8. Is the NBC Agreement Reasonable?
PG&E states that at the time PG&E and the Districts started negotiations PG&E was experiencing a very high rate of uncollectibles for the payment of NBCs by the Districts' customers. In response to the August 12 Ruling, PG&E filed and served an estimate of the current and expected future legal and other costs it will incur to collect the amounts that have accrued and will accrue to the Districts' NMDL Customers (Estimate).42
The Estimate shows that the administrative and legal costs of pursuing collection of the unpaid NBCs owed by currently delinquent NMDL Customers served by the Districts and the customer service and billing costs that are avoided under the NBC Agreement are substantially greater than the value of the discounts provided in the NBC Agreement. The Commission has considered the Estimate and finds it to be reasonable.
Without an agreement, PG&E will continue to experience a high rate of uncollectibles and incur significant additional administrative and legal costs to collect unpaid NBCs. It is unreasonable for PG&E to incur costs to collect unpaid NBCs that exceed the value of the unpaid NBCs being collected. The NBC Agreement is in the interest of PG&E and its customers because the NBC Agreement reduces the costs that PG&E ratepayers would otherwise bear.
The NBC Agreement, as modified by and subject to the conditions set forth in this decision, does not result in any cost-shifting to PG&E ratepayers because the reductions provided under the agreement are less than the costs of pursuing collection of the unpaid NBCs. As modified by and subject to the conditions set forth in this decision, the NBC Agreement is reasonable, and is in accordance with applicable statutes and Commission decisions prohibiting cost shifting among customers.
The NBC Agreement, as modified by and subject to the conditions set forth in this decision, is in the interest of the Districts and their customers because it reasonably and finally resolves all issues surrounding the billing and collection of NBCs from NMDL Customers served by the Districts, including avoiding possible costly litigation.
There is a strong public policy favoring the settlement of disputes to avoid costly and protracted litigation,43 and the NBC Agreement, as modified by and subject to the conditions set forth in this decision, satisfies this public policy preference. The NBC Agreement, as modified by and subject to the conditions set forth in this decision, serves the public interest by resolving competing concerns in a collaborative and cooperative manner.
By reaching agreement, PG&E avoids the costs of billing and collecting NBCs from NMDL Customers served by the Districts, including possible litigation costs for PG&E and the NMDL Customers served by the Districts. Approval of the NBC Agreement, as modified by and subject to the conditions set forth in this decision, will provide speedy and complete resolution of all issues surrounding the billing and collection of NBCs from NMDL Customers served by the Districts.
The NBC Agreement, as modified by and subject to the conditions set forth in this decision, reflects the interests of the Applicants and their customers. PG&E and the Districts have balanced a variety of issues of importance to them and have agreed to the terms of the NBC Agreement as a reasonable means by which to finally resolve all issues surrounding the billing and collection of NBCs from NMDL Customers served by the Districts.
The NBC Agreement is the result of arms-length negotiations between PG&E and the Districts, and is uncontested. Thus, for these reasons, and taken as a whole, the NBC Agreement, as modified by and subject to the conditions set forth in this decision, is in the public interest. The NBC Agreement, as modified by and subject to the conditions set forth in this decision, does not contravene or compromise any statutory provision or prior Commission decision, is reasonable, consistent with the law, and in the public interest. Applicants' request is unopposed, and, therefore, the NBC Agreement, as modified by and subject to the conditions set forth in this decision, should be approved.
PG&E must send a follow up letter to NMDL Customers served by the Districts informing them of the termination of PG&E's billing and collections obligations to NMDL Customers served by the Districts. A draft of the letter must be submitted to Director of the Energy Division for review and approval prior to distribution.
42 PG&E filed a companion motion requesting confidential treatment of the Estimate and supporting work papers, pursuant to GO 66-C. The September 15, 2010 ruling granted PG&E's unopposed request.
43 D.88-12-083, 30 CPUC2d 189, 221.
