4. Discussion
4.1. Do the procedures adopted in this rulemaking provide all parties with a full and fair opportunity to participate in the affected Commission proceedings?
Parties in Commission hearings are entitled to discover confidential market sensitive information in accordance with our Rules of Practice and Procedure. (See Commission Rules of Practice and Procedure, Rule 10.1, et seq.)7 CAC/EPUC and IEP contend that due process in a Commission hearing requires that all parties to a Commission proceeding have sufficient access to market sensitive information to enable meaningful participation, regardless of their status as market participants. The Joint Utilities contend that there are no constitutional rights to due process in rate setting proceedings, and that parties' access to market sensitive information is governed by statutory, not constitutional law.8 The point here is not whether the Commission needs to provide for due process in ratesetting proceedings; we have previously stated: "...constitutional requirements of due process and equal protection are applicable to various categories of Commission proceedings [citation omitted], and are not based on the choice one has to become a party, but on the fact that certain constitutional guarantees adhere to various proceedings. [Citations omitted.]" (D.09-03-046 at 14.) The point here is whether the procedures we adopted in this rulemaking and that are to be applied in the affected proceedings provide all parties with due process.
We do not find that the cases cited by IEP and those relied on by CAC/EPUC support their position that employees of the market participant enterprise -- as distinct from a market participant party's outside counsel and outside consultants and experts -- must be given access to confidential market sensitive information, under the general rules we have adopted and are clarifying here, in order to satisfy the requirements of due process. On the contrary, we believe the general rules we have adopted and are clarifying here, achieve a fair and reasonable balance between two sets of competing considerations, namely, the right to participate meaningfully in Commission proceedings versus the need to protect sensitive, confidential information from being exploited to the disadvantage of utility customers.
It is important to emphasize that these are rules of general applicability. If, in the course of a particular proceeding before the Commission, a market participant party believes that its employees must be given access, on a confidential basis, to sensitive and confidential information, and that its right of full participation somehow will be unduly constrained by the general rule limiting access to outside counsel, consultants and experts, then such a party can file a motion with the decision-maker and seek an exemption from the general rule.
The focus of this decision on rehearing is whether the procedures that we have adopted for gaining access to confidential market sensitive information allow market participant parties a full and fair opportunity to participate in Commission proceedings.9 We believe that the procedures we have adopted, with the clarifications we make herein to D.06-12-030, achieve this goal and, therefore, that the due process rights of market participant parties are ensured.
In this decision, we modify D.06-12-030 to expand the qualifications to be a Reviewing Representative so that any market participant party may hire
non-employee attorneys, consultants and experts to act as its Reviewing Representatives. Of course, any such Reviewing Representative will be obligated to satisfy the four part criteria, as modified herein, and must agree to abide by the Commission's confidentiality rules. In addition, a Reviewing Representative retained by a market participant party will not be permitted to provide commercial advice to the market participant enterprise. If the market participant chooses to retain other attorneys, consultants or experts in the same law firm or consulting firm to provide advice in connection with market activities, then the attorney, consultant or expert serving as a Reviewing Representative under our confidentiality rules must be separated by an ethics wall from those in the firm who are involved in commercial dealings. We note that the Model Protective Order adopted in D.08-04-023 now will need to be updated, to conform with the changes made in this decision for Reviewing Representatives.
Our rationale for permitting market participant parties to access market sensitive information via Reviewing Representatives is to ensure confidentiality of market sensitive information to protect the California ratepayer.10 "By definition, market sensitive information has commercial value to the utilities and market participants, including those who seek to maximize profits in negotiating energy supply contracts with utilities. Such information can be used to cause harm to or gain an advantage in the market." (July 2, 2009 Opening Brief of the Joint Utilities and Coalition Parties at 2.)11 We agree with the Joint Utilities and Coalition Parties in their opening brief, that we cannot protect the confidentiality of market sensitive information by allowing market participant parties to retain Reviewing Representatives who themselves actually engage in wholesale marketing activities or commercial negotiations with the utilities, because it is precisely those people who are in a position to make use of the protected information. This does not present a due process issue, as no party will be deprived of the opportunity to participate in Commission proceedings, provided it abides by our confidentiality rules.
4.2. Does the Commission have the authority to deny party status to market participants, or limit the scope of their participation in proceedings where market sensitive information is relevant to the subject matter of the proceeding?
