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Ottawa, 13 December 1993
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Taxation Order CRTC 93-11
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In re: Telecom Public Notice CRTC 92-64, The New Brunswick Telephone Company Limited - Incentive Regulation (Public Notice 92-64)
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Phillipa Lawson, for the New Brunswick Anti-Poverty Association (NBAPA).
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J.P. O'Hara, for the New Brunswick Telephone Company Limited (NBTel).
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TAXATION OF COSTS OF NBAPA
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Taxing Officer: Carolyn Pinsky
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This order constitutes the taxation of costs awarded to NBAPA in the case of Public Notice 92-64. Costs were awarded to NBAPA by Telecom Costs Order CRTC 93-8, 16 August 1993 (Costs Order 93-8).
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NBAPA submitted a Bill of Costs amounting to $25,248.75, consisting of $1,750 in counsel fees, $22,586.10 in expert fees, $705.64 in disbursements, and $207.01 for G.S.T. NBTel relied on its comments with respect to the amount of costs claimed that were included in its 27 April 1993 response to NBAPA's application for costs. For its part, NBAPA relied on its comments filed in reply on 15 April 1993. No further submissions were made by either party following the award of costs in Costs Order 93-8.
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Counsel Fees
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NBTel argued that any costs beyond 23 November 1993, the date the company sought to withdraw its application, should be disallowed. I note that costs incurred for preparation of costs applications have generally been allowed in previous Taxation Orders. In my opinion, the costs claimed for counsel's work in connection with the application for costs are reasonable.
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Experts Fees
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Hourly Fees
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With respect to the hourly fee claimed for Mr. Todd's services, NBTel argued that the rate is out of line relative to that being claimed for the applicant's other experts. In response, the applicant submitted that Mr. Todd's rate represents a significant discount from the rate he receives from private sector companies and is in line with the rate that has been awarded to him in the past by the Commission and other regulatory boards in Canada.
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I note that the hourly rate of $165.00 claimed in this proceeding represents a ten percent increase over the $150.00 rate awarded to Mr. Todd in Taxation Order 1993-4, 23 March 1993, in respect of his work for the Alberta Consumers Coalition in the AGT Limited 1992 Revenue Requirement proceeding. I find this increase excessive in view of the inflation rate applicable for the period between the two proceedings. In the circumstances, I have taxed the hours allowed for Mr. Todd at a rate of $155.00 per hour.
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NBTel also questioned the rate of $125.00 for Ms. Titus given the functions she appeared to have performed. The applicant stated that Ms. Titus was responsible for project management and editing; it did not address the issue of hourly rate. I note that the number of hours spent by Ms. Titus editing and doing literature searches together account for a majority of the hours claimed for her work. I also note that while a curriculum vitae was filed for each of Mr. Carlson, Ms. Alexander, Mr. Goodman and Mr. Todd, none was provided to testify to the particular expertise of Ms. Titus. I note that an hourly rate of $125.00 is within the range of rates awarded in previous taxation orders for work done by consultants or expert witnesses involved in Commission proceedings and is in excess of the range of hourly rates for legal counsel other than senior counsel. Considering all of the circumstances noted above, and in light of the fact that three experts were responsible for the pre-edit draft document prepared by The Goodman Group, an hourly rate of $125.00 is in excess of what I consider to be necessary and reasonable in relation to the functions performed by Ms. Titus. I have taxed the work allowed for Ms. Titus at an hourly rate of $75.00.
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Hours Claimed
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In its comments dated 27 April 1993, NBTel argued, among other things, that the applicant was not cost efficient in its preparation of the evidence to be filed in the proceeding. NBTel noted that 11 people were involved in various capacities and that there was an overlap of cost claims of individuals researching the same areas and a preoccupation with consultation with other individuals. In particular, the Company noted that in excess of 56 hours were spent, in aggregate, by four experts in reviewing and researching literature on Canadian and American trends. NBTel argued that the Company should not be required to pay for updating the expertise of the individuals involved.
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In response, NBAPA noted that The Goodman Group had reached only the second draft stage at the time when NBTel sought to withdraw its application and both The Goodman Group and Mr. Todd intended to add a significant amount of material to the document in the final week of preparation. The applicant noted that much of the initial effort was devoted to developing an outline of the testimony and the argument to be presented in the final written document. In addition, the applicant argued that the research was not undertaken for the education of the experts but rather to provide an up-to-date summary of the American and Canadian experience with incentive regulation. On the issue of efficiency, the applicant argued that it was cost efficient in producing the evidence by using both an American and a Canadian organization and disputed the claim that 11 people were involved. Finally, the applicant noted that the claim for 23 November is in respect of work performed prior to the experts having received a direction to cease work on the project.
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In assessing whether the costs claimed by NBAPA for 152.34 hours of work performed by the experts engaged to prepare its evidence (consisting of 130 hours by The Goodman Group and 22.34 hours by Mr. Todd) were necessarily and reasonably incurred, I am mindful of NBAPA's submission that, in the interests of keeping costs down, Canadian and American experts were engaged because of their respective expertise to prepare separate portions of the evidence. In addition, I note the applicant's position that a "great deal of work" remained to be done. The draft evidence contains a very brief description of NBTel's proposal, a short overview of the general theory of incentive regulation, a brief introduction to five alternative approaches to incentive regulation, a general description of several experiences in the United States with incentive regulation, and some comments on NBTel's particular proposal.
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I will first address the claim made in respect of the work performed by The Goodman Group. The applicant claims approximately 45 hours for time spent by The Goodman Group relating to research and review of the literature, and in excess of 50 hours, in total, for time spent preparing and editing drafts of the document. In determining the reasonableness of the number of hours claimed for time spent by The Goodman Group in this regard, I have considered, first, the subjects addressed in the draft document. I note in particular that the document contains brief and general comments on the general theory of price incentive regulation and brief reports of several American experiences. Second, I have recognized that experts, who were engaged by the applicant for their special expertise in the area and who are claiming remuneration at rates based on that expertise, performed some of the research, reviewed the literature, prepared the drafts, and did almost half of the editing. While I do not dispute the applicant's submission that a reasonable amount of time is required to do some research and prepare an outline, in light of the considerations noted above, I am not prepared to find that the costs for 45 or so hours for research and review of the literature are either reasonable or necessary. Based on the two considerations noted above and, in particular, given the preliminary stage of the draft, I also find that the hours claimed for time spent preparing and editing the draft document filed with the Commission, to be excessive.
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In addition, I share NBTel's concern that costs are being claimed for some duplication of work. For example, a review of the file was required by each expert involved in the project, and several discussions or consultations on the file involved two or more experts. I note that a total of around 21 hours are claimed by The Goodman Group in relation to discussions and consultations with one another. In my opinion, the total number of hours spent by all of the experts for discussions and consultations among themselves should not be considered to have been necessarily or reasonably incurred by the applicant. Similarly, with respect to the overlap of functions, I am of the view that the costs relating to the review and editing by The Goodman Group of Mr. Todd's preliminary draft comments was neither necessarily nor reasonably incurred, particularly in light of the applicant's position that Mr. Todd's draft "cannot be considered to reflect anything more than the very early formative text of Mr. Todd's testimony".
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With respect to costs incurred for work performed by experts on 23 November 1992, I accept NBAPA's submission that the claim relates only to work performed prior to a direction to terminate the project. I have therefore not made any disallowance on that basis.
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In light of the foregoing, I am unable to conclude that the costs incurred by the applicant for 130 hours of time spent by The Goodman Group were reasonably and necessarily incurred. I am prepared to allow 75 hours at the rate of $150.00, and 15 hours at the rate of $75.00, of the 130 hours claimed by NBAPA in its Bill of Costs.
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With respect to the hours claimed for work performed by Mr. Todd, I note that approximately 9 hours relate to conference calls involving the other experts hired on the project or the review of evidence prepared by the other experts. In light of my comments above relating to duplication of work, I cannot conclude that all of the costs claimed for Mr. Todd's work were necessarily or reasonably incurred by the applicant. I have therefore allowed 18 hours at a rate of $155.00 of the total claim by NBAPA for work performed by Mr. Todd.
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I will allow the amounts for disbursements as claimed.
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Costs as Taxed
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I hereby tax the fees and disbursements as follows, taking into account the 50% G.S.T. credit, which I understand to be available to the applicant in the circumstances of this case:
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Fees
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Counsel: $ 1,750.00
G.S.T: $ 61.25
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The Goodman Group: $ 12,375.00
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John Todd: $ 2,790.00
G.S.T.: $ 97.65
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Disbursements
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General: $ 705.64
G.S.T.: $ 17.47
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Totals Fees and Disbursements, inclusive of G.S.T. $ $19,092.86
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Carolyn Pinsky
Legal Counsel
Canadian Radio-television and Telecommunications Commission
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