly to win its passage by the Joint Legislative Audit Committee. Assemblyman Perea has received over $50,000 in contributions from gas, electric, telecommunications and water utilities since 2011, according to reports on the Secretary of State’s website.

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 audit made several recommendations for improvements. CFC salutes 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 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.

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

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Richard Holober is the Executive Director of the non-profit Consumer Federation of California, a leading consumer advocacy organization.