Rule 1.4 provides that, where circumstances warrant, the Commission may deny party status or limit the degree to which a party may participate in a proceeding. This rule is intended to limit party status or participation to persons with a legitimate interest and intention to participate in a proceeding and to avoid the inappropriate expansion of the proceeding's scope. However, nothing in Rule 1.4 contemplates that persons may be denied or given only limited party status for purposes of denying them discovery of market sensitive information.
It is not necessary to invoke our authority under Rule 1.4 in order to ensure the confidentiality of market sensitive information: Rule 10.1 provides that any party may obtain discovery from any other party regarding any matter, not privileged, that is relevant to the proceeding or reasonably calculated to lead to the discovery of admissible evidence.
The Legislature has required the Commission to adopt procedures to protect the confidentiality of market sensitive information, which we have done. (§ 454.5(g).) Accordingly, we need not reach the question of whether the Commission may deny or limit party status for the purpose of accomplishing the same result.
4.3. Do the confidentiality procedures adopted by the rulemaking provide market participant parties with the opportunity to meaningfully participate in the affected proceedings and provide for open decisionmaking?
The purpose of this rulemaking is set forth in SB 1488, which provides:
The Public Utilities Commission shall initiate a proceeding to examine its practices under Sections 454.5 and 583 of the Public Utilities Code and the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) to ensure that the [C]ommission's practices under these laws provide for meaningful public participation and open decisionmaking.
There is no set meaning that we can find in case law for "meaningful public participation" in the affected ratesetting (i.e., quasi-legislative) proceedings. However, common sense and case law holds that meaningful public participation is an element of fairness.12
Under the confidentiality rules we are adopting in this proceeding, Reviewing Representatives of market participant parties in electric procurement proceedings will be given the same opportunity for access to confidential market sensitive information through discovery as other parties pursuant to Article 10 of our Rules of Practice and Procedure. To be sure, they will be required to abide by our confidentiality rules, just as they are obligated to abide by all of our rules. We do not agree that this implicates in any way the due process of market participant parties, nor prevents them from meaningful participation in the affected proceedings.13
Because of the critical nature of the market sensitive information, the Legislature's requirement that we protect its confidentiality, and our general duty (both statutory and constitutional) to protect the interests of California's ratepayers, we have previously decided that Reviewing Representatives may not be employees of the market participant; they may not be engaged in the purchase, sale or marketing at wholesale of electrical energy or capacity, natural gas, or power plants;14 and may not disclose the information to the market participant or its employees.15 While this procedure prevents employees of market participant enterprises from directly accessing market sensitive information (and thus protects the confidentiality of that information as required by the Legislature and the interests of California's ratepayers), their qualifying Reviewing Representatives will be able to access it for the specific purposes of a proceeding. In addition, market participant parties are not deprived of discovery of relevant material information that is not market sensitive and hence not covered by our confidentiality rules.
Fairness and meaningful public participation do not require unfettered access to market sensitive information by all market participants. Our procedures achieve the appropriate balance by providing access to market sensitive information by the qualified Reviewing Representatives of market participant parties. Given that all parties, including market participants, will enjoy access to all relevant material information in the record of the proceeding, in accord with Article 10 of our procedural rules, we conclude that the procedures we have adopted for disclosure to Reviewing Representatives in the affected proceedings provide for meaningful public participation and open decisionmaking.
4.4. Do the adopted procedures provide parties in the affected proceedings with requisite constitutional rights?
We granted rehearing of D.06-12-030 in part to consider implications concerning equal protection and the right to petition that were raised by the applications for rehearing of D.06-12-030 with respect to the Reviewing Representative process.
As we discussed above, by this decision we shall modify D.06-12-030 to clarify that all market participant parties who utilize Reviewing Representatives will enjoy the same discovery rights as other parties in an affected Commission proceeding, including access to confidential market sensitive information through a Reviewing Representative, provided that they agree to abide by our confidentiality rules. Accordingly, no "equal protection" issue is presented. As the courts have explained:
The equality guaranteed by the equal protection clauses of the federal and state Constitutions is equality under the same conditions, and among persons similarly situated. The Legislature may make reasonable classifications of persons and other activities, provided the classifications are based upon some legitimate object to be accomplished.
