ORDER NUMBER

F-3-20

 

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

 

and

 

British Columbia Hydro and Power Authority

Review of the Regulatory Oversight of Capital Expenditures and Projects

Participant Assistance/Cost Award Application

 

BEFORE:

K. A. Keilty, Panel Chair

W. M. Everett, Q.C., Commissioner

R. I. Mason, Commissioner

 

on January 22, 2020

 

ORDER

WHEREAS:

 

A.      On May 3, 2016, the British Columbia Utilities Commission (BCUC) issued Order G-58-16 establishing a proceeding to review the regulatory oversight of British Columbia Hydro and Power Authority’s (BC Hydro) capital expenditures and projects (Review);

B.      By Orders G-63-16, G-174-16, G-89-18, G-126-18, G-173-18, G-193-18, G-223-18, G-226-18, G-16-19,
G-24-19 and G-63-19, the BCUC updated the regulatory timetable. The regulatory process comprised two procedural conferences, technical and clarifying questions regarding BC Hydro’s initial proposal and 2018 Capital Filing Guidelines (2018 Guidelines), a workshop, intervener evidence and information requests (IRs) on the evidence, BC Hydro rebuttal evidence, IRs on BC Hydro’s revised proposal and rebuttal evidence, and final and reply arguments; 

C.      By May 25, 2016, the following parties registered as interveners: Association of Major Power Customers of British Columbia (AMPC); British Columbia Old Age Pensioners’ Organization et al. (BCOAPO); BC Sustainable Energy Association and Sierra Club (BCSEA); Clean Energy Association of BC (CEABC); Commercial Energy Consumers Association of British Columbia (CEC); Ilse Leis; and Movement of United Professionals (MoveUP);

D.      By letter dated October 1, 2018, the BCUC confirmed that the Participant Assistance/Cost Award (PACA) Guidelines attached to Order G-97-17 would be applied to the Review;

E.       On December 2, 2019, by Decision and Order G-313-19, the BCUC made a determination that it will approve BC Hydro’s 2018 Guidelines subject to certain amendments, and directed BC Hydro to file an update of the 2018 Guidelines for approval within 60 days of the Decision;

F.       The following participants filed Participant Assistance/Cost Award (PACA) applications with the BCUC with respect to their participation in the proceeding:

 

G.     By letter dated December 20, 2019, BC Hydro provided its comments on the participants’ PACA applications. BC Hydro submits that all Applicants participated in the proceeding and, to varying degrees, contributed to a better understanding of the issues by the BCUC;

H.      BC Hydro also submits, for the reasons set out in its December 20, 2019 letter, that CEC’s PACA application should be adjusted to exclude costs related to CEC’s filed evidence and to exclude the costs of any duplication in work by its legal counsel. By letter dated December 30, 2019, Mr. Quail submitted a response regarding BC Hydro’s comments on CEC’s PACA application;

I.        By letter dated December 31, 2019, CEC provided its response to BC Hydro’s comments; and

J.        The BCUC has reviewed the PACA applications in accordance with the criteria and rates set out in the PACA Guidelines, attached to Order G-97-17, and considers cost awards to BCSEA, CEABC, BCOAPO and MoveUp, in the full amounts they respectively claim for their respective participation in this proceeding, are warranted. The BCUC further considers a cost award to CEC in an amount less than the full amount it claims for its participation in this proceeding is warranted.

 

NOW THEREFORE pursuant to section 118(1) of the Utilities Commission Act, the BCUC orders as follows:

 

1.       For the reasons outlined in Appendix A of this order, funding is awarded to the following participants in the listed amounts for their participation in the Review:

 

 

2.       BC Hydro is directed to reimburse the above-noted participants for the awarded amount in a timely manner.

 

DATED at the City of Vancouver, in the Province of British Columbia, this    22^nd      day of January 2020.

 

BY ORDER

 

Original signed by:

 

K. A. Keilty

Commissioner

 

 

Attachment

British Columbia Hydro and Power Authority

Review of the Regulatory Oversight of Capital Expenditures and Projects

Participant Assistance/Cost Award Application

 

 

 

Table of Contents

Page no.

