Intervene At Your Own Risk

I don?t know about you, but I found Theresa Heinz Kerry?s unscripted moment at the Democratic National Convention this week so refreshing. Her telling an obnoxious reporter to ?shove it? was music to my ears, providing a long-overdue contrast to the plethora of overly refined PC statements in the political arena. Of course, being a billionaire does make it significantly easier to speak one?s mind in public. As Bill Clinton noted during the convention in Boston when mentioning the country?s ?fair trade? agreement with Japan and China, you can?t afford to screw your banker. The contrasting remarks swirled in my head as I reviewed the draft decision on compensation awards proposed for consumer groups intervening in the Pacific Gas & Electric bankruptcy ordeal, the mother of all recent California Public Utilities Commission battles. I wondered just where that green or perceived line is that, if crossed by consumer groups, will jeopardize payment for legal costs incurred in this CPUC proceeding or others. The rub is that while public advocates fight to protect their constituents, they have no guarantees the commissioners will agree to cover their intervention costs. ?Getting paid is always on my mind,? said James Weil, director of the Aglet Consumers Alliance. ?It obviously has something to do with what we decide to pursue and what we don?t pursue,? added Mike Florio, The Utility Reform Network senior attorney. ?If you piss off a decision maker, your interests are at risk. That is the world we live in.? The structure of the intervenor compensation law creates an inherent tension because intervenors get paid after the fact?and only if the commissioners conclude they made a ?substantial contribution? to a case. This subjective call keeps consumer groups on edge. As one source noted, ?It puts the screws to the consumer representatives.? In addition, contributions by participants are deemed ?substantial? only if they are different from those of other intervenors. So standing apart counts for a lot?that is, when it comes to getting the bills paid under the enabling statute. Another problem with the law is that it shuts far less experienced consumer advocates out of the complicated CPUC process because getting involved is a big gamble many cannot afford. CPUC member Loretta Lynch called the rules ?Byzantine? when voting for expanding them to allow unions to qualify as intervenors at the end of last year. ?It?s hard enough to provide a perspective and analysis that is different from utilities,? she said. To date, the commission is credited with applying a liberal interpretation overall of what constitutes significant input into a proceeding, particularly in cases involving high stakes. But that doesn?t change the fact that it is a subjective standard. Having to worry about getting paid because of a lack of a dispassionate arbitrator and deep pockets also allows suspicions to creep in about whether or to what extent public advocates modify their stance to keep them from ending up in the hole. For example, TURN had invested significant time and resources in fighting PG&E?s bankruptcy plan. It pushed for replacing the proposed settlement?s $2.2 billion regulatory asset with a ratepayer-backed bond to save consumers $1 billion at the get-go. That had been agreed to by CPUC president Mike Peevey, unknown staff, and PG&E lawyers. However, at the last minute, Florio agreed to delaying the creation of a dedicated rate component that cut into the hoped-for savings, costing an estimated $300,000 for every day the Legislature postponed its creation. His agreement with PG&E delighted three of the five CPUC members but upset many others. If Florio had not agreed to sign on to the deal and had told PG&E to ?shove it,? would TURN?s intervenor compensation claim have been at risk? If he hadn?t continued to stake out a position that differed from those of other consumer groups, would the $800,000 the organization had on line have been jeopardized? ?No one ever said a word that it would improve or hurt our chances on compensation,? Florio said. But the issue is not what?s explicitly stated; it?s what is implicitly understood or feared. No one I talked to believed that TURN?s agreement affected its payment chances, and all were quick to defend the organization. They were, however, troubled by being shut out of the negotiations. Some also noted that Peevey indicated TURN?s substantial costs, including the hiring of outside counsel, would be covered well before the 11th-hour deal. But then again, there were no guarantees. Imagine how nerve-wracking it would be not to know whether you?d be paid for a job involving months of time and resources. To date, there is no way to measure the impact of the substantial-contribution rule. But it seems to me that there must be a better way for legitimate intervenors to collect their due. Yes, I know and agree that you can?t let everyone and their sister intervene in a case and that there must be standards to protect the process. But why, for example, aren?t intervenors? cost claims treated on a par with those of utilities? Consider this: PG&E bankruptcy intervenors had to detail and defend their legal costs, while the $400 million in professional fees PG&E and the CPUC incurred were explicitly covered by the closed-door settlement. Also, the highest hourly rates of some of PG&E?s lawyers?$700 per hour?were $250 more than the highest hourly legal fee proposed by some of the intervenors. In addition, PG&E?s legal fees were given far less scrutiny. The bankruptcy court did not weigh r?sum?s and hourly rates charged by other attorneys as the CPUC does when assessing intervenor rates. Furthermore, why does the commission spend much more time on intervenor compensation claims than on the much costlier claims of investor-owned utilities in the underlying proceedings? Stepping back and seeing the half-full glass piggy bank, the intervenor compensation rules, while flawed, do allow consumer groups to provide much-needed input to help better the regulatory process. ?It is very important to counterbalance corporate advocacy,? said Doug Heller, director of the Foundation for Taxpayer and Consumer Rights. Florio added it was noteworthy that the rules have survived for 20 years ?with no scandal.? Be that as it may, for a moment, just imagine how colorful the debates at the CPUC would be if one or more consumer advocates were independently wealthy or didn?t have to worry about recovering their costs. A ?shove it? remark would likely not even merit any press coverage. Proposed Decision on PG&E Bankruptcy Intervenors? Comp Awards The July 23 California Public Utilities Commission draft decision would award the following amounts: $867,000 to TURN $256,000 to the California Hydropower Reform Coalition $127,000 to Aglet $97,000 to the Greenlining Institute $33,000 to Consumers Union.

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