(People v. Spears (1995) 40 Cal.App.4th 1683, 1687.)
We have previously addressed our rationale for categorization of market participant and non-market participant parties in the electric procurement and related proceedings. The categorization is grounded in § 454.5(g). The process bears a rational relationship to the legitimate state purpose of ensuring that market sensitive information remains confidential and to protect it from disclosure to those who may have a reason and the means use it against the interest of electricity customers. (See e.g., Kirchberg v. Feenstra (1981) 450 U.S. 455, 460.)
In its opening brief, IEP does not raise an equal protection claim per se, but merely argues that the due process requirement of a fair hearing is not met if the Commission bases its decision on information that is not available to all parties. As discussed above, we modify D.06-12-030 to clarify that all market participant parties may use Reviewing Representatives, provided they agree to abide by our confidentiality requirements in order to access confidential market sensitive information for purposes of discovery in a proceeding. Thus, through our procedures, all parties will have equal access to information in all affected proceedings.
In its reply brief, IEP objects to the categorization between market participants and non-market participants as being based on the erroneous assumption that market participants will routinely disregard ethical and legal obligations not to improperly use market sensitive information for their own competitive advantage. We did not grant a rehearing on the question of the categorization of parties16 whether market or non-market. As both D.06-12-030 and D.09-03-046 set forth, we are authorized to adopt such categories and we are obligated to do so by our duty to protect the confidentiality of market sensitive information and simultaneously provide access of it to non-market participants as required by § 454.5(g).
IEP asserts that there is no relationship between the restrictions on access to market sensitive information and the effort to prevent its misuse, and cites Blumenthal v. Board of Medical Examiner (1962) 57 Cal.2d 228, a case on qualifications for opticians, as support for this assertion. IEP's claim is both without basis, and not supported by Blumenthal. In Blumenthal, the court found that for purposes of protecting the public from incompetent and unethical opticians, there was no reasonable difference between persons who served a
five-year apprenticeship or have been licensed for five years in another state and other persons regardless of their qualifications.
Here, in contrast, there is a reasonable difference between persons in the independent energy markets who have the ability and business/financial incentives to use market sensitive information for their own competitive advantage and other persons who do not.
IEP asserts that restrictions in D.06-12-030 on market participants' access to market sensitive information created an improper and unlawful limitation on its ability to petition the Commission, as guaranteed by the First Amendment of the United States Constitution and Article I, § 3(a) of the California Constitution. IEP relies on American Civil Liberties Union v. Board of Education (1961) 55 Cal.2d 167, concerning rights to assemble and of free speech with respect to the application and denial of the use of school property to conduct a meeting; Thomas v. Collins (1945) 323 U.S. 516, concerning rights to assemble and of free speech with respect to a labor organizer's solicitation of persons to become union members; and California Motor Transport Co. v. Trucking Unlimited (1972) 404 U.S. 508, concerning the right to approach administrative agencies or courts with respect to bringing an action against a competitor.
IEP asserts that the Commission may not impose restrictions on parties' ability to petition the Commission absent a "clear public interest, threatened not doubtfully or remotely, but by clear and present danger," as articulated in Thomas v. Collins, supra, 323 U.S. at 530.
The flaw in IEP's argument is that we have not restricted market participant parties from participating in the affected proceedings, because they may do so through use of our Reviewing Representative procedure, as clarified herein. Further, the eligibility criteria we have established for Reviewing Representatives do not impede the right to petition; the test is whether there is a rational basis for the restriction:
Although a fundamental interest may be involved, both the United States Supreme Court and this court have recognized that not every limitation or incidental burden on a fundamental right is subject to the strict scrutiny standard. When the regulation merely has an incidental effect on exercise of protected rights, strict scrutiny is not applied. [Citations.] It is only when there exists a real and appreciable impact on, or a significant interference with the exercise of the fundamental right that the strict scrutiny doctrine will be applied. [Citations.]
(Fair Political Practices Com. v. Superior Court (1979) 25 Cal.3d 33, 46.)