1.0         Introduction.. 2

2.0         Criteria for Cost Award.. 3

3.0         CEC’s PACA Application.. 3

3.1          CEC’s PACA Budget. 4

3.2          CEC’s Evidence. 5

3.3          Comments on CEC’s PACA Application. 5

 

 

 

1.0              Introduction

On May 3, 2016, the British Columbia Utilities Commission (BCUC) issued Order G-58-16 establishing a proceeding to review the regulatory oversight of British Columbia Hydro and Power Authority’s (BC Hydro) capital expenditures and projects (Review).

 

By May 25, 2016, the following parties registered as interveners:

•         Association of Major Power Customers of British Columbia (AMPC);

•         British Columbia Old Age Pensioners’ Organization et al (BCOAPO);

•         BC Sustainable Energy Association and Sierra Club (BCSEA);

•         Clean Energy Association of BC (CEABC);

•         Commercial Energy Consumers Association of British Columbia (CEC);

•         Ilse Leis; and

•         Movement of United Professionals (MoveUP);

 

The regulatory process for the Review, established by orders of the BCUC, comprised two procedural conferences, technical and clarifying questions regarding BC Hydro’s initial proposal and 2018 Capital Filing Guidelines (2018 Guidelines),[1] a transcribed workshop, evidence filed by CEC[2] and information requests (IRs) on CEC’s evidence, BC Hydro rebuttal evidence, IRs on BC Hydro’s revised proposal and rebuttal evidence, and final and reply arguments.

 

On December 2, 2019, the BCUC issued its Decision on the Review.

 

By letter dated October 1, 2018, the BCUC confirmed that the PACA Guidelines attached to Order G-97-17 would be applied to the Review.

 

Subsequent to the filing of BC Hydro’s reply argument on September 5, 2019, the following participants filed, pursuant to PACA Guideline 14.2.2, Participant Assistance/Cost Award (PACA) applications with the BCUC with respect to their participation in the proceeding:

 

 

The BCUC has reviewed the PACA applications in accordance with the criteria and rates set out in the PACA Guidelines and the submissions of BC Hydro in its letter of December 20, 2019 (in which it does not take any objection to the PACA applications made by BCSEA, CEABC, BCOAPO and MoveUp) and determines that the cost awards for BCSEA, CEABC, BCOAPO and MoveUp, in the full amounts they respectively claim for their respective participation in this proceeding, are warranted.

 

The BCUC concludes that a partial adjustment to CEC’s PACA application is warranted, for the reasons as set out below in this Reasons for Decision.

2.0              Criteria for Cost Award

Section 3 of the PACA Guidelines provides that in determining whether a participant is eligible for a cost award in a proceeding the BCUC will consider whether the participant:

a)      is directly or sufficiently affected by the BCUC’s decision; or

b)      has experience, information, or expertise relevant to a matter before the BCUC that would contribute to the BCUC’s decision-making.

 

The Panel notes that CEC’s eligibility to receive PACA funding is not at issue in these Reasons for Decision.

 

Section 4.3 of the PACA Guidelines sets out the following criteria the BCUC will consider in determining the amount of a participant’s cost award:

a)      Has the participant contributed to a better understanding by the BCUC of the issues in the proceeding?

b)      To what degree will the participant be affected by the outcome of the proceeding?

c)       Are the costs incurred by the participant fair and reasonable?

d)      Has the participant joined with other groups with similar interests to reduce costs?

e)      Has the participant made reasonable efforts to avoid conduct that would unnecessarily lengthen the duration of the proceeding, such as ensuring participation was not unduly repetitive?

f)       The funding day calculation for funding in accordance with Sections 4.1 and 4.2, if one is provided.

g)      Any other matters which the BCUC determines appropriate in the circumstances.

 

The foregoing criteria form the basis for the Panel’s determination.

3.0              CEC’s PACA Application

In its revised PACA application dated December 3, 2019, CEC seeks a cost award for the following professional fees:

 

 

 

 

 

 

 

 

 

3.1              CEC’s PACA Budget

Pursuant to section 14.1.1 of the PACA Guidelines, participants that intend to apply for a cost award exceeding $10,000 must file a PACA budget with the BCUC. On October 16, 2018, CEC submitted a PACA budget to BCUC, which estimated 45 funding days required for consultants, 14 days for expert witness, and 24.43 days for legal counsel, with a total cost estimate, including taxes, of $195,629.99.

