IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
Applications for Participant Assistance/Cost Awards
for the FortisBC Inc.
Application for Stepped and Stand-By Rates for Transmission Voltage Customers
BEFORE: L.A. O’Hara, Commissioner
R.D. Revel, Commissioner July 10, 2014
O R D E R
WHEREAS:
A. On March 28, 2013, FortisBC Inc. (FortisBC) filed an application with the British Columbia Utilities Commission (Commission) for approval of new rates for transmission voltage customers (the Application) under sections 58‑61 of the Utilities Commission Act;
B. The Application included the following:
i. Request for approval of a set of conservation Stepped Rates;
ii. Request for approval for a Non-Embedded Cost Power (NECP) Rate Rider;
iii. Request for approval for a Stand-by Service Rate; and
iv. A determination of the retroactive application of rates to Zellstoff Celgar Limited Partnership (Celgar);
C. British Columbia Hydro and Power Authority (BC Hydro), Celgar, International Forest Products Limited, the British Columba Pensioners’ and Seniors’ Organization et al., and the BC Municipal Electric Utilities registered as Interveners;
D. On January 31, 2014, by Order G-12-14, the Commission determined that its review of the issues in the Application that did not overlap with the issues then being considered in the BC Hydro Rate Schedule 3808 Application (RS 3808 Proceeding), would proceed by way of a written hearing. The NECP rate rider and the retroactive application of rates to Celgar would be deferred until after the Commission made a final determination on the RS 3808 Proceeding;
E. On March 31, 2014, by way of Letter, the Commission established a Participant Assistance Cost Awards (PACA) Application deadline of March 31, 2014, for costs up to the filing of Final Submissions on those portions of the Application that have not been deferred to future process;
F. On May 26, 2014, by way of Order G-67-14, the Commission made a determination on the portions of the Application that have not been deferred to future process. The Commission also directed FortisBC to file a revised Stand-by Service Rate;
G. By the deadline established in the Commission’s March 31, 2014 letter, the following Interveners filed PACA Applications;
|
Registered Intervener |
Requested Award |
|
British Columbia Pensioners’ and Seniors’ Organization |
$20,398.59 |
|
Zellstoff Celgar Limited Partnership |
$105,650.20 |
|
Total |
$126,048.79 |
H. On May 9, 2014, the Commission issued a letter to Celgar requesting additional information to support its PACA Application. Celgar responded to the Commission’s request on May 15, 2014;
I. On June 12, 2014, the Commission issued a letter to FortisBC requesting comments on the two PACA Applications;
J. On June 26, 2014, FortisBC provided comments to the Commission on the PACA Applications; and
K. The Commission reviewed the PACA Applications with regard to the criteria and rates set out in the PACA Guidelines in Commission Order G-72-07, and considered FortisBC’s comments.
NOW THEREFORE for the Reasons for Decision attached as Appendix A, pursuant to section 118(1) of the Utilities Commission Act, the British Columbia Utilities Commission orders as follows:
1. Funding is awarded to the following Interveners for their participation in the FortisBC Inc. Application for Stepped and Stand-By Rates for Transmission Voltage Customers proceeding on the portions of the Application that have not been deferred to future process, as follows:
|
Registered Intervener |
Award |
|
British Columbia Pensioners’ and Seniors’ Organization |
$20,398.59 |
|
Zellstoff Celgar Limited Partnership |
$52,820.00 |
|
Total |
$73,218.59 |
2. FortisBC Inc. is directed to reimburse the above-noted Interveners for the approved award amount in a timely manner.
3. The deadline for filing Participant Assistance Cost Award Applications for the remaining matters in the Application will be determined in due course.
DATED at the City of Vancouver, in the Province of British Columbia, this 30th day of July 2014.
BY ORDER
Original signed by:
L.A. O’Hara
Commissioner
Attachment
Applications for Participant Assistance/Cost Awards
for the FortisBC Inc.
Application for Stepped and Stand-By Rates for Transmission Voltage Customers
Reasons for Decision
1.0 BACKGROUND
The British Columbia Utilities Commission (Commission) Panel reviewed the British Columbia Pensioners’ and Seniors’ Organization (BCPSO) and the Zellstoff Celgar Limited Partnership (Celgar) Participant Assistance Cost Award (PACA) Applications while taking into consideration the guidelines, as set out in Commission Order G‑72‑07 (PACA Guidelines), and the FortisBC Inc. (FortisBC) letter, dated June 26, 2014.