IEP asserts that the Commission has failed to articulate a rationale for imposing limitations on market participants' access to market sensitive information. This assertion lacks merit. Market sensitive information is, by definition, information that has the potential to materially affect an electricity buyer's market price for electricity. (D.06-06-066 at 39.) The Commission is legally obligated to ensure that rates are just and reasonable. (See e.g., Cal. Const. Art. 12, § 6; Pub. Util. Code, §§ 451, 454, 728.) To the extent that IEP challenges D.06-06-066 as modified and its designation of market sensitive information, that issue is beyond the scope of this rehearing, and such challenge is foreclosed by § 1731.
4.5. Is there a less restrictive means to achieve the public interest in shielding the use of market sensitive information by market participants for purposes other than for the conduct of the proceeding?17
SB 1488 directed the Commission to review our procedures under §§ 454.5 and 583, as well as the CPRA to ensure that our practices provide for meaningful participation and open decisionmaking. Accordingly, we identified what information is market sensitive and subject to confidential treatment, and established procedures that protects the confidentiality of such information, including, the use of qualified Reviewing Representatives in procurement and related proceedings. We further believe that the confidentiality requirements and procedures we have adopted are within our authority18 as well as within the bounds of what other administrative agencies have adopted for protecting relevant confidential information subject to discovery. The process we have adopted is the least restrictive means to achieve the public interest in protecting the confidentiality of market sensitive information.
IEP asserts, however, that the Reviewing Representative requirement is an unnecessary and duplicative restriction on market participants because a nondisclosure agreement requiring market participants not to disclose or improperly use the market sensitive information, would achieve the desired result. IEP further asserts that such requirement would adequately protect against such disclosure or improper use because doing so would be a violation of that agreement, as well as a violation of our Rule 1.119 which requires any person appearing before the Commission not to mislead the Commission or its staff; in addition to, in the case of attorneys, the Business and Professions Code §§ 6068 and 6103 and Rule 5-200 of the Rules of Professional Conduct which impose additional professional obligations and sanctions for violations. We agree that Rule 1.1, and the personal and professional integrity we expect of practitioners certainly should deter such action, as perhaps do various penalty provisions in the Public Utilities Code.
However, although those rules may be applicable, none of them are absolutely specific to our mandate from the Legislature to ensure the confidentiality of market sensitive information, while providing for open decisionmaking and meaningful public participation. (§ 454.5(g); SB 1488.) The reality is that unfettered access by market participants to confidential market sensitive information does not ensure such information's confidentiality, for the reasons both articulated in the comments filed in this proceeding and as we have discussed herein and in earlier decisions in this rulemaking. The risk that market participants might improperly use market sensitive information for personal competitive advantage, is alluded to by IEP when it notes that a Reviewing Representative "... will face the nearly impossible task of ensuring that the client does not use, even indirectly, any advice he or she gives in the role of reviewing representative in connection with the purchase, sale, or marketing of electrical energy or capacity or natural gas or the bidding on or purchasing of power plants."20 IEP's observation underscores our rationale of why Reviewing Representatives cannot be employees of market participants and must not actually engage in wholesale marketing activities or in commercial negotiations.
CAC/EPUC assert that the Commission's nondisclosure procedure is unduly restrictive because: (1) Modesto Irrigation District's experience in publicly disclosing market sensitive information without ratepayer harm demonstrates that it is extremely unlikely that ratepayers would be harmed by the disclosure of market sensitive information, (2) the Commission's regulation of utility procurement provides sufficient ratepayer protection, and (3) a less restrictive nondisclosure procedure will achieve the Commission's goal of safeguarding data from improper use, as evidenced by the less restrictive nondisclosure procedures in other jurisdictions and as required by law.
As an initial matter, we reject CAC/EPUC's assertion that we should relax our confidentiality procedures because it is unlikely that ratepayers would be harmed by unprotected disclosure of market sensitive information and because ratepayers are adequately protected from any such harm by virtue of the Commission regulation of utility procurement. Even if we concurred with CAC/EPUC's assessment - and we do not - we are statutorily required to ensure the confidentiality of market sensitive information. California experienced severe consequences of electric market abuse and the limitations of its ability to remedy them. Presumably, in enacting § 454.5(g), the Legislature weighed the severity of those consequences against the risk that market sensitive information might be misused.