 

Further to section 14.1.3 of the PACA Guidelines, BCUC staff provided a response to CEC’s PACA budget, providing an estimate of funding days and advice on whether in staff’s opinion, all or a portion of the participant’s budget estimate may be at risk of not being funded. BCUC’s staff advice is not binding on the participant or the BCUC. BCUC’s staff response letter estimated funding days for full participation in the proceeding, including the filing of evidence, as follows: 30 days for a consultant, 20 days for legal counsel and 7 days for a specialist/expert witness.

3.2              CEC’s Evidence

CEC was the only intervener to request to file evidence in this proceeding. It filed submissions on its proposed evidence by letters dated August 2 and August 27, 2019.[5] By Order G-173-18 dated September 17, 2018, the Panel accepted CEC’s request to file evidence, stating:

The Panel finds CEC’s proposed intervener evidence, focusing on potential additional information requirements to be filed by BC Hydro as part of the capital review processes, to be within the scope of the Review.

 

CEC filed evidence prepared by Mr. Craig and Mr. Thompson on November 5, 2018.[6] Subsequently, BC Hydro filed rebuttal evidence on February 15, 2019.[7]

3.3              Comments on CEC’s PACA Application

BC Hydro

By letter dated December 20, 2019, BC Hydro provided its comments on the PACA applications. BC Hydro notes that some aspects of CEC’s contributions in this proceeding were helpful (such as its IRs on capital investment strategies) but submits that its evidence did not contribute to the BCUC’s understanding of issues and unnecessarily lengthened the duration of the proceeding. In support of its position regarding CEC’s evidence, BC Hydro cites the BCUC’S Decision where the Panel determined that:

•         CEC did not demonstrate its proposals will improve the effectiveness of BCUC’s regulatory oversight;

•         CEC has not provided evidence of deficiencies in BCUC’s regulatory processes or information that is missing from BC Hydro’s information filing requirements;

•         Some of CEC’s recommendations may go beyond the role of regulatory oversight.

 

BC Hydro also observes that CEC may have been able to ensure its recommendations did not go beyond the role of regulatory oversight had it retained expert(s) in management consulting for the preparation of its evidence, as stated in CEC’s evidence proposal. BC Hydro notes that in response to a BCUC IR, CEC did not identify their witness as an expert in management consulting. BC Hydro is also concerned about duplication of work between the two lawyers listed in the PACA application.

 

BC Hydro submits that CEC’s PACA application be adjusted to exclude costs related to CEC’s filed evidence and costs for any work duplicated between legal counsels.

 

Mr. Quail

 

By letter dated December 30, 2019, Mr. Quail submitted a response regarding BC Hydro’s comments on CEC’s PACA application. Mr. Quail’s submission is not on behalf of Allevato, Quail and Roy’s clients. Mr. Quail identifies concerns with the legal basis of BC Hydro’s request to disallow some of CEC’s costs. Mr. Quail states that the BCUC not adopting evidence or recommendations should not be a basis to disallow PACA, and such a determination could provide a disincentive for interveners to present evidence that is novel, or challenges established practices. Mr. Quail submits that evidence that challenges existing approaches can test the validity of underlying assumptions, even if these are not adopted by the BCUC.

 

Mr. Quail also observes that with respect to intervener recommendations that the BCUC determines are beyond its jurisdiction, such bounds are not always clear, and that recovery of PACA should not be based on a retrospective BCUC determination.

CEC

By letter dated December 31, 2019, CEC provided its response to BC Hydro’s comments. CEC agrees with
Mr. Quail’s comments regarding disincentives for intervener participation and issues that are determined beyond the BCUC’s jurisdiction.

 

CEC states that it “made a good faith effort to file relevant and probative evidence challenging BC Hydro's past and proposed approach to the information provided to enable the Commission to provide regulatory

oversight of capital expenditures and projects.” CEC submits it was important to provide the BCUC with an alternative view in this proceeding, in response to concerns raised by the Provincial Government and BCUC around BC Hydro’s capital spending practices. In CEC’s view, BC Hydro’s significant efforts to rebut CEC’s evidence show that the evidence was of persuasive value. CEC notes that in final arguments, other interveners commented positively on CEC’s evidence.

 

With respect to BC Hydro’s comments about retaining a management consultant, CEC states that Mr. Craig is a Management Consultant with over 30 years of experience, that its expert Mr. Thompson is a senior Canadian utility executive, and that no weight should be placed on BC Hydro’s critique.

