IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
Applications for a Participant Assistance/Cost Award
for the FortisBC Inc. Stage 2 Prudency Expenditure Review
regarding the Kettle Valley Distribution Source Project
BEFORE: D.M. Morton, Commissioner April 19, 2013
R.D. Revel, Commissioner
O R D E R
WHEREAS:
A. On August 9, 2006, the British Columbia Utilities Commission (Commission) issued Order C‐5‐06 granting a Certificate of Public Convenience and Necessity to FortisBC Inc. (FortisBC) for the Kettle Valley Distribution Source Project (Project);
B. By Order G-36-12 dated March 15, 2012, the Commission established the Regulatory Timetable for the Stage 2 Written Hearing for the review of expenditures on the Project (Stage 2 Review);
C. By Order G-47-13 dated April 3, 2013, the Commission made its determinations on the Stage 2 Review;
D. Three Interveners registered as participants for the proceeding: the British Columbia Pensioners’ and Seniors’ Organization (BCPSO), the Industrial Customer Group (ICG), and Mr. Norman Gabana;
E. Commission Order G-72-07 established Guidelines for Participant Assistance/Cost Awards (PACA) applications;
F. All of the registered Interveners submitted budget estimates; two of the registered Interveners, ICG and BCPSO, submitted final applications for PACA funding to the Commission for their participation in the proceeding;
G. By letter dated February 4, 2013, FortisBC stated it had reviewed the PACA applications;
H. Pursuant to the PACA Guidelines, the Commission determines the entitlement to an award taking into account the criteria in the Guidelines, the information provided by the participant and variances in estimates provided. The Commission has reviewed the comments submitted by FortisBC and it is satisfied that the participants should receive a Participant Assistance Cost Award to recover costs related to this proceeding, as set out in the Reasons for Decision that are attached as Appendix A to this Order.
NOW THEREFORE the Commission orders as follows:
1. Pursuant to section 118 (1) of the Utilities Commission Act, the Commission awards funds in the following amounts, net of GST/HST, to the Participants for their participation in the proceeding.
|
|
Final Application
|
|
|
British Columbia Pensioners’ and Seniors’ Organization |
$11,690 |
$11,690 |
|
Industrial Customer Group |
$21,600 |
$18,828 |
2. FortisBC is directed to reimburse the Participants for the amounts awarded in a timely manner.
DATED at the City of Vancouver, in the Province of British Columbia, this 19th day of April 2013.
BY ORDER
Original signed by:
David Morton
Commissioner
Attachment
Applications for Participant Assistance/Cost Awards
for the FortisBC Inc. Stage 2 Prudency Expenditure Review
regarding the Kettle Valley Distribution Source Project
REASONS FOR DECISION
1.0 INTRODUCTION
On August 9, 2006, the British Columbia Utilities Commission (Commission) issued Order C‐5‐06 granting a Certificate of Public Convenience and Necessity to FortisBC Inc. (FortisBC) for the Kettle Valley Distribution Source Project (Project).
By Order G-36-12 dated March 15, 2012, the Commission established the Regulatory Timetable for the Stage 2 Written Hearing for the review of expenditures on the Project (Stage 2 Review).
Section 118 of the Utilities Commission Act (UCA) provides that the Commission may make cost awards to participants in a proceeding. The Commission received two applications pursuant to section 118 of the UCA for Participant Assistance/Cost Award (PACA) funding for the proceeding.
The Commission’s PACA Guidelines are set out in Appendix A to Order G‑72-07 and include the following provisions:
“The Commission Panel will determine whether a Participant is eligible or ineligible for an award. In determining an award of all or any portion of a Participant’s costs, the Commission Panel will first consider whether the Participant has a substantial interest in a substantial issue in the proceeding. If this criterion is not met, the Participant will typically not receive a cost award except, possibly, for out-of-pocket disbursements.
…
The Commission Panel will then consider the following:
(i) Will the Participant be affected by the outcome?
(ii) Has the Participant contributed to a better understanding of the issues by the Commission?
(iii) Are the costs incurred by the Participant for the purposes of participating in the proceeding fair and reasonable?
(iv) Has the Participant joined with other groups with similar interests to reduce costs?
(v) Has the Participant engaged in any conduct that tended to unnecessarily lengthen the duration of the proceeding? (This criterion will not, by itself, disqualify a Participant for pursuing a relevant position in good faith and with reasonable diligence)
(vi) Any other matters appropriate in the circumstances.
If the Commission Panel considers it to be an appropriate consideration in a proceeding, the Commission Panel may consider the Participant’s ability to participate in the proceeding without an award.”
2.0 PROCEEDING AND PREPARATION DAYS
Section 4 of the PACA Guidelines states that a “proceeding day” may include workshop days, negotiation days, pre-hearing conference days, hearing days, and oral argument days.
The Guidelines also provide that the Commission Panel may award costs for preparation days, typically on a ratio of up to two days per proceeding day, although after the proceeding the Commission Panel may adjust this ratio with adequate justification from participants.
In the case of this proceeding, the Panel finds that the standard calculation of preparation days is not particularly helpful for a written hearing process. Also, the Panel considers some additional days may have been required to establish some framework related to the application of the Prudent Investment Test.
Commission Determination
The Commission Panel finds that although this is a written hearing, given two rounds of information requests, basing PACA awards on an estimate of two (2) hearing days is appropriate.