In addition, CAC/EPUC's evidence that Modesto Irrigation District has disclosed procurement information similar to market sensitive information and its ratepayers were not harmed in that instance is not proof that similar disclosure here will not result in ratepayer harm. In view of the 2000-2001 California Electricity Crisis and § 454.5(g), CAC/EPUC's assertion that relaxation of our confidentiality procedures in Commission utility procurement proceedings is in order because without them we are sufficiently able to protect ratepayers from market abuse is not supported by the facts, recent history or the law.
Finally, we are not persuaded by CAC/EPUC's assertion that less restrictive nondisclosure procedures of other jurisdictions adequately protect against ratepayer harm in California. The fact that less restrictive nondisclosure procedures are acceptable to other jurisdictions is not dispositive, nor relevant to the Commission's obligations under § 454.5(g).
CAC/EPUC's assertion that a less restrictive nondisclosure procedure is required by law is without merit. As discussed previously, market participant parties through use of our Reviewing Representative procedures will have access to the same discovery as non-market participant parties, provided they agree to abide by our procedures. We do not think it necessary to discuss in detail the legal precedent that CAC/EPUC cites as favoring disclosure of trade secret information because we have addressed the question of trade secret information in previous decisions in this proceeding and not all confidential market sensitive information is necessarily trade secret.
Further, because the clarifications we make herein to D.06-12-030 address all of the interrelated issues raised in this rehearing and provide all parties with the opportunity to meaningfully participate in the affected proceedings (including e.g., discovery pursuant to our rules, the ability to submit and
cross-examine evidence and challenge our action), it is unnecessary to repeat each and every argument raised during the rehearing.
4.6. Does participation in the electric and/or gas market in excess of one megawatt create a material ability to affect market price? If not, what amount of participation in the electric and/or gas market creates such a material ability?
D.06-12-030 established a 1 megawatt (MW) threshold of participation in the electricity market for determining whether an entity is a market participant, based on the exemption from local resource adequacy requirements established in D.06-06-064. Specifically, D.06-06-064, which was issued in Rulemaking
05-12-013 regarding the Commission's resource adequacy requirement program, exempts load serving entities from having to procure local resource adequacy requirements of less than 1 MW for a particular area, based on its finding that transactions of less than 1 MW are not commercially reasonable:
We share staff's reluctance to exempt any [load serving entity] from local procurement obligations. On the other hand, the comments of several parties persuasively make the point that transactions of less than 1 MW are not commercially reasonable, at least at this time. Accordingly, we will adopt this proposed exemption for Local [resource adequacy requirements]. (D.06-06-064 at 32.)
In ordering rehearing on this issue, D.09-03-046 noted that
D.06-06-064's determination of the 1 MW exemption threshold was for a different purpose than its intended use in D.06-12-030, i.e., the identification of entities whose participation in the electricity market may materially affect the market price of electricity. Accordingly, D.09-03-046 concluded that parties should have a further opportunity to address the issue of whether this threshold or any other amount establishes de minimis participation.
D.09-03-046 also noted concern with D.06-12-030's statement that participation in the natural gas market "above the de minimis threshold" renders an entity a market participant without making any finding regarding what constitutes a de minimis threshold in the gas market. The Commission therefore extended rehearing to consideration of what constitutes a de minimis threshold in the natural gas market.
We address these issues separately below.
Under the California Independent System Operator's (CAISO) Locational Marginal Pricing market structure, entities can bid supply at any price under the current bid caps; the market generally clears at the highest-priced supply bid to cover the bid-in system load. Therefore, bids as little as 1 MW, if they are the marginal awarded bid, can set the market clearing price for all suppliers at the relevant price point. Accordingly, we find that a 1 MW de minimis threshold reasonably identifies entities whose participation in the electricity market may materially affect the market price of electricity.
IEP and CAC/EPUC assert that, due to the overall size of the California electricity market (historically 71 gigawatts (GW) with a forecasted 63 GW of statewide peak demand), the 1 MW de minimis threshold is too low. This assertion disregards the electricity market structure, as discussed immediately above.
CAC/EPUC observes that the Federal Energy Regulatory Commission (FERC) bases its market-based rate authorizations on a market power test in which an entity's market share of uncommitted capacity must be less than 20% of the market's net uncommitted supply, and proposes that the Commission base the de minimis threshold for identifying entities with the ability to materially affect the market price of electricity on the FERC market power tests.
We reject CAC/EPUC's proposal. The FERC market power test identifies entities that have the ability to materially affect the market price of electricity on the basis of their market power. Our purpose here is to identify entities that have the ability to materially affect the market price of electricity on the basis of their access to market sensitive information. The market power test does not inform this inquiry.
Therefore, we find no compelling argument or authority to change our determination in D.06-12-030 that a 1 MW threshold reasonably identifies entities whose participation in the electricity market may materially affect the market price of electricity and therefore their designation as a market participant remains.
D.06-12-030 found that EPUC is a market participant because: (1) it represents the customer generation interests of several major gas and oil companies, (2) collectively, this membership has the potential to materially impact the market price of electricity, and (3) EPUC regularly participates at the Commission jointly with CAC, whose membership, likewise, collectively has the potential to materially impact the market price of electricity. (D.06-12-03 at 48, Findings of Fact 5 and 6.) After reviewing the comments submitted in this rehearing, we are no longer convinced that this finding was supported by the record and we modify it. EPUC states that it is primarily an end-use consumer group whose member companies purchase a large amount of bundled power from both PG&E and SCE.21 EPUC member companies maintain combined
heat-and-power operations mainly to serve on-site end-use loads. In addition, EPUC argues, and the record before the Commission supports it, that EPUC and CAC are different and EPUC regularly appears before the Commission without CAC.
The Commission has determined that entities such as the California Large Electric Consumers Association (CLECA), the California Manufacturers and Technology Association (CMTA) and the California Farm Bureau are
"non-market participants." Just like EPUC, these other entities "directly or indirectly purchase electricity or natural gas." However, in EPUC's case, it is also true that some of its member companies are also energy sellers in wholesale electricity and natural gas markets. We do not find record support for treating EPUC, when it buys bundled power from a California regulated utility to serve on-site end-use loads, differently than CLECA, CMTA, or the California Farm Bureau, for purposes of participation in our proceedings. Therefore, we will modify our presumption from D.06-12-030 that EPUC should always be treated as a market participant party, to the presumption that when EPUC files solely as a bundled purchaser of power to serve on-site and end-use customers, that the presumption is that EPUC is not a market participant. For example, for a general rate case or rate design window proceeding, the presumption is that EPUC is not a market participant.
However, when EPUC participates in a proceeding where EPUC's position is as a market participant, such as a utility procurement proceeding, especially one for procurement of combined heat and power (CHP) EPUC will be categorized as a market participant.
Further, in instances when EPUC-or any other non-market participant-files jointly with a market participant in an affected Commission proceeding, the non-market participant, as well as the market participant parties must comply fully with the Commission's confidentiality procedures, including executing a Nondisclosure Certificate in accordance with a Protective Order that prohibits disclosure of market sensitive information to those who are employees of market participant enterprises. In accordance with our procedures for ensuring the confidentiality of market sensitive information, only authorized Reviewing Representatives of the market participant party may have access to market sensitive information. Accordingly, language in D.06-12-030 will be changed to reflect this modification to the presumption concerning EPUC as a market participant.
D.06-12-030's discussion of EPUC's status also includes the following commentary:
It is true that EPUC's members are large energy consumers, but many of them are also active in the natural gas market. Many categories of data relating to natural gas are deemed confidential in the Matrix accompanying D.06-06-066. Thus, participation in the natural gas market, at least above the de minimis threshold, is enough to render an entity a market participant.
(D.06-12-030 at 31.)
D.06-12-030 does not adopt a de minimus threshold of participation in the natural gas market for purposes of determining market participation status, and D.09-03-046 orders a limited rehearing on this issue. The rehearing order was "to focus on the question of whether participation based on 1 MW or less of capacity in the [...] gas market establishes de minimus participation, and if not, what amount does and why." (D.09-03-046 at 19.) However, because we are modifying D.06-12-030's presumption that EPUC is a market participant, we need not reach this issue. We therefore, modify D.06-12-030 to delete this unnecessary commentary and reference to EPUC.
In modifying our prior characterization of EPUC as a market participant, we are in no way tempering our directive that all disclosure of market sensitive information must be pursuant to the confidentiality procedures and processes we have adopted in the underlying proceeding. Our goal is to warrant that no participant to a Commission proceeding, be they a consultant or a lawyer, no matter what category of participant they represent, be they a market or a
non-market participant, can both have access to an investor owned utility's confidential information and simultaneously knowingly advise a third party on a wholesale power transaction with that utility. These rules are intended to ensure both the protection of confidential information and parties' ability to meaningfully participate in our proceedings.