 

CEC submits that providing evidence and otherwise participating fully in the proceeding required significant time and effort, and CEC should not be punished because the BCUC did not adopt the evidence.

 

CEC states it used two lawyers to manage workload and that allocation of tasks to the more junior lawyer reduced overall costs.

 

Panel Determination

The Panel does not accept BC Hydro’s suggested adjustments to CEC’s PACA application. While the BCUC did not adopt (as BC Hydro notes) CEC’s proposals in its Decision, the Panel agrees with the reply comments of CEC and Mr. Quail, that the BCUC’s determination to not accept CEC’s proposals is not itself a justifiable reason to conclude CEC did not contribute to a better understanding of the issues in the proceeding.

 

The introduction of alternative ideas or concepts through evidence, whether such evidence is adopted by the BCUC or not, can be an important tool for testing the evidence of the applicant in a proceeding. BC Hydro’s rebuttal evidence contributed to the Decision, as well as to BC Hydro’s Final Argument. BC Hydro’s rebuttal evidence may not have emerged in the absence of the alternative viewpoint provided by CEC’s evidence. In this regard, the Panel considers that, at least indirectly, CEC’s evidence contributed to a better understanding of issues in the proceeding. Therefore, the Panel considers that disqualifying all costs related to the preparation of CEC’s evidence based on not “contributing to a better understanding” is not warranted. Further, the Panel believes that a determination in line with BC Hydro’s position would set an unreasonably high bar for the award of PACA funding related to intervener evidence. 

 

With respect to BC Hydro’s submissions regarding costs sought in respect of CEC’s legal counsel, the Panel dismisses BC Hydro’s suggestion that costs should be disallowed on the basis of duplication of tasks between the two lawyers. The Panel considers that the invoices for legal counsel accompanying CEC’s PACA application do not indicate that there was a clear duplication of effort, and the Panel acknowledges that the use of a more junior lawyer, where appropriate, can reduce overall costs.

 

Finally, the Panel takes no position on the credentials of the authors of CEC’s evidence, since the Panel did not place any weight on CEC’s evidence in its decision.

 

However, for the reasons outlined below, the Panel finds that the costs sought by CEC in its PACA application are not entirely fair and reasonable, in the context of CEC’s contributions to the Review, and should be adjusted.

 

The Panel accepts that due to the filing of evidence and the need to respond to IRs on its evidence, CEC justifies a higher number of funding days than other interveners, but also notes that CEC’s PACA application is higher than both CEC’s PACA budget and BCUC staff’s estimate of funding days. While the BCUC staff estimate provides useful context for assessing reasonableness of costs, the Panel places greater weight on the magnitude of the difference between CEC’s PACA budget and PACA application. In this instance, the difference is a 48 percent increase in funding days for consultants and a 68 percent increase in funding days for legal counsel.

 

CEC’s PACA budget was filed on October 16, 2018, three weeks prior to the filing of its evidence. At that time, the regulatory timetable had been established for the remainder of the proceeding,[8] and while the dates were later amended, the regulatory process remained the same. CEC had also requested an extension to the deadline for filing its evidence on October 5, 2018. With this in mind, the Panel considers that at the time of filing its PACA budget, as a regular intervener in BCUC proceedings, CEC should have had a well-formed view of the likely time commitments to participate fully in the remainder of the proceeding. This includes the magnitude of its evidence and the procedural implications, such as IR responses and addressing rebuttal evidence, for the remainder of the Review. For these reasons, the Panel does not consider that CEC has made a case for a cost award greater than the PACA budget it submitted. The Panel therefore does not accept that the difference between CEC’s PACA budget and PACA application represents “fair and reasonable costs,” per section 4.3(c) of the PACA Guidelines.

 

The filing of CEC’s evidence was accepted by the Panel on the basis that it focused on “potential additional information requirements to be filed by BC Hydro as part of the capital review processes,” and in CEC’s own words the evidence was intended as a “starting point rather than a final solution.”[9] Given this context, the Panel finds further reason to conclude that the overall number of funding days sought by CEC to achieve these relatively confined objectives is excessive.

 

The Panel awards CEC costs equal to CEC’s PACA budget of $195,629.99.