Findings of Fact

1. Senate Bill X2 39, Ch. 19 of California Statutes 2001, 2d Extraordinary Sess., requires the Commission to enforce the maintenance and operations standards adopted by the California Electricity Generation Facilities Standards Committee (Committee). The legislation also requires the Commission to enforce the protocols for the scheduling of power plant outages of the Independent System Operator (Outage Coordination Protocol).

2. Pursuant to Resolution No. 3, the Committee adopted six General Duty Standards for operation and maintenance on June 3, 2003, and filed the General Duty Standards in this proceeding on June 6, 2003.

3. The Committee adopted a set of Maintenance Standards on May 2, 2003, and filed the Maintenance Standards in this proceeding on May 16, 2003.

4. The General Duty Standards impose broad obligations on generators in their operation and maintenance of electric power generation facilities.

5. The Maintenance Standards pertain to the operation, repair, and maintenance of existing electric power generation facilities.

6. The CAISO has adopted an Outage Coordination Protocol that provides a systematic method of scheduling necessary plant outages and monitoring and investigation of unplanned outages.

7. The parties appearing in this proceeding have had the opportunity to provide written and oral comments on the various methods to enforce the General Duty Standards, Maintenance Standards, and CAISO Protocol and we have considered their views.

8. The proposed GO will improve the operations and maintenance practices at those electric generation facilities covered by the order.

9. These improvements, in turn, will lead to increased efficiency and reliability in electric power generation available to the state.

10. The improvements also will better protect the public health and safety of California residents and businesses.

11. Additional enforcement of the standards might be achieved by incorporating them in the CAISO's tariff filed with the Federal Energy Regulatory Commission, but this approach requires further study.

12. The GO provides a practical and reasonable method for implementing other standards or requirements once the Committee files them with the Commission.

13. The GO provides a practical and reasonable method for updating the standards and requirements after the Committee terminates which, in turn, will allow this legislatively created program to continue in providing electrical service reliability and adequacy.

Conclusions of Law

1. The proposed GO satisfies the requirements of Senate Bill (SB) X2 39, codified at Pub. Util. Code § 761.3.

2. We have the authority under section 761.3 and other provisions of the Public Utilities Code to adopt and enforce the proposed GO.

3. The Committee, as an instrumentality of California state government, is authorized, under section 19 of the Federal Water Power Act, 16 U.S.C. § 812 (2003), to apply General Duty and Maintenance Standards to federally licensed hydroelectric Generating Assets.

4. The Commission, as a constitutionally created state agency, is also authorized under section 19 of the Federal Water Power Act to implement and enforce General Duty and Maintenance Standards against federally licensed hydroelectric Generating Assets. We do not implement and enforce all provisions of the GO against hydroelectric Generating Assets since we seek a cooperative relationship with FERC, based on intergovernmental comity, allowing the joint expertise of both commissions to be utilized in securing the safe, efficient, and reliable operation of these facilities.

5. Once the Committee terminates, we continue to have an obligation under section 761.3 to implement and enforce the standards and to modify and update the specific requirements under the eighteen broad performance objectives, so long as the changes remain consistent with those broad objectives.

6. Our approval of the proposed GO is exempt from the requirements of CEQA.

7. The Commission should adopt and enforce the proposed GO.

8. The GO will be utilized to implement and enforce other standards and requirements adopted by the Committee.

9. Our order should be effective immediately so that California's electrical service reliability and adequacy are improved.

ORDER

IT IS ORDERED that:

1. General Order (GO) No. [tentatively 167], set forth as Attachment A to this decision, is adopted.

2. Sections 7.0, 9.0, 10.3, 10.4, or 15.1 of the GO will not, for the moment, be implemented or enforced against hydroelectric Generating Assets licensed by FERC.

3. The Executive Director shall prepare and file a notice indicating our determination that the approval of the GO is categorically exempt from the California Environmental Policy Act.

4. As discussed in Part E(1)(f)(2) of the decision, the Executive Director shall investigate and report within 180 days on the possibility of further enforcing the standards implemented and enforced the GO by also incorporating them in the tariff filed by the California Independent System Operator with the Federal Energy Regulatory Commission.

5. The Executive Director shall regularly update the GO so that it includes, as appendices, all standards and requirements adopted by the Committee and approved for implementation and enforcement by the Commission.

This order is effective today.

Dated , at San Francisco, California.

Attachment A:

Public Utilities Commission of the State of California

General Order No. [Tentatively 167]

Enforcement of Maintenance and Operational Standards

for Electric Generating Facilities

Adopted _____, 2003. Effective _____, 2003.

(D.03-__-___ in R.02-11-39)

Table of Contents

1.0 Purpose 11

2.0 Definitions/Acronyms 22

3.0 Required Compliance 55

4.0 General Duty Standards 55

5.0 Generator Logbook Standards (Thermal Energy) 55

6.0 Generator Logbook Standards (Hydro) [Reserved] 66

7.0 Generator Maintenance Standards 66

8.0 Generator Operational Standards [Reserved] 88

9.0 Independent System Operator (ISO) Outage Coordination Protocol 88

10.0 Information Requirements 88

11.0 Audits, Inspections, and Investigations 1010

12.0 Violations 1111

13.0 Commission Proceedings 1212

14.0 Sanctions 1313

15.0 Miscellaneous Provisions 1515

Appendix A: General Duty Standards 2020

Appendix B: Generator Logbook Standards (Thermal energy) [Reserved] 2121

Appendix C: Generator Maintenance Standards 2222

Appendix D: Generator Operational Standards [Reserved] 2323

Appendix E: Fines for Specified Violations 2424

1.0 Purpose

The purpose of this General Order is to implement and enforce standards for the maintenance and operation of electric generating facilities and power plants so as to maintain and protect the public health and safety of California residents and businesses, and to ensure electrical service reliability and adequacy. The General Order provides a continuing method to implement and enforce General Duty Standards for Operations and Maintenance, Generation Maintenance Standards (Maintenance Standards), and Generation Operational Standards all adopted pursuant to Public Utilities Code § 761.3 (Chapter 19 of the Second Extraordinary Session of 2001-02 (SBX2 39, Burton et al.). The General Order also provides a means to enforce the protocols for the scheduling of power plant outages of the California Independent System Operator. The General Order is based on the authority vested in the California Public Utilities Commission by the California Constitution; California statutes and court decisions; prior Commission decisions and orders; and federal law including, but not limited to, section 714 of the Energy Policy Act of 1992, 16 U.S.C. § 824(g).