FortisBC’s letter provided no comments or recommendations regarding BCPSO’s Application but submits that Celgar’s PACA Application should be denied and provided the following comments:
• Celgar should not be eligible for PACA funding;
• Expert witness fees for Mr. Fitzgerald, Mr. Linxwiler and Mr. Switlishoff are excessive;
• Legal fees are not assigned appropriately and are excessive.
2.0 ADJUSTMENTS TO INDIVIDUAL PACA APPLICATION AMOUNTS
The Fortis BC Inc. Application for Stepped and Stand-by Rates for Transmission Voltage Customers (Application) was heard by way of a written hearing that consisted of two rounds of information requests (IRs), Intervener evidence filed by Celgar and IRs on that evidence, as well as rebuttal evidence filed by FortisBC and associated IRs. This was followed with written Final Submissions and a Reply Submission by FortisBC.
2.1 BCPSO
BCPSO’s PACA Application was for approximately 7.5 legal counsel days and 6 consultant days. The Application was consistent with the PACA Guidelines, the proceeding days were within an acceptable range, and no concerns were raised by FortisBC. Therefore, the Panel is awarding the full amount of BCPSO’s PACA request.
2.2 Celgar
2.2.1 Background
On June 13, 2013, Celgar sent to the Commission a PACA budget of $80,250 which represented 15 legal counsel days at $1,800 per day, a consultant for 15 days at $1,250 per day and an expert witness for 15 days at $2,300 per day.
By letter dated June 28, 2013, Commission staff informed Celgar that the number of proceeding days for: two rounds of IRs, filing of intervener evidence and responding to IRs on that evidence, including making a final submission would likely be set at 10 days. Commission staff advised Celgar that their forecast exceeded staff’s estimate and may be at risk of recovery. The staff letter included the following specific comments:
• The daily rate for Celgar’s expert witness exceeded the maximum daily rate allowed in the PACA Guidelines;
• The PACA Guidelines state that except in limited circumstances, it is expected that only rate payer groups would be eligible for PACA funding. Although it is not a rate payer group, Celgar has in the past been determined to be eligible for PACA funding when it actively participated in a proceeding; and
• Celgar would be eligible for PACA funding if their participation led to a better understanding of the issues by the Commission.
However, staff also informed Celgar that the Commission Panel will make the final determination and will likely also consider if the costs incurred by Celgar are reasonable and the Panel may also consider Celgar’s ability to participate without an award. In the past, the Commission has typically interpreted the criteria in the PACA Guidelines to mean that it will not fund individuals, individual business interests or municipalities, except under unusual circumstances.
On July 11, 2013, Celgar submitted a letter seeking advance approval to retain Mr. Joe Linxwiler as an expert witness for 15 days at a daily rate of $1,800. By letter dated July 23, 2013, the Commission Panel approved Mr. Linxwiler as an expert witness for $1,800 per day, but did not provide any assurance on the number of eligible days stating that it would in part depend on the evidence filed by Celgar.
On April 28, 2014, Celgar filed its PACA Application for recovery of $105,650.20. The Application provided little supporting material or a sufficient detailed breakdown of the costs, but did identify that Celgar had retained legal counsel and the services of a consultant and two expert witnesses, one of which was Mr. Linxwiler. Celgar stated that the knowledge and expertise of the second expert witness, Mr. Fitzgerald, lie in different areas than Mr. Linxwiler.
By letter dated May 9, 2014, the Commission requested that Celgar provide additional details and invoices to support their PACA claim. Celgar responded to the Commission’s request by letter dated May 15, 2014. The following table attempts to detail Celgar’s updated PACA Application; however, from the information filed the exact amount being claimed is not clear.
Celgar stated that the reason for the variance between the April 28, 2014 request and the May 15, 2014, request was due to rounding.
2.2.2 Eligibility
In addition to the “substantial interest in a substantial issue” test the Commission Panel will 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 purpose 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 reasonable diligence.)
(vi) Any other matters appropriate in the circumstances. (Order G-72-07, Appendix A, page 1)
In reference to criterion (v) above, FortisBC’s submitted in its June 26, 2014 letter that Celgar’s conduct tended to lengthen the duration of the proceeding unnecessarily. However, FortisBC opined that this conduct would not necessarily disqualify a participant from receiving PACA funding, but noted that Celgar’s attempts to expand the scope, and the associated delays, likely added legal and consultant costs. FortisBC further noted that Section 1 of the PACA Guidelines also state: “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.” This could, if applied to Celgar, disqualify them from PACA funding entirely.
FortisBC states that Celgar is a for-profit company, one of the largest of its kind and has the means to participate without an award. FortisBC further submits that Celgar would likely still participate if there was not opportunity for reimbursement of its costs and notes that if the PACA award is granted FortisBC’s ratepayers as a whole (approximately 87% residential) will pay for Celgar’s participation in this hearing. Should the Panel find Celgar eligible for PACA funding, FortisBC submits the award should not be for the amount applied for and provides reasons for various reductions.
Commission Determination on Eligibility
A review of past PACA funding to Celgar shows the following:
• On December 14, 2010, the Panel awarded Celgar $73,451.49 for its participation as a ratepayer in the FortisBC 2009 Rate Design and Cost of Service Analysis Application (applied for $152,745.00). The Panel accepted “…Celgar’s assertion that it has significant interest in the RDA as it was the only customer in RS33 and took specific exception to FortisBC’s proposed allocation of certain costs to that customer class.” However, the Panel found that “… the establishment of a GBL between it and FortisBC would have benefitted Celgar and would have been unlikely to benefit FortisBC’s other customers, and for this reason the Commission Panel considers that the funds Celgar expended to make its case before the Commission should be for its account alone and should not be borne by all FortisBC’s other customers.” This was the key reason for the significant reduction in the award. (Order F-31-10, Appendix A, page 6);
• On November 27, 2013, the Panel awarded Celgar $32,704.57 for its participation in Phase 2 of Purchase of the Utility Assets of City of Kelowna CPCN (100 percent of applied amount) as it found the requested amount reasonable; and
• There have also been other applications in the FortisBC service territory where Celgar participated but did not apply for PACA funding, such as filing for Guidelines for Establishing Entitlement to Non-PPA Embedded Cost Power and Matching Methodology (Order F-3-13).
The Panel finds that Celgar has a significant interest in stepped rates as it is one of four customers that would be affected. Moreover, with a stand-by rate for transmission voltage customers with self‑generation, Celgar is at the present time the sole customer representing the group’s interest. The Panel accepts that Celgar could be negatively affected without its participation. Accordingly, the Commission Panel determines that Celgar has contributed to a better understanding of the issues by the Commission and is therefore eligible to some level of PACA funding even if it might be able to participate without an award. However, the Panel emphasizes that this ruling should not be considered precedent setting. Each case for a for-profit company like Celgar will be considered on its own merits.
2.2.3 Analysis
The Panel notes, as did FortisBC, that Celgar’s requested award is considerably higher than BCPSO’s request. The main reason for the higher amount is due to Celgar requesting recovery for 41 legal counsel days and 24 consultant days while BCPSO requested recovery of 7.5 and 6 days respectively. Further, Celgar’s claim includes recovery for two expert witnesses.
Mr. Fitzgerald – Expert Witness
FortisBC recommends that funding for Mr. Fitzgerald should be denied. Specifically FortisBC states that Mr. Fitzgerald’s evidence focused exclusively on a comparison of FortisBC’s rate to BC Hydro’s rate which did not contribute significantly, if at all, to the proceeding. FortisBC noted that the rate of $1,200 per day for Mr. Fitzgerald is within the PACA Guidelines.
The Panel appreciates FortisBC’s comments; however, it finds that the expert testimony of Mr. Fitzgerald did contribute to the Panels better understanding of the issues. As the Commission highlighted in the Decision accompanying Order G-67-14: “Discrimination, when applied to rates for utility service, can only be of an ‘intra-utility’ nature and not ‘inter-utility’” and therefore FortisBC’s Stand-by Rate cannot be considered unfair or discriminatory solely on the basis of a comparison with the stand-by rates offered by BC Hydro. Nonetheless, a comparison of rates approved in other jurisdictions, especially within Canada and British Columbia, can be informative in assisting the Commission in making a determination. Furthermore, Order G-188-11 which directed FortisBC to submit an Application for a stand-by rate, referenced BC Hydro’s stand-by rate as an example of a stand-by rate that could be considered.