3.0 INDIVIDUAL PACA APPLICATIONS AND AWARD AMOUNTS
3.1 British Columbia Pensioners’ and Seniors’ Organization, BC Coalition of People with Disabilities, Council of Senior Citizens' Organizations of BC and Tenant Resource and Advisory Centre (BCPSO et al.)
On December 20, 2012, the BCPSO applied for PACA funding for its participation in the proceeding. BCPSO applied for 4.3 days of legal counsel fees at a cost of $8,668.80 (excluding GST/HST) and 3.16 days of consultant fees at a cost of $4,424.00 (excluding GST/HST), for a total request of $13,092.80. The maximum daily fees of $1,800 for legal fees and $1,250 for consultant fees are within the PACA Guidelines.
In its response, FortisBC notes that BCPSO did not reference proceeding days or preparation days in determining its PACA application, but rather identified the discrete amount of effort expended by counsel (to the nearest tenth of a working day), and used that amount to calculate its PACA application. FortisBC submits that this methodology is consistent with the PACA Guidelines, and appropriate for a written hearing format which does not normally have proceeding days calculated for the purposes of awarding PACA funding.
Commission Determination
The Commission Panel finds that BCPSO represents ratepayer groups and participated actively and constructively in the proceeding thereby meeting all the criteria for PACA reimbursement. Further, the calculation of the PACA award BCPSO seeks is consistent with the PACA Guidelines. The Panel therefore awards the full amount of BCPSO’s claim of $11,690 (excluding GST/HST).
3.2 Industrial Customer Group (ICG)
On January 14, 2013, ICG applied for PACA funding for its participation in the proceeding. ICG applied for 12 days of legal counsel fees at a cost of $21,600 for a total request of $24,192.00 (including 12% HST). The maximum daily fees of $1,800 for legal fees are within the PACA Guidelines.
ICG believes that it was more efficient and ultimately more effective for the ICG to participate without the assistance of a case manager or regulatory consultant. In these circumstances, the ICG requests a final award calculated on a 3:1 ratio of preparation days to proceeding days, instead of the usual 2:1 ratio. ICG states that this will result in a participant funding award that is less than the participant funding award would have been if a case manager and regulatory consultant had also been retained by the ICG.
On February 4, 2012, FortisBC responded with several comments on the PACA application from ICG. However, in its response to the ICG application, FortisBC challenges the sole use of legal counsel, the lack of a sworn affidavit to support costs, and the ratio of preparation days to proceeding days.
FortisBC states “…without an understanding of the experience and length of engagement of a possible case manager and/or regulatory consultant, and the extent to which such involvement would have reduced the requirement for legal counsel, it is not clear whether the ICG PACA application would have in fact been greater than the applied for amount of $23,192.00 in such a scenario.” FortisBC submits that in this scenario adequate justification has not been provided to warrant a 3:1 ratio of preparation to proceeding days. The Panel will make any adjustments necessary after considering the level of effort put forward by ICG.
Further, FortisBC notes that the PACA Guidelines require that an application should include a sworn affidavit. FortisBC also submits that given the absence of the required documentation, as well as the lack of adequate justification to support even the typical 2:1 ratio of preparation to proceeding days, the costs of $23,192.00 being claimed by ICG for PACA are neither reasonable nor fair. FortisBC submits that a PACA award based on a 1:1 ratio of preparation days to proceeding days is appropriate and fair. FortisBC submits that in the event a ratio greater than 1:1 is accepted by the Commission, there is a reasonable expectation that future PACA applications for written hearings will increase with no resultant benefit to customers who must ultimately bear the burden of funding such PACA requests.
FortisBC submits that even a 2:1 ratio is inappropriate for the Stage 2 Review, particularly since the proceeding was conducted by way of a written hearing, information requests were limited to two rounds, no evidence (rebuttal or otherwise) was led by Interveners, and no oral appearances were ultimately required (oral argument was contemplated). FortisBC submits there is a lack of adequate justification to support even the typical 2:1 ratio of preparation to proceeding days.
Commission Determination
With regard to a sworn affidavit, the Panel notes the precise wording in the Guidelines is: “The application must be supported by a statement of costs with the appropriate receipts and invoices and should include a sworn affidavit.” [Emphasis added.] Thus, the Panel finds a statement of costs was submitted and notes that a sworn affidavit is not always required. Further, the costs expended were within the ICG’s Budget Estimate.
ICG submits that it did not utilize a Case Manager or consultant(s). While it is not possible to say whether this approach is more or less efficient than an approach with these people, the Panel is satisfied that without them more effort was required from ICG’s legal counsel. Accordingly, the Panel is prepared to vary the 2:1 ratio to allow the full twelve days requested by the ICG.
However, the Panel notes that ICG proposes to apply the maximum daily fee of $1,800 to all of the hours incurred by counsel, even when counsel was acting in the capacity of a case manager or consultant. The PACA Guidelines provide for different daily rates for legal counsel, case managers and consultants. Under the circumstances, the Panel is of the view that a blended rate that reflects the actual time spend in these roles is more appropriate. The daily rate for a case manager is $500, while that of a consultant ranges from $640 to $1,250 for someone with 10+ years of experience. The Panel finds that $1,569 per day is an appropriate rate to apply to ICG’s blended approach and awards ICG the amount of $18,828 (excluding GST/HST).