2.0 Definitions/Acronyms

3.0 Required Compliance

All Generating Asset Owners shall comply with this General Order.

4.0 General Duty Standards

5.0 Generator Logbook Standards (Thermal Energy)

5.3 Verified Statement. For each Generating Asset, the Generating Asset Owner shall file one original verified statement with the Director of the Commission's CPSD. The verified statement shall include at least the following:

5.4 Time of Filing. For each Generating Asset in Active Service on the effective date of this General Order, the Generating Asset Owner shall file the Verified Statement within 45 days of the effective date of this General Order.

5.5 Time of Filing for Other Assets. For each Generating Asset placed in Active Service after the effective date of this General Order, the Generating Asset Owner shall file the Verified Statement within 45 days of the Generating Asset being placed in Active Service. When a Generating Asset Owner acquires a Generating Asset from an existing Generating Asset Owner, the new owner shall file a verified statement within 45 days of the effective date of the transfer of title or within 45 days of the transfer of possession, whichever date is later.

6.0 Generator LOGBOOK STANDARDS (Hydro) [Reserved]

7.0 Generator Maintenance Standards

8.0 Generator Operational Standards [Reserved]

9.0 Independent System Operator (ISO) Outage Coordination Protocol

10.0 Information Requirements

11.0 Audits, Inspections, and Investigations

12.0 Violations

13.0 Commission Proceedings

14.0 Sanctions

15.0 Miscellaneous Provisions

Appendix A: General Duty Standards

[Upon approval of the General Order,

the General Duty Standards,

as filed with the Commission on

June 6, 2003, will be codified here.]

Appendix B: Generator Logbook Standards (Thermal energy) [Reserved]

[Upon approval of the draft decision on

thermal energy logbook standards,

the operative provisions of the order

will be codified here.]

Appendix C: Generator Maintenance Standards

[Upon approval of the General Order,

the Maintenance Standards,

as filed with the Commission on

May 16, 2003, will be codified here.]

Appendix D: Generator Operational Standards [Reserved]

Appendix E: Fines for Specified Violations

Violation

Fine

Failure to file an Initial Certification, Recertification, or Notice of Material change at the time or in the manner required by this General Order.

$1,000 per incident plus $500 per day for the first ten calendar days the filing was late and $500 for each day thereafter.

Failure to maintain logbooks as required by this General Order.

$5,000 per incident.

Failure to respond to an Information Requirement set forth in section 10.0 of this General Order.

$1,000 per incident plus $500 per day for the first ten calendar days the Information Requirement was not satisfied after being requested and $1,000 for each day thereafter.

Negligent submission of inaccurate information in response to an information request under section 10.0 of this General Order.

$2,000 per incident plus $500 per day for the first ten days the inaccuracy was not corrected and $1,000 for each day thereafter.

Repeated violation of any requirement listed in this schedule.

200% of the fine that would be imposed for a first-time violation.

END OF GENERAL ORDER

Attachment B:

Commission Responses to Comments on

Draft General Order Dated October 2, 2003

Participants in the proceeding were provided an opportunity to comment on the draft General Order (GO) dated October 2, 2003. The following are the Commission's responses to the comments. The responses use, for identification purposes, the section number from the October 2, 2003, General Order. If the section number has been changed in the revised GO attached to this decision, the new section number is indicated in parenthesis.

1.0 Purpose

The participants offered mainly jurisdictional comments, suggesting that the cited authority does not support the functions to be undertaken under the GO, especially as that authority pertains to EWGs. To the contrary, the language of section 1.0 invokes both the specific authority given the Commission under SBX2 39 and the more general authority granted under state and federal law. The Commission's jurisdiction over EWGs has been discussed in more detail in the Part C of the decision and in the Commission's logbook (thermal electric) decision. The Commission's authority to enforce outage coordination protocols is addressed in response to the comments to section 9.0, infra. Other minor errors in the text have been corrected.

2.6 "Exigent Circumstance"

The comments suggested that the phrase "including but not limited to" is vague and creates uncertainty. The comment has been accepted and the language has been changed.

2.7 "General Duty Standards"

A participant commented that any amendments to the standards should be preceded by notice and reasonable opportunities to comment. The Commission has no authority over the Committee's procedures in amending any of the standards. To the extent the Commission amends the standards pursuant to section 15.8 of the GO, the Commission's normal procedures will be followed; and section 15.8 has been changed to reflect this understanding.

2.8 [Exemptions to "Generating Asset"]

Pursuant to comments, this section has been amended to reflect the exemption language set forth in SBX2 39. The enforcement of standards against hydroelectric facilities is discussed in Part C of the decision.

One issue, raised by the comments, is the application of the standards to Generating Assets, located outside of California, that produce electricity used in California. Since this is a rulemaking proceeding, it is premature to determine the applicability of the GO to situations that are fact-specific.

2.9 "Generating Asset Owner"

Some comments indicated that too many persons or entities, such as shareholders and employees, were included in the original definition of "Generating Asset Owner." The third sentence has been deleted although the Commission will enforce the GO against any person or entity (with the exception of governmental agencies) owning, operating, or managing a Generating Asset. The participants' recommendations to exempt out-of-state facilities are discussed in response 2.8.2, supra.

2.12 "Generator Logbook Standards (Thermal Energy)"

One comment said that any amendments to the standards should be preceded by notice and reasonable opportunities to comment. This comment is discussed in response 2.7, supra.

2.13 "Generator Maintenance Standards"

A comment indicated that the Committee determined, on May 2, 2003, not to enforce assessment guidelines as enforceable standards. The comment is in error. The Committee, in its Resolution No. 2, decided that section 1 constitutes the Maintenance Standards. While the transcript of the Committee meeting includes some discussion between two committee members and staff concerning the differences between the standards and "assessment guidelines," Resolution No. 2 as approved by the Committee does not differentiate between the standards and the assessment guidelines, both of which are contained in section 1.

Another comment suggested that any amendments to standards should be preceded by notice and reasonable opportunities to comment. This comment is discussed in response 2.7, supra.

No change has been made to this subsection.

2.15 "Material Change" (Now "Initial Certification")

Several entities commented on the breadth of this definition and the unintended consequences that might follow if applied to changes involving Generating Assets. The concept of "material change" was used only in the context of changes to certifications and the reporting of previously undeclared deficiencies, pursuant to section 15.1. Because of this limited usage, the definition has been deleted here and section 15.1 has likewise been modified.

Section 2.15 now is a definition for "Initial Certification;" see response 7.2.4, infra.

2.17 "Notify CPSD" etc.

A comment suggested the use of "submit" and "submission" instead of "file" and "filing" as these latter terms may be confused with the formal filing of documents with the Commission's Docket Office. An additional clarifying sentence has been added to indicate that these documents are not filed with the Docket Office.

Another comment suggested that fax or e-mail filing also be required. Section 15.2 authorizes CPSD to require electronic submissions of all filings.

2.19 Scheduling Coordinator

Several comments objected to covering scheduling coordinators. We believe the existing definition of "Generating Asset Owner," response 2.9, supra, specifies the appropriate persons to be covered by this GO; thus, this subsection has been deleted. We do not determine at this time whether scheduling coordinators, under certain circumstances, may be Generating Asset Owners.

2.20 "SLIC" (Now 2.19)

A comment suggested citing to the appropriate ISO documentation that describes the "Scheduling Logging for the ISO of California" or "SLIC." Because SLIC is described on the CASIO website, and the Internet address may change over time, a citation has not been added to the definition. A description of SLIC, however, may be found at www.caiso.com under "Stakeholder Processes."

2.21 "Standards" (Now 2.20)

One comment was that the second sentence concerning the obligation of Generating Asset Owners to comply with the ISO's outage coordination protocol was redundant and confusing. The subsection has been modified in response to the suggestion. Other comments concerning the Commission's authority to enforce ISO tariffs and protocols are discussed in response 9.0, infra, and in Part E(1)(e) of the decision.

2.22 "Thermal Energy" (Now 2.21)

One comment suggested that "is not limited to" makes the definition ambiguous. We have made the language more precise.

3.0 Required Compliance

Comments were submitted indicating that, because of the breadth of the original "Generating Asset Owner" definition, employees and other persons would be brought under the GO. As indicated previously, the definition of "Generating Asset Owner," subsection 2.9, has been narrowed; and this comment has been addressed by similarly narrowing the persons required to comply.

4.0 General Duty Standards

Comment stated that the General Duty Standards are vague, they may conflict with other standards, and the enforcement of General Duty Standards 3 or 4 will encroach on FERC's regulatory authority. Another comment about how this section conflicts with subsection 2.9 has been addressed by the amended "Generating Asset Owner" definition.

The Commission is obligated and authorized to implement and enforce operations and Maintenance Standards adopted by the Committee, including the General Duty Standards. Concerns about the content of the General Duty Standards were raised before and resolved by the Committee. Jurisdictional issues concerning the ISO are discussed in response 9.0, infra. Language has been added to this section to address any perceived discrepancy between the General Duty Standards and other standards.

5.0 Generator Logbook Standards (Thermal Energy)

Some comments argued that exemption authority cannot be delegated to staff, the criteria for granting exemptions is not stated, and generators should have the ability to request exemptions.

The Commission is presently considering Commissioner Carl Wood's draft Interim Order Regarding Logbook Standards for Thermal Powerplants, dated October 29, 2003, concerning the enforcement of the Generating Logbook Standards (Thermal Energy). Once the Commission approves a thermal logbook decision, the appropriate enforcement language from that decision will be incorporated in this section 5.0. Pending that final decision, no changes have been made to section 5.0.

7.1 Applicability of [Maintenance] Standards

A comment asserted that the GO adopts a strict liability standard that will be inflexible in adapting to differences among Generating Assets. As noted in Part D of the decision, a strict liability standard is a tort standard not commonly used to describe administrative enforcement. The GO requires adherence to the standards and other obligations set forth therein, and this obligation exists whether or not the generators intended a violation or was negligence or reckless. The standards themselves, however, allow generators considerable flexibility in developing maintenance plans to meet those standards. The GO also provides that sanctions for violations may be enhanced or mitigated depending on the factual circumstances surrounding the violation.

7.2.1 Content of Maintenance Plans

One comment was that the GO does not adopt the compliance mechanism originally set forth in the Maintenance Standards. This decision explains that the Commission has authority under SBX2 39 to adopt the enforcement methods for the standards. The Commission has considered all of the Committee's enforcement recommendations and adopted many of them. Ultimately, the Commission will rely on its prior enforcement experience to fashion an implementation and enforcement mechanism that will be workable.

Other comments concerned the definition of Generating Asset Owner, addressed in response 2.9, supra, and the application of the GO to out-of-state plants, discussed in response 2.8, supra.

7.2.2 Certificate of Compliance

One comment was that the definition of Generating Asset Owner could include thousands of persons. This comment has been addressed in response 2.9, supra.

7.2.3 Certificate of Noncompliance

One entity suggested that "corrective plan" should be defined. This section sufficiently addresses the purpose and content of such a plan. Other comments asked for a procedure allowing generators to demonstrate why compliance with certain standards should be waived. This is unnecessary since the standards allow considerable flexibility in attaining compliance, and the generators themselves will prepare the maintenance plans for their Generating Assets. Some participants also asked for more time than 180 days to comply.

The Committee finalized the Maintenance Standards on May 2, 2003; thus, generators have had considerable time already to begin bringing their programs into compliance. Subsection 15.9 has been amended to authorize the Executive Director to allow more than one 30-day exemption; but such extensions will be allowed sparingly.

7.2.4 Time of Filing

One participant suggested that "Initial Certification" be defined. A definition has been provided in a revised subsection 2.15. Other comments concerning the definition of "Generating Asset Owner" and extensions of time have been previously addressed.

7.2.5 Time of Filing for Other Assets

Another comment was that the definition of Generating Asset Owner could include thousands of persons. This comment has been addressed in subsection 2.9, supra.

7.3.1 Method of Recertification (Now Recertification of Maintenance Plans, 7.3)

One comment was that the definition of Generating Asset Owner could include thousands of persons. This comment has been addressed in response 2.9, supra.

The text has been slightly modified for the reason given in response 7.3.2, infra.

One participant requested clarification on what documents need to be verified; this request has been addressed in a change to subsection 15.3, infra.

7.3.2 Time for Recertification (Now Deleted)

One suggestion was that a three-year cycle be used for recertification since this interval would reduce the regulatory burden and coincide with normal inspection and overhaul periods. Another comment was that the definition of Generating Asset Owner could include thousands of persons. This comment has been addressed in response 2.9, supra.

This section has been deleted, however, for the following reason. Once all standards and logbook requirements are enforced under this GO, generators will be required to periodically submit recertifications or similar documents indicating they remain in compliance. Thus, a new subsection 15.1 has been added to the GO addressing the ongoing reporting obligations of generators concerning logbooks and Maintenance Standards.

7.5 Exemption

The main body of the decision addresses comments about delegating authority to the Executive Director to exempt Generating Assets from certain requirements of the standards based on the best use of the Commission's limited resources in maximizing the program's benefits of improving electric service reliability and adequacy. See Part E(1)(a). This subsection of the GO has been slightly modified to remove any ambiguity resulting from the use of "other factors." Assets exempt under this subsection are not exempt for all purposes of the GO. While certain Generating Assets may be exempt from subsections 7.2, 7.3, or 7.4 of the GO, the remaining provisions of the GO (unless otherwise indicated) do apply to all Generating Assets as defined in subsection 2.9.

Some comments asked that the exemption process be more explicitly defined. The Commission does not anticipate a case-by-case exemption process so such procedural details are unnecessary. Rather, the Executive Director is authorized to exempt categories of Generating Assets based on the objective criteria specified in the GO. The text has been modified accordingly.

Finally, one comment asked that CPSD be required to provide generators with feedback concerning their certified and recertified maintenance plans. The Commission does not have the financial resources to provide such an evaluation to all generators. Resources permitting, CPSD is available to answer questions from generators about the development of their plans and certifications.

9.0 Independent System Operator (ISO) Outage Coordination Protocol

Many comments were submitted on the respective jurisdictions of the Commission, CAISO, and FERC, especially in the context of CAISO's outage coordination protocol. These concerns are addressed in Part E(1)(e) of the decision. The Commission's enforcement of the CAISO outage coordination protocol is to ensure the proper operation and maintenance of electric generating facilities, a responsibility imposed on the Commission by section 761.3 and recognized under federal law.

10.1 Provision of Information

The parties filed various comments: the subsection is too broad; it ignores a statutory exemption for EWGs (Pub. Util. Code § 216(g)); the five-day response period is too short; and the Commission cannot require the submission of information in a format different from how it is normally maintained.

No changes are necessary to this subsection. The scope of information that the Commission may request includes seven specific categories of information as well as other materials "reasonably related to the requirements of this General Order." The scope of information that may be requested is sufficiently circumscribed.

The section 216(g) issue is addressed in the Commission's Thermal Logbook Standards decision. While section 216(g) does indicate that EWGs are not public utilities under the Commission's general ratesetting jurisdiction, SBX2 39 specifically enlarges Commission authority, "[n]ot withstanding subdivision (g) of section 216," to enforce maintenance and operations standards for all electric generation facilities owned by electrical corporations. EWGs, while they may not be public utilities under the general ratesetting provisions of the Public Utilities Code, are electrical corporations subject to section 761.3 and are public utilities under specific provisions of the state constitution. See Cal. Const. art. XII, § 3.

The five-day response period is retained because, in some instances, the requested information may be lost or destroyed if not promptly acquired. Generators remain free to request a deadline extension under subsection 15.9 of the GO.

Finally, since the Commission has broad authority under Pub. Util. Code § 792 to specify the books and accounting practices of public utilities, the Commission also has the authority to specify how information will be submitted to staff. The Commission has specified the submission format in many previous proceedings. For all generators, the authority to require the submission of information in a format readily usable by staff is reasonably implicit in section 761.3(a)'s charge to "implement and enforce standards."

See the discussion under response 10.5, infra, explaining the reason for other changes to this subsection.

10.2 Authorization for Release of Information

Some comments suggested that this subsection seeks to indirectly extend the Commission's ability to obtain information the Commission is not authorized to obtain directly. Other participants are concerned that the Commission may obtain and subsequently release information that is held in confidence by another governmental agency.

In its mandate to the Commission to "implement and enforce standards," the Legislature implicitly provided us with the authority to gather necessary information concerning the maintenance and operation of Generating Assets. The Commission is authorized to obtain this relevant information directly from the generators; however, in some circumstances, information held by other agencies will be more helpful to the Commission's enforcement purposes. For example, generators submit generation data to NERC. While the Commission can obtain the raw data directly from the generators, the Commission's ability to satisfy its section 761.3 obligations is enhanced if staff can obtain the information from NERC and thereby benefit from that organization's sophisticated analytical tools. Similarly, the Commission can obtain accident data from generators; but the files maintained by other public safety agencies may include interviews, photos, and other information helpful to staff in determining whether the maintenance or operation of a Generating Asset may have contributed to an accident.

The confidentiality concerns expressed in some comments are addressed in response 15.4, infra.

10.3.2 Submission of Information to NERC

Some comments questioned the Commission authority to require generators to submit information to NERC. These concerns are addressed in subsection 10.2, supra.

One participant pointed out that NERC does not accept information from wind generators and asks how this subsection will be applied for such generators. The subsection is slightly modified to alleviate this concern.

10.3.3 Transitional Compliance Period

One entity suggested the vagueness of "transitional" and "regular." This language is slightly modified. Other participants' concerns about the Commission's authority to require the submission of information to NERC have been addressed in response 10.2, supra.

10.3.4 Frequency of Information (Now "Historical Information")

Several participants indicated that this subsection requires generators to submit duplicative information with little benefit to the Commission. In response to these comments, the subsection has been eliminated. A substitute subsection, "Historical Information" has been provided authorizing CPSD to request historical generating information for any period after January 1, 1998.

10.4 Provision of Information to ISO (Now Deleted)

Comments were received saying that the requirement interferes with federal jurisdiction and the provision is duplicative of subsection 9.1. Part C of the decision addresses the jurisdictional concerns and they need not be repeated here. As the subsection duplicates the earlier provision, it is deleted.

10.5 Books, Accounts, Papers, and Other Documents (Now Deleted)

Many of the comments on this subsection repeat concerns raised earlier to subsection 10.1. Upon review, the two subsections are sufficiently related and should be combined. This consolidated helps address the participants' concerns about the breadth of subsection 10.5. Other comments concerning the provision of information are discussed in response 10.1, supra.

One entity suggested a new subsection allowing information disputes to be referred to an Administrative Law Judge. The Commission's Resolution ALJ-164 (Sept. 16, 1992) limits the resolution of discovery disputes to formal proceedings. The suggestion is not feasible under the existing rules.

10.6 Safety Related Incidents (Now 10.4)

Safety-related accidents may indicate defects in facility operations and maintenance that may affect electrical system reliability and adequacy. The critical components of plant systems range in cost from a few to millions of dollars. Some parties recommended a higher damage-reporting threshold, and we have now established a $50,000 threshold. This threshold still represents a conservative effort to monitor threats to electrical system reliability caused by failures of relatively inexpensive equipment. The meaning of "significant media coverage" is clarified, but other terms such as "damage" have been retained since they are sufficiently precise. For safety-related accidents, the short 24-hour notification requirement (which may be by phone), followed by a 5-day period for written reports, is preferable since these requirements allow Commission staff to investigate incidents while memories are fresh and the accident site is relatively unchanged.

11.1 General Requirement [Audits, Inspections, and Investigations]

The comments raised questions about Commission investigative authority over EWGs and concerns about potential interference with plant operations resulting from frequent inspections. The jurisdictional issues have been raised and addressed earlier in Part C of the decision. The Commission's obligation under section 761.3(a) to implement and enforce standards certainly includes the authority to conduct audits, inspections, and investigations related to the scope of this legislation. The Commission's authority exists under section 761.3(a), notwithstanding other provisions of the Public Utilities Code that may exempt EWGs from other public utility ratemaking requirements.

Commission staff has already received extensive training in preparation for audit and inspection activities. Through classes and ongoing training, staff will have the expertise to conduct well-planned audits and inspections while minimizing interference with generators. A generator's obligation to cooperate includes affording access to Generating Assets.

11.2 Interviews and Testimony

Participants questioned whether sworn testimony can be compelled outside of a formal Commission proceeding. They also criticized the lack of any Commission procedure to quash subpoenas or seek protective orders. Pub. Util. Code § 311(a) recognizes the authority of individual Commissioners, the Executive Director, and assistant executive directors to "administer oaths . . . and issue subpoenas for the attendance of witnesses and the production of papers . . . and testimony in any inquiry, investigation, hearing, or proceeding . . . ." This authority is not limited to information requested in formal proceedings or from regulated entities. See also Pub. Util. Code § 314. The GO does not prevent any person from seeking to quash or limit a subpoena or an information request through other legal means. The section has not been changed.

11.3 Audits, Tests, or Technical Evaluations (Now "Tests and Technical Evaluations)

The comments questioned who bears the costs and liabilities resulting from tests and technical evaluations. The comments also raised the problem of how tests and technical evaluations may interfere with CAISO's schedule of power and power outages.

Commission staff will not be operating Generating Assets during tests or technical evaluations. The language has been modified to indicate that, upon Commission staff's request, the Generating Asset Owner or a third person mutually agreed upon by the Generating Asset Owner and staff will conduct any test or evaluation. Additional language has been added requiring the generator to notify CAISO of such tests or evaluations if they may affect power scheduling. Commission staff will carefully schedule tests or evaluations to minimize generation disruptions and will, as appropriate, coordinate its activities with CAISO.

Other entities recommended advance notice of tests and evaluations and a formal procedure, before the Commission's law and motion judge, for disputes about these tests and evaluations. In some cases, advance notice would negate the value of a particular test or evaluation. The Commission's law and motion procedure is now limited by Resolution ALJ-164 (Sept. 16, 1992) to formal proceedings and the procedure is not available in these situations. Once again, the GO does not prevent a Generating Asset Owner from seeking to quash or limit a subpoena or an information request through other legal means.

11.4 Preservation of Records

Several participants complained of what they characterized as the burdensome nature of the proposed "life of the asset plus three years" retention period. The retention period has been changed to five years. One comment asked that the requirement be prospective and generators should not be required to retain records maintained by a previous owner. In its present form, the section is prospective in that the effective date of the GO will commence a five-year retention period for all referenced documents in existence at that time, including any relevant records that were transferred from a prior owner.

11.5 Third-Party Audits, Tests, or Technical Evaluations

The comments argued that CPSD should not be the final arbiter of what tests or evaluations should be performed. The participants may have missed the purpose of this subsection. This provision affords generators an opportunity, during an audit, inspection, test, or evaluation, to submit the results of a previously prepared audit or test that may address some or all of the pending information requests. The generator is not required to submit these results, unless specifically requested by CPSD; but if they are submitted, CPSD will determine how useful the submitted information is to the pending inquiry. If adequate information is already available, the subsection may reduce a generator's costs and minimize the interference with its operations.

12.0 Violations

Some entities commented that the section imposes strict liability for what may be inconsequential violations and that enforcement should be more focused on reckless or deliberate violations or violations that threaten grid reliability. One participant was concerned that a series of minor violations may lead to "negligence per se" findings by a civil court. Other comments urged that notice and an opportunity to cure, and other due process opportunities, be provided before a violation is deemed to occur.

As explained in Part D of the decision, strict liability is a tort concept not commonly used to describe administrative enforcement. The GO does require adherence to the standards or other obligations set forth therein, and this obligation exists whether or not the generator intended a violation or was negligent or reckless. This is common is many administrative regulatory schemes (e.g., water pollution discharges). Section 14 of the GO, however, sets forth a variety of circumstances that may mitigate or enhance a sanction, such as the seriousness of the violation, subsection 14.3.2 (now subsection 14.1.3), or the degree of compliance with guidelines concerning the standards, subsection 14.4.1 (now subsection 14.2.1). In the event of a violation, sections 13.0 and 14.0 provide detailed procedures that are fully compatible with due process. The Commission cannot second-guess how a civil court might interpret repeated violations of the GO in tort suits against generators since such litigation is fact-intensive. For ensuring electric system reliability and adequacy, which is the Commission's present concern in implementing section 761.3, a series of cumulative minor violations may well result in significantly diminished generation or more outages.

12.2 Retaliation

The comments were that this section exceeds Commission jurisdiction and the text gives no indication how causation between a violation and retaliatory action will be determined. In implementing and enforcing the standards, the Commission is well within its authority under section 761.3 to prevent retaliatory action against persons who report violations to the Commission. The GO authorizes formal proceedings in section 13.0 to determine whether retaliation has occurred. The subsection has been modified, however, to incorporate specific language suggested by one participant.

13.1 Formal Enforcement Proceedings

Several participants questioned Commission jurisdiction to conduct formal proceedings against EWGs for violations of the GO. Once again, section 761.3(a) instructs the Commission to implement and enforce the standards, "notwithstanding" any exemptions provided under Pub. Util. Code §§ 216, 228.5(c) & (d). Another comment was that the Commission has failed to pursue FERC authority to enforce these standards through Participating Generator Agreements. In the decision, the Commission asks its Executive Director to study further how, as a regulatory backstop, the standards can also be enforced through CAISO tariffs. See Ordering Paragraph No. 4.

13.3.1 Specified Violations

Many comments were submitted questioning whether CPSD has the authority to impose scheduled fines. Other comments suggested that the reduction of scheduled fines when warranted, as well as waivers when curing the violation would not be feasible or economic.

The comments miss the following point: Specified fines can be imposed for a limited set of violations, but they can be imposed only if the Generating Asset Owner agrees. If the owner agrees, the matter can be expeditiously resolved. The value of this simplified enforcement process is diminished if the Commission must determine whether mitigating circumstances exist in particular circumstances. If the Generating Asset Owner disputes that there was a violation or asserts that some mitigating circumstances should be weighed, the owner can refuse the offer of a scheduled fine and wait for formal proceedings to be commenced.

Because scheduled fines cannot be imposed unless the Generating Asset Owner agrees, there is no delegation of authority or due process problem.

13.3.2 Schedule of Fines

Several comments suggested that advance notice and an opportunity to be heard should be given before the schedule of fines for specified violations is modified by resolution. These suggestions have been incorporated into the section.

13.3.3 Acceptance of Assessed Fine

One participant suggested a mechanism for reducing scheduled fines by a settlement, presumably with staff. By allowing for negotiation of fines, this suggestion would defeat the purpose of the scheduled fine process to expedite the resolution of this type of violations.

The subsection has been modified to clarify that the imposition of scheduled fines only occurs upon the generator's consent. The subsection has also been amended to include interest on delinquent fines.

13.3.4 Contest of Scheduled Fine

Some comments were that the 10-day challenge period is too short. In response, the contest period has been extended to 15 days.

Other comments suggested that generators will be deprived of due process or penalized if they do not accept the assessment of a scheduled fine under subsection 13.3.1. To the contrary, the specified violation/scheduled fine process does not violate due process if the generator contests the proposed assessment. If a generator believes it has a meritorious defense to an alleged violation, the generator can choose to defend itself in any subsequent formal proceeding before the Commission during which it will have a full array of procedural rights. As the result of a formal proceeding, the generator may be vindicated or, even if a violation is determined, the resulting sanction may be less than would have been imposed under the specified violation/scheduled fine process. The specified violation/scheduled fine process does not prejudice the generator.

13.4 Other Remedies (Now 13.5)

For the reason discussed in response 14.2, infra, this section has been renumbered.

14.1 Violation (Now Deleted)

Some comments indicated that "other applicable law" is too vague and general. Another comment was that this subsection repeats subsection 13.1 and should be deleted. In response to the latter suggestion, the subsection has been omitted.

14.2 Punishment of Contempt (Now 13.4)

Some participants questioned the Commission's authority to impose sanctions against EWGs. This argument subsection repeats provisions of the Public Utilities Code; its inclusion in the GO helps generators, some of whom have not been regulated by the Commission, to understand the range of formal proceedings employed by the Commission. Since this subsection relates to "Commission Proceedings," it has been moved to subsection 13.4 of the GO.

14.3 Sanctions (Now 14.1)

One comment questioned the Commission's jurisdiction over EWGs, a concern that has been addressed earlier. Another entity commented that some of the mitigating factors set forth in In re Standards of Conduct, D.98-12-075, 84 CPUC 2d 155 (1998), have not been included. Two factors, the overall public interest and the role of precedent, have been added to the language.

14.3.1 [Diligence and Reasonableness] (Now 14.1.1)

One entity commented that it would be difficult to determine whether a generator acted reasonably in not reporting an incident to a governmental agency other than the Commission. The Commission disagrees; the facts and circumstances surrounding a failure to report can be demonstrated in a specific enforcement proceeding.

