2. Background

SDG&E and SoCalGas filed the above-captioned application on February 4, 2008. Following the April 3, 2008 prehearing conference, the April 17, 2008 scoping memo and ruling bifurcated this proceeding into two phases and established separate procedural schedules for each phase.

Following the July 2008 evidentiary hearings on the Phase One issues, the parties agreed to a settlement of the Phase One issues. A motion to adopt the Phase One Settlement Agreement was filed and the Commission granted the motion and adopted the terms of the Phase One Settlement Agreement in D.08-12-020.

Evidentiary hearings in Phase Two were originally scheduled to begin on February 23, 2009. The parties prepared and served their testimony on the Phase Two issues. On February 3, 2009, SDG&E and SoCalGas e-mailed a notice of an all-party settlement conference to be held on February 13, 2009. Following the February 13, 2009 settlement conference, SDG&E and SoCalGas requested that the start of the evidentiary hearings be rescheduled to April 20, 2009 to allow the parties additional time to discuss settlement of the Phase Two issues. That request was granted as described in the February 19, 2009 ruling of the Administrative Law Judge (ALJ).

On April 16, 2009, SDG&E and SoCalGas informed the ALJ and the service list that they had reached an agreement in principle with most of the active parties to settle the Phase Two issues. SDG&E and SoCalGas requested that the start date for the evidentiary hearings be postponed to June 4, 2009 so that the Settlement Agreement and a motion to adopt the Settlement Agreement could be prepared and filed with the Commission. All of the active parties agreed to, or did not oppose, the new start date. In an April 16, 2009 e-mail to the service list, the ALJ granted the request to postpone the start of the evidentiary hearing to June 4, 2009.

A joint motion to adopt a Settlement Agreement of the Phase Two issues was filed on June 2, 2009. A copy of the Settlement Agreement was attached to the joint motion as Appendix A. The Settlement Agreement also consists of Attachments 1 through 4, which were included as part of Appendix A to the joint motion. A copy of the Settlement Agreement, without the attachments, is attached to this decision as Appendix A.

The joint motion also requested that the 53 documents that were submitted and served in connection with the Phase Two issues be admitted into evidence, and that the evidentiary hearings scheduled to start on June 4, 2009 be taken off-calendar.

The evidentiary hearings were taken off-calendar in a June 2, 2009 e-mail from the ALJ to the service list. Pursuant to the procedure set forth in the June 11, 2009 ruling of the ALJ, the parties were allowed to file comments on the joint motion to adopt the Settlement Agreement and to make any objections to the admission of the 53 documents.

On July 2, 2009, Shell Energy filed its comments on the joint motion and requested that an evidentiary hearing be held on the operational flow order (OFO) protocols contained in the Settlement Agreement. Shell Energy also requested that other provisions of the Settlement Agreement be clarified or eliminated. Shell Energy did not object to the admission of any of the documents. Joint reply comments to Shell Energy's comments were filed on July 17, 2009.

The request in the joint motion to admit the 53 documents into evidence was granted in the ALJ ruling of July 22, 2009. On July 31, 2009, Shell Energy's request for a hearing on the OFO protocols was denied in the ruling of the assigned Commissioner and ALJ. The request for a hearing was denied after a review of the prepared testimony did not reveal any material contested issues of fact, and to hold a hearing so that parties could repeat or reinforce their respective viewpoints would not have been a productive use of time and resources.