The Panel awards Celgar the full amount regarding the claim for Mr. Fitzgerald as the number of days appears reasonable, the daily rate is within the PACA Guidelines, and the testimony contributed to a better understanding of the issues by the Panel.
Mr. Linxwiler – Expert Witness
FortisBC did not provide comments on the overall contribution made by Mr. Linxwiler other than stating that it was of more relevance than the evidence of Mr. Fitzgerald; however, FortisBC took exception to the daily rate of $1,720 which exceeds the PACA Guideline maximum of $1,250.
The Panel provided Celgar with advance approval for a rate of $1,800 per day for Mr. Linxwiler by letter dated July 23, 2013. Accordingly, the Panel approves the rate of $1,720 as it is less than the preapproved rate. Given that FortisBC did not dispute the claim for 8 days for Mr. Linxwiler and the Panel gained a better understanding of the issues as a result of his written testimony, the Panel approves Celgar’s full claim for Mr. Linxwiler.
Legal Counsel
FortisBC states that a claim of 41 days for legal counsel is too high in contrast to BCPSO’s claim for 7.5 days. While FortisBC acknowledges that Celgar’s participation was more extensive than BCPSO’s it still considers the claim too high. Further FortisBC submits that much of Celgar’s submission, evidence and information requests were not related to issues of law but rather related to issues better addressed by a consultant or case manager and therefore should be recovered based on those rates ($1,200 for consultant and $500 for case manager). FortisBC also requests that Celgar not recover any costs related to the preparation of its final submission relating to the parts that were redacted by the Commission and struck from the record for being out of scope.
The Panel considers that it would be appropriate for the legal counsel days approved for Celgar to be greater than BCPSO’s claim of 7.5 days given that Celgar’s participation in the hearing was significantly greater than that of BCPSO as many aspects of the Application directly impacted Celgar. However, the Panel agrees with FortisBC that 41 days is excessive for legal counsel. In the staff comfort letter sent to Celgar on June 28, 2013, it was identified that 10 days would be eligible for PACA funding; however this was made without consideration of FortisBC filing rebuttal evidence. Therefore the Panel determines 12 legal counsel days to be sufficient.
The Panel notes that Celgar is only charging a legal counsel rate at $1,200 which is less than the $1,800 maximum daily rate allowed under the PACA Guidelines, but is consistent with that of a consultant. As such the Panel suspects that some of the days being claimed as legal counsel days are in fact consultant days. However, Celgar is also making a claim for a consultant and the Commission does not under normal circumstance allow Participants to recover costs for two consultants, especially when two expert witnesses have been engaged. Therefore the Panel is not allowing any additional days for legal counsel that may relate to consulting but rather will consider the time required for a consultant as part of its evaluation of Celgar’s claim for consultant costs.
Consultant
FortisBC recommends that funding for the consultant, Mr. Switlishoff, should be denied. Specifically FortisBC states that Mr. Switlishoff’s expertise in the area of “power generation” should not be required as Celgar has sufficient expertise regarding its own generation and this was primarily a rate design application. Further, FortisBC submits that they were not able to determine from the supporting documents the 24 day contribution made by Mr. Switlishoff that was not already provided by the expert witnesses. FortisBC noted that the rate of $1,120 per day for Mr. Switlishoff is within the PACA Guidelines.
The Panel notes that Celgar’s Expert Witness claim relates exclusively to the Stand-by Rate. The Application also covers other matters including the Stepped Rate and the NECP Rate Rider. The consultant would have covered, in addition to the Stand-by Rate, these other areas of the Application. Accordingly, the Panel considers that Celgar is entitled to recover costs related to a consultant in addition to the two expert witnesses.
Similar to the legal counsel days claim, the Panel considered that it would be appropriate for the consultant days approved for Celgar to be greater than BCPSO’s claim of 6 days given that Celgar’s participation in the hearing was significantly greater than that of BCPSO. However, that Panel agree with FortisBC that 24 days is excessive.
For the same reasons as stated for legal counsel days the Panel determines 12 consultant days to be sufficient. No issues were raised with the consultant’s rate of $1,120, and it is within the range set out in the PACA Guidelines.
Celgar’s Final PACA Award
For the reasons stated above the Panel awards Celgar PACA funding of $52,820.00 including taxes for the portions of the Application that have not been deferred to future process, as follows: