ARCHIVED - Taxation Order CRTC 2001-5

Taxation Order CRTC 2001-5

Ottawa, 29 June 2001

In re: Application to review and vary Order CRTC 2000-531 - Télébec ltée - Rate restructuring
Reference: 8662-A65-01/00 and 4768-097

Application by Eve-Lyne H. Fecteau on behalf of Action Réseau Consommateur (ARC) and the Association coopérative d'économie familiale des Bois-Francs (ACEF-BF)

Taxation of costs of ARC and ACEF-BF

Taxation officer: Tariq Qureshi

This order constitutes the taxation of costs awarded to ARC and ACEF-BF for their intervention with respect to the application to review and vary Order CRTC 2000-531, Télébec ltée - Rate restructuring, dated 9 June 2000.

In Costs Order CRTC 2001-7, Application to review and vary Order CRTC 2000-531: Télébec ltée - Rate restructuring, dated 2 April 2001, the Commission awarded costs to ARC and ACEF-BF in accordance with section 56(1) of the Telecommunications Act, and ordered that those costs be paid by Télébec ltée.

On 9 April 2001, ARC and ACEF-BF submitted their bill of costs in the amount of $18,459.97, consisting of $18,108.10 in fees and $351.87 in disbursements. ARC and ACEF-BF claimed that, under the circumstances, those costs were reasonably and necessarily incurred.

By letter dated 1 June 2001, ARC and ACEF-BF amended their bill of costs, reducing it by $746.74, for taxes that ARC and ACEF-BF had allocated for work done by the in-house analyst.

Comments by Télébec

On 24 April 2001, Télébec filed its comments regarding the bill of costs of ARC and ACEF-BF, stating that it found the costs claimed to be exaggerated. Télébec disputed the claim that, under the circumstances, the costs were reasonably and necessarily incurred, because the arguments raised by ARC and ACEF-BF in the review and vary application are the same as those raised in the interventions presented by those parties in opposition to Tariff Notice 239 (TN 239), and those raised in the dissenting opinion in Order CRTC 2000-531.

Furthermore, Télébec submitted that those costs are particularly exaggerated given that the amount claimed is almost 10 times higher than the amount claimed by ARC and ACEF-BF in their original intervention opposing TN 239. Télébec was of the opinion that such a difference in costs is disproportionate to the content of the review and vary application filed by ARC and ACEF-BF.

Finally, Télébec considered the amount to be particularly excessive given that, for all intents and purposes, those costs will be borne by the customers represented by ARC and ACEF-BF.

For those reasons, Télébec was of the opinion that, at most, the amount awarded be the same as that awarded for the initial interventions by ARC and ACEF-BF in the proceeding leading to Order 2000-531, i.e., a total of $2,000.

Reply from ARC and ACEF-BF

By letter dated 25 April 2001, ARC and ACEF-BF, in reply to the comments by Télébec, submitted that those comments do not take into account the significant differences between the work required to file an initial position in a rate case, and that of the work required to file an application to rescind a decision made by the Commission.

In support of its application, ARC and ACEF-BF also cited specific circumstances dating back to the beginning of the TN 239 proceeding. Following the departure of their analyst, Philippe Tousignant, who had worked on the case, and given the need to prepare an application to review and vary the resulting order, ARC and ACEF-BF had to replace Mr. Tousignant, with all the associated inconvenience.

Moreover, ARC and ACEF-BF submitted that, given the complexity of the work and the legal nature of an application to review, they had to hire two outside lawyers to handle the work.

Finally, ARC and ACEF-BF submitted that if the consumers they represent were to pay the costs claimed, the amount claimed constitutes a profitable investment, given that Télébec subscribers will benefit from the $3.2 million placed in a deferral account each year resulting from the review of the rate increase initially granted to Télébec.

Fees

ARC and ACEF-BF claimed $5,370 for their four analysts, and $11,991.36 (including taxes) for the services of two lawyers, Eve-Lyne H. Fecteau and Franklin S. Gertler.

The hourly rates claimed for the services of Eve-Lyne H. Fecteau and Franklin S. Gertler are $100 and $200 respectively. For the work done by their analysts, Nathalie St-Pierre, Louise Tardif and Philippe Tousignant, ARC and ACEF-BF claimed a daily rate of $400.

The rates claimed are, in each case, equal to or lower than those set forth in the CRTC Legal Directorate Guidelines for the Taxation of Costs (the Guidelines). In my opinion, given the interveners' years of practice and their expertise, those rates are appropriate under the circumstances.

ARC and ACEF-BF also used the services of a fourth analyst for whom they are claiming a daily rate of $400. Although the Guidelines stipulate a rate of $400 per day for an in-house analyst, I am of the opinion that that rate is representative of current market rates for the services of an analyst with experience in the telecommunications industry and paid to analyse matters submitted to the Commission. I note that Jean Sébastien only has limited experience (three months). In the past, taxation officers have considered that an applicant's limited experience did not justify allowing the hourly rate provided for in the Guidelines. In my opinion, that approach is justified in determining the hourly rate. In this case, I cannot accept the amount claimed by ARC and ACEF-BF. I believe that a daily rate of $200 is more appropriate for the services of Jean Sébastien in this matter.

Preparation and procedural time

In their bill of costs, ARC and ACEF-BF claimed a total of 94.05 hours for work done by their counsel, and a total of 13 and 3/7 days for work done by their analysts. As stated above, and for the reasons given, Télébec opposed that claim. After reviewing Télébec's arguments and the reply from ARC and ACEF-BF, I find that the amounts claimed were reasonably and necessarily incurred.

I cannot agree with Télébec. I do not believe it is appropriate to compare the time spent by an intervener to prepare an intervention for a rate case, with the time it takes to file a review and vary application, make representations supporting that application and reply to comments by the other party.

In a review proceeding, to refute the presumption of the correctness of a decision by the Commission, the burden of proof rests with the applicants, requiring not only technical arguments, but also legal arguments based on the principles of administrative law. In the case of the application to review and vary Order 2000-531, ARC and ACEF-BF presented arguments supporting their application. This involved a review of previous decisions by the Commission, an in-depth analysis of the Commission's policy with respect to rate restructuring, and an analysis of Télébec's regulatory and financial environment in order to argue that the shortfall resulting from the depletion of Télébec's reserve account should be offset by the approved rate restructuring. I am of the view that this work was reasonably and necessarily incurred.

Also, I cannot agree that there was an unnecessary duplication of work by counsel and the analysts involved in this proceeding. Mr. Tousignant, who had worked on preparing an application to rescind the order, voluntarily left his position at ARC. ARC and ACEF-BF had to find someone to take over the file. They were entitled to use outside counsel, who were not involved in the original proceeding, and thus had to become familiar with the issues addressed, the status of the case, and the procedures undertaken before they began working on the case. The somewhat high cost is the result of the duplication of work that was begun by Mr. Tousignant and research done by Ms. Fecteau to conclude the file. I consider that duplication to be acceptable under the circumstances. As pointed out by ARC and ACEF-BF, a change in staff in the middle of a case is not an ideal situation, but it does happen. I do not believe it would be appropriate to penalize ARC and ACEF-BF for a situation outside their control.

Although two analysts participated in preparing for the review proceeding, half of the work was done by two lawyers somewhat unfamiliar with CRTC proceedings. They had to become familiar with the procedures, legislation and regulations, and with the Commission's policies with respect to an application to review. Although that task may have resulted in overtime, the hourly rate charged for that learning curve is lower than the rate set forth in the Guidelines for outside counsel. In my opinion, any other approach would prevent an intervener from submitting a documented and useful brief to the Commission.

Although Ms. St-Pierre and Mr. Sébastien helped prepare the review and vary application and the reply in addition to the two lawyers assigned to the case, I am not convinced that there was a duplication of work. In my opinion, each brought unique expertise to the ARC and ACEF-BF intervention. This same approach was used in Taxation Order CRTC 2000-3, In re: MTS Communications Inc. - Mechanism to recover future income tax expense - Telecom Decision CRTC 99-2, dated 1 May 2000, in which the taxation officer found it appropriate that information prepared by an analyst for an intervener was also reviewed by the intervener's counsel to ensure that the information was relevant and accurate.

With respect to the number of days claimed for Mr. Tousignant, I find it appropriate to approve the number of days claimed. As stated earlier, the nature of the arguments in a review application are different from arguments used in an intervention responding to a tariff notice. In the initial proceeding, ARC was only one of the interveners responding to the TN filed by Télébec. In this matter, ARC and ACEF-BF are the applicants and instigated the review undertaken by the Commission. As such, they had to prepare a complete case to meet the burden of proof required for reviewing the Commission's decision.

For all those reasons, I find that in the circumstances, the preparation time claimed by ARC and ACEF-BF in this matter is necessary and reasonable.

Disbursements

In their bill of costs, ARC and ACEF-BF claimed $351.87 for in-house photocopying, postage and courier services, long distance and research.

I consider the disbursements to be reasonably and necessarily incurred in the circumstances and I will allow them.

Taxes and tax relief

As stated in the Affidavit of Disbursements filed by ARC and ACEF-BF, ARC and ACEF-BF are entitled to a 50% rebate for the federal goods and services tax and a 50% rebate for the Quebec sales tax.

Although ARC and ACEF-BF confirmed this in their letter dated 1 June 2001, they did not amend their bill of costs accordingly. I will thus adjust the costs claimed to reflect the tax rebate to which ARC and ACEF-BF are entitled. The amendments to the bill of costs involve only those amounts claimed for Eve-Lyne Fecteau and Franklin Gertler, because the goods and services tax and the Quebec sales tax are applicable in their cases.

Costs as taxed

I hereby tax the fees and disbursements of ARC and ACEF-BF as follows:

Legal counsel fees

Eve-Lyne Fecteau

$9,014.93

Fraklin Gertler

$2,193.26

Analyst fees

Nathalie St-Pierre

$570

Philippe Tousignant

$4,000

Jean Sébastien

$200

Louise Tardif

$400

Total fees

$16,378.19

Disbursements

In-house photocopies

$105.24

Postage/courier

$61.22

Long distance

$100.64

On-line legal research

$74.77

Total disbursements

$341.87

Total fees and disbursements

$16,720.06

Pursuant to Costs Order 2001-7, the respondent Télébec is to pay the costs as taxed forthwith.

Taxation officer

Tariq Qureshi

Secretary General

This document is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca