5. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. CPSD and CNE filed opening comments on February 24, 2011, and CPSD filed reply comments on March 1, 2011.

1. After CNE submitted its December 1, 2008, month-ahead resource adequacy compliance filing for January 2009, CNE was required to procure an additional 180 MWs in order to meet its resource adequacy and CNE amended its filing on December 15, 2008, to reflect that additional procurement.

2. CPSD maintains that CNE therefore violated system resource adequacy requirements and must pay a penalty of $1.8 million pursuant to Commission's decisions.

3. CNE maintains that, under its alleged facts, its action did not constitute a violation of system resource adequacy requirements and that, even if it did, a penalty is not appropriate.

4. Based on the whole record, both parties face substantial litigation risk as to whether their respective positions will prevail.

5. The settlement agreement avoids the time, expense and uncertainty of further litigating and resolving the matter and, by requiring a settlement payment, affirms the importance of adherence to the Commission's rules and orders.

1. The settlement payment amount of $300,000 reasonably reflects the litigation risk faced by the parties.

2. Nothing in the settlement agreement contravenes any statute or Commission decision or rule.

3. The settlement agreement is in the public interest.

4. The settlement agreement should be approved, and CNE should be directed to make a settlement payment to the State of California General Fund in the amount of $300,000 within 60 days after the date when the Commission serves the decision finally resolving any application for rehearing of this decision or, where no application for rehearing has been filed, the period to apply for rehearing has expired.

5. This investigation should be closed.

ORDER

IT IS ORDERED that:

1. The settlement agreement is approved.

2. The parties' prepared testimony is admitted into evidence.

3. Constellation NewEnergy, Inc. (CNE) shall make a settlement payment to the State of California General Fund in the amount of $300,000 within 60 days after the date when the Commission serves the decision finally resolving any application for rehearing of this decision or, where no application for rehearing has been filed, the period to apply for rehearing has expired. CNE must pay the $300,000 by check or money order payable to the California Public Utilities Commission and mailed or delivered to the Commission's Fiscal Office at
505 Van Ness Avenue, Room 3000, San Francisco, CA 94102, within the timeframe directed above. CNE must write on the face of the check or money order "For deposit to the General Fund per Decision 11-03-006."

4. Investigation 10-04-010 is closed.

This order is effective today.

Dated March 10, 2011, at San Francisco, California.

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