14.3.4 [Financial Resources] (Now 14.1.4)

One comment questioned the Commission's ability to evaluate EWGs' financial information. The Commission has over 90 years of experience in reviewing the financial information of a wide range of commercial entities. EWGs' financial information presents no special interpretative problem.

Another comment questioned the Commission's authority to impose punitive damages.

The Commission's authority to weigh a generator's financial resources has been established by prior Commission decisions. See D.98-12-075, supra. Any constitutional limits on the Commission's authority to impose sanctions based on an entity's financial information will be based on the facts and circumstances of a specific enforcement proceeding.

14.4 Mitigation of Sanctions (Now 14.2)

Another entity commented that some of the mitigating factors set forth in In re Standards of Conduct, D.98-12-075, 84 CPUC 2d 155 (1998), have not been included. They have been added to subsection 14.3 (now subsection 14.1).

14.4.1 [Guidelines] (Now 14.2.1)

One comment was that CPSD does not have authority to issue guidelines to generators. A new subsection 15.10 has been added, pursuant to Pub. Util. Code § 308, authorizing the Executive Director to issue forms, instructions, advisories, and other guidance to further the implementation of this program. As discussed in Part E(1)(a) of the decision, the Commission believes that responsibilities involving the exercise of actual judgment and discretion can be lawfully delegated to the Executive Director.

14.4.2 [Conflicting Requirements] (Now 14.2.2)

Some entities commented that the GO's acknowledgement that there are inconsistent requirements indicates impermissible regulatory overlap. Other entities objected to the possibility of multiple fines being imposed by different agencies. Another entity indicated that such overlapping requirements would discourage new investment in California.

In our complex society, regulations and jurisdiction may overlap and result in enforcement actions by separate agencies. Federal, state, and local taxation of a person's income may be the most prominent example. The purpose of this subsection 14.4.2 (now subsection 14.2.2) is to provide a basis for generators to seek a mitigated fine based on any overlapping requirements. The subsection allows for penalties to be reduced in such a circumstance. Concerning any investment disincentive, no facts in the record reasonably support this conclusion. To the contrary, the specificity of the operation and Maintenance Standards may produce more regulatory stability and electrical system reliability, circumstances that are attractive both for energy investors and investors the much larger non-energy component of California's $1.3 trillion economy.

14.4.3 [Penalties Imposed by Other Agencies] (Now 14.2.3)

One comment was that the Commission should avoid, rather than mitigate, regulatory conflicts. This comment has been addressed in response 14.4.2, supra.

14.2.4 [Demonstrated Compliance] (New)

To better mirror the list of enhancing factors, an additional mitigating factor, demonstrated cooperation with the Commission, has been added as a new subsection.

14.5 Enhancement of Sanctions (Now 14.3)

One comment was that the mitigating and enhancing sections are too limited. As described above, the relevant mitigating factors set forth in In re Standards of Conduct, D.98-12-075, 84 CPUC 2d 155 (1998), have been added to subsection 14.1.

14.5.1 Compliance with Guidelines (Now 14.3.1)

One comment was that CPSD does not have authority to issue guidelines to generators. As indicated previously (subsection 14.4.1, now subsection 14.2.1), a new subsection 15.10 has been added authorizing the Executive Director to issue forms, instructions, advisories, and other guidance to assist generators in complying with the GO. This subsection 14.5.1 (now subsection 14.3.1) allows compliance with Executive Director-issued guidance to be considered as one mitigating factor in imposing a sanction against a generator.

14.5.3 Outages (Now 14.3.3)

One comment was that unsafe conditions on the transmission grid sometimes result in generator outages; and, in such cases, generators should not be punished. While sanctions for violations that result in reduced power or outages may be enhanced under this provision, the Commission, applying subsection 14.1.5, will also consider mitigating circumstances, such as the situation described in the comment.

14.5.5 [Efforts to Impede or Frustrate CPSD] (Now 14.3.5)

One entity commented that sanctions should not be enhanced when a generator asserts its legal rights. The text has been changed to clarify that a generator's lawful and reasonable invocation of legal rights does not itself provide a basis for enhancing a sanction.

14.6 Not Applicable to Specified Fines (Now 14.4)

Several comments recommended deleting this subsection because it impermissibly allows CPSD to further penalize a generator. The comments apparently miss the point of this subsection. The entirety of section 14.0 applies to sanctions imposed as the result of formal proceedings before the Commission. This subsection simply clarifies that the mitigating and enhancing factors, that are available in formal proceedings, do not apply to scheduled fines imposed for specified violations under subsection 13.3.

15.1 Notice of Material Change (Now 15.1.2)

Some comments indicated that this provision duplicates an earlier section. Other comments were that the time period for giving notice is too short and the reporting period should run from discovery of the change. Most of these comments have been addressed in deleting the original language in subsection 2.15. The 30-day period is a reasonable accommodation between giving generators enough time to respond and providing the Commission with information it needs to ensure that Generating Assets are being properly maintained and operated.

15.1.1 Periodic Recertifications (New)

As discussed in response 7.3.2, a new subsection 15.1 has been added to govern the ongoing reporting obligations of generators in all program areas.

15.2 Filings and Submissions

One comment suggested that "file" and "filing" have specific meanings in the Commission's formal proceedings and the use of these terms here may be confusing. The text has been slightly altered, but this subsection is sufficiently clear that the specified documents are delivered directly to CPSD and not to the Commission's Docket Office. By analogy, advice letters are commonly filed with the Commission's Industry Divisions with minimal confusion. This concern has also been addressed in response 2.17, supra.

15.3 Oath, Affirmation or Verification

Several comments suggested that this verification process would be burdensome if required for all documents that might be submitted to the Commission in the enforcement of standards. The text has been modified to limit the specific verification requirements to Certifications, Recertifications, Notices, or contests. By submitting any other document to the Commission, a Generating Asset Owner conducts business with the Commission and agrees, pursuant to Rule 1, "Code of Ethics," Rules of Practice and Procedure, "never to mislead the Commission or its staff by an artifice or false statement of fact or law."

15.4 Confidentiality

The comments presented a range of concerns about the confidentially procedures of the GO. They indicated that the provisions are inconsistent with a leading California case, Bridgestone/Firestone, Inc. v. Superior Court,37 because these requirements place only a modest burden on CPSD and a heavy burden on generators. The generators also indicated that the procedures under this subsection are cumbersome. They suggested that some information, if not protected, would be used by other persons to manipulate energy markets.

The Bridgestone/Firestone case sets forth a three-part process for determining confidentiality, i.e., assertion of privilege, showing of need, assessment of whether a protective order would be sufficient. The case arose in the context of litigation between two private parties and does not mandate how confidentiality claims will be handled in a regulatory proceeding instituted by a constitutionally created regulatory agency. The court of appeals' decision supports our approach in subsection 15.4 in that: (a) the party asserting the privilege has the burden of establishing its existence; (b) a balancing of interests test may be used; and (c) confidentiality will not be maintained if fraud or an injustice would result. These three features are incorporated into this subsection and apply to claims not based on a specific statute.

One comment suggested that the confidentiality process might be simplified if categories of information could be presumptively considered confidential or not confidential. During the comment period on this decision, we invite participants to identify categories of information relevant to the purposes of the GO that might, in advance, be deemed or presumed either confidential or not confidential.

Finally, while we will recognize valid confidentiality claims, we generally believe that transparency of information, rather than concealment, is the most viable long-term strategy for preventing market manipulation.

15.5 Violations of Law

Participants argued that this subsection violates the provisions of GO No. 66-C, concerning public information, and Pub. Util. Code § 583. Other comments requested that the subsection be changed to require the Commission to notify the generator if confidential information will be released to another governmental entity.

If in conflict with GO No. 66-C, this subsection will prevail since it is more recent and is adopted specifically to assist the implementation and enforcement of section 761.3. Section 583 is not applicable since it pertains to the release of information for public inspection. This subsection only addresses the release of information to other governmental agencies for law enforcement purposes. Even if section 583 applied, it only requires that information furnished by a public utility be made public only pursuant to a Commission order. By adopting this GO, we determine that confidentiality claims for information indicating a possible violation of law will not prevent the submission of that information to other government agencies. This interpretation is consistent with other provisions of California law, such as Evidence Code § 1060, that do not extend the trade secret privilege to information that conceals fraud or otherwise works an injustice.

15.7 Committee Amendments

Several entities asked for an opportunity to comment on the enforcement of newly filed standards before the Commission enforces them. They also asked for additional time before the standards become enforceable.

Interested persons are likely to have an opportunity to comment on proposed amendments when the Committee first considers the proposals. The amendments would be to standards and requirements previously considered and adopted by the Committee and, through this GO, implemented and enforced by the Commission. The parties have had numerous opportunities in this proceeding to comment on the basic approach for enforcing these standards and requirements. Additional comments on implementation and enforcement methods previously approved are unlikely to provide any new useful information. If certain amendments present unique implementation and enforcement issues, we will entertain motions to permit comments on implementation and enforcement.

The effective enforcement date, however, has been extended to 30 days. Subsequent extensions may be requested under subsection 15.9.

15.8 Duration of Standards

In Part E(1)(g) of the decision, we discuss our authority, in certain circumstances, to amend the standards and requirements themselves. The text of this subsection has been modified to indicate that any such amendments will occur in a Commission rulemaking proceeding.

15.9 Extension of Time

Several comments were submitted indicating that one extension was unduly restrictive and additional time might be necessary under some circumstances. The subsection has been changed to allow one or more extensions based on the circumstances.

15.10 Guidance (New)

A new subsection has been added authorizing the Executive Director to issue forms, instructions, advisories, and other guidance to assist generators in complying with the GO. See response 14.5.1, supra. Such delegation is permissible under Pub. Util. Code § 308.

Appendix E: Fines for Specified Violations

Several comments recommended deleting the fine for negligent submission of inaccurate information. This scheduled fine process is designed for violations where few if any facts are in dispute. If a Generating Asset Owner agrees that it negligently failed to submit correct information, the generator should have the opportunity to accept a scheduled fine for that violation. If the Generating Asset Owner disputes that it was negligent, the generator should contest the assessment and seek vindication in a formal Commission proceeding.

Other comments suggested that "incident" is vague and may lead to multiple assessments for essentially the same behavior, e.g., multiple, similar incorrect log entries in the same logbook. The term "incident" is not defined since the Commission cannot foresee all the possible factual circumstances that may arise. Commission staff will apply these specified fine provisions reasonably for the simple reason that these fines cannot be imposed without the generator's concurrence.

Another entity maintained that a hearing should be held before these fines are imposed. Such a proposal defeats the expeditious, consensual purpose of these provisions. If a Generating Asset Owner wants a hearing, the generator should wait for a formal proceeding to be commenced.

Attachment C:

Participants Submitting Comments on

Draft General Order Dated October 2, 2003

AES Alamitos, LLC;

AES Huntington Beach, LLC;

AES Redondo Beach, LLC

Automated Power Exchange, Inc.

Cabrillo Power I, LLC Cabrillo Power II, LLC

Duke Energy North America

Elk Hills Power, LLC

FPL Energy, LLC

High Desert Power Project, LLC

Independent Energy Producers Association

Long Beach Generation, LLC

Midway-Sunset Cogeneration Company

Mirant Delta, LLC;

Mirant Potrero, LLC

Pacific Gas & Electric Co.

Reliance Energy Mandalay, Inc. Reliant Energy Coolwater, Inc. Reliant Energy Ellwood, Inc. Reliant Energy Ettwanda, Inc. Reliant Energy Ormond Beach, Inc.

San Diego Gas & Electric Co.

Southern California Edison

West Coast Power: El Segundo Power, LLC

Western Power Trading Forum

37 7 Cal. App. 4th 1384 (1st Dist. 1992).

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