February 25, 2005
The Honorable Martha Escutia
Chairwoman
Senate Energy, Utilities, and Communication Committee
State Capitol, Room 5046
Sacramento, CA 95814
Dear Senator Escutia:
I am pleased to forward to you answers to your Committee’s questions regarding the activities and operations of the Office of Ratepayer Advocates in the California Public Utilities Commission. Please have your staff contact our office if they need additional information.
Sincerely,
S/ Dana Appling
DANA APPLING
Director, ORA
Attachments
Cc: Senator Bill Morrow
Senator Kevin Murray
Senator Richard Alarcon
Senator Joe Simitian
Senator Jim Battin
Senator Debra Bowen
Senator John Campbell
Senator Dave Cox
Senator Joseph Dunn
Senator Christine Kehoe
Randy Chinn
Lawrence Lingbloom
Question No. 1 – The Office or Ratepayer Advocates is California’s statutorily created utility consumer advocate. What is your vision for the ORA?
Section 309.5 of the Public Utilities Code requires that ORA, as a division within the Commission, represent the interests of pubic utility customers and subscribers within the jurisdiction of the Commission to “obtain the lowest possible rate for service consistent with reliable and safe service levels,” and to consider the interests primarily of residential and small commercial customers for revenue allocation and rate design matters.
In keeping with that statutory mandate, the vision for ORA is to have the necessary resources, meaning dedicated, skilled, and trained personnel to participate in the appropriate forums to formidably and effectively represent the interests of utility ratepayers under the Commission’s jurisdiction. ORA’s contribution to the record would be sought after by decision makers, and given considerable weight when crafting their decisions. In all cases, ORA would make a significant contribution to the process of ensuring that ratepayer rights and interests are protected (including low-income and vulnerable populations) in the form of lower rates and safe, reliable, and quality service from the investor-owned utilities.
Question No. 2 - What are the major utility consumer issues for 2005
Telecommunications:
- Verizon/MCI (or Qwest/MCI) and SBC/AT&T mergers
- Review of New Regulatory Framework for SBC and Verizon
- Development of broadband, regulation of related services and preservation of universal service
- Service Quality: Consumers Bill of Rights
Energy:
- Holding the line on utility rate increases in general rate cases
- Ensuring ratepayer funds are used effectively in energy efficiency programs and renewable energy technologies
- Advocating for a fair allocation of costs among customer classes and protection of low-income households through rate discounts
- Participation in peer review groups for resource supply at lowest possible costs for consumers
- Development and implementation of rules for community choice aggregation
Water:
- Upgrades to California’s aging water infrastructure at a significant capital cost that will need to be recovered through higher rates
- Contamination of the water supply presents significant challenges to keeping rates affordable
- Need for development of a statewide program that provides assistance to low-income customers of water utilities
Question No. 3 – Does the ORA have adequate resources to perform its duties? How have those resources changed over time?
ORA currently has approximately 121 authorized positions and 116 filled positions. ORA is in the process of filling vacant positions. ORA’s immediate additional staffing needs are as follows:
Telecommunications - ORA has identified a need for 9 new positions to participate fully in current and upcoming significant telecommunications proceedings.
Energy –
- 5 restored positions in Electricity Procurement and Resource Planning
- 3 restored positions in Electricity Cost Allocation and Rate Design
- 5 new positions for Energy Efficiency
- 4-5 new positions for participation in the Energy Action Plan and IEPR process at the California Energy Commission
- 4-5 new positions for consumer representation in ISO transmission planning proceedings
Water – AB 2838 requires the CPUC to conduct a General Rate Case (GRC) for each Class A water company ratemaking district every three years. This has increased ORA’s water branch workload by over 60%. AB 2838 provided $455,000 from the CPUC Reimbursement Account to fund 11 positions for the remainder of fiscal year 2002-2003. This authorization was reduced to 3 positions, and only 2 positions were filled due to the 2003 hiring freeze and elimination of vacant positions. For Fiscal year 2005-2006 ORA is seeking 7 new positions.
Resource Changes Over Time - Total authorized positions in ORA declined from a high of 223 employees in 1994 (when it was the Division of Ratepayer Advocates) to 113 positions by 2001; a decrease of more than 100 positions. The accepted wisdom at the time was that ratepayer advocates would have less of a role to play in the newly restructured electric utility competitive environment. Most of the staff ORA lost during that time found homes in other Commission divisions.
Question No. 4 – Does the ORA have adequate legal resources under its control to perform its duties?
Technically, ORA has no legal resources “under its control.” ORA’s 2004-05 and proposed 05-06 budget allocates $1.8 million dollars for legal support, enough to fund 14 to 16 full time attorneys. The attorneys utilized by ORA are assigned to ORA by the Commission’s general counsel. Until mid 2004, ORA had been assigned a group of about 12 dedicated full time attorneys who worked only on ORA cases. This included an assistant general counsel who supervised the work of these attorneys while working closely with ORA management.
The Commission’s legal division has recently been restructured such that the formerly dedicated ORA attorneys were removed from ORA and returned to the Commission’s legal division. ORA assigned attorneys now have or are subject to assignment on Commission advisory related legal work, while at the same time performing advocacy work for ORA. As a result, attorney time and availability is divided and the potential for conflicts has increased. The attorneys’ sense of being on the ORA team is diluted; the continuity of an attorney with knowledge of specific issues and cases is lost as different attorneys are assigned depending on time and availability.
Furthermore, ORA management does not have an independent legal advisor to provide it counsel on issues related to ORA authority, management, administration and general legal advice. Legal advice provided by the Commission’s general counsel poses a significant risk of conflict.
Question No. 5 – Does the ORA have adequate legal authority to perform its duties?
ORA lacks necessary legal authority in the management and administration of the organization. Under Section 309.5(f) of the Public Utilities Code, ORA has a budget that may only be utilized by ORA in the performance of its duties. However, the statute does not explicitly provide ORA management with budgetary spending authority. This leaves ORA management at the mercy of the Commission to spend money on behalf of ORA, which by statute, can only be spent for ORA purposes. Section 309.5 also requires the Commission to determine the amount of ORA’s budget in an amount sufficient to allow ORA to participate in significant proceedings. The statute does not ensure that ORA management has input or authority to determine its budgetary needs. It would improve ORA’s management of its budget and other resources if the ORA director has an expressly designated role in determining the budgetary needs of the organization.
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