4.7. Should the Commission reconsider or change its prohibition of access to market sensitive information by attorneys or consultants who simultaneously represent market and non-market participants?
Under the current procedure adopted in D.06-12-030, and as expanded by this decision, a Reviewing Representative may not be an employee of a market participant and may not engage in wholesale market activities. Thus, the prohibition of access to market sensitive information by attorneys, consultants or experts who simultaneously represent market and non-market participants is unnecessary for purposes of protecting against the disclosure of market sensitive information to an individual who engages in market activities. We therefore, modify D.06-12-030 to eliminate the prohibition on simultaneous representation of market and non-market participants.
4.8. Should the special limitations on market participants' access to market sensitive procurement data adopted in D.06-12-030 (or as may be considered in this rehearing) extend to additional materials?
D.08-04-023 resolved the remaining issues in this proceeding by adopting Model Protective Order for market sensitive information addressed in
D.06-06-066 as modified by D.07-05-032. Included as an addendum to the Model Protective Order was a Nondisclosure Certificate, to be executed by individual Reviewing Representatives, confirming that they understood and agreed to abide by the terms of the Protective Order.
We adopted the Model Protective Order after balancing our statutory obligation pursuant to § 454.5(g) to ensure the confidentiality of "market sensitive information," and the competing interest in broad public access to public information and meaningful participation in our proceedings, and after carefully identifying what specific data is properly classified as "market sensitive" and subject to these special protections. D.08-04-023 and the terms of the Model Protective Order are appropriately limited to "market sensitive information" that is the focus of § 454.5(g) and this rulemaking; thus it is limited to information that can be identified by the Matrix adopted in D.06-01-066 as modified by D.07-05-032 and subsequent decisions.
The Joint Utilities and Coalition Parties propose that the confidentiality procedure should extend to all information that is market sensitive information, regardless of whether it is specifically identified in D.06-06-066 as modified. We agree in principle that all "market sensitive information," as that term is used in
§ 454.5 and our decisions in this rulemaking, is subject to confidential treatment. We clarify, however, that in the event that the Commission or other appropriate authority has not identified particular information as market sensitive, a party's designation of information as "market sensitive" is not controlling.
HEI proposes that the Commission extend the same protections as those provided by courts for intellectual property, trade secrets, and commercially sensitive information related to new and emerging technologies. Specifically, HEI seeks protection, either in this proceeding or in Application 09-04-008, regarding SCE's application for cost recovery related to HEI's feasibility study for an integrated gasification and combined cycle facility. To the extent that HEI seeks a determination of whether its feasibility study is market sensitive information entitled to the protections of D.06-06-066 as modified by D.07-05-032, D.06-12-030 and D.08-04-023, that issue is beyond the scope of this rehearing. To the extent that HEI seeks the protections provided by courts for intellectual property, trade secrets, and commercially sensitive information, that issue is likewise beyond the scope of this rehearing. To the extent that HEI seeks to extend the protections of D.06-06-066 as modified by D.07-05-032, D.06-12-030, and D.08-04-023 to intellectual property, trade secrets, and commercially sensitive information that is not "market sensitive information," we reject HEI's proposal for the reasons discussed above.
4.9. Does D.06-12-030 impose unique restrictions on the IEPs from those of any other market participant?
IEP has repeatedly raised this issue based on its concern that a statement in D.06-12-030 singled out IEP as uniquely barred from obtaining access to market sensitive information through a Reviewing Representative. Specifically, after finding that IEP was a market participant, D.06-12-030 at page 29 provided: "Nor are we prepared to give certain 'reviewing representatives' within IEP access to market sensitive information, as we discuss in the 'Reviewing Representatives' section above."
We reiterate what we stated on page 17 of D.09-03-046, which granted rehearing of D.06-12-030: "We note that the rules adopted [in this proceeding] do not foreclose IEP from participating in the affected proceeding[s]...." To the extent that language in D.06-12-030 could be interpreted to uniquely bar IEP from obtaining access to market sensitive information through a Reviewing Representative, we shall, by this order, delete it. Although there are necessary restrictions on who may act as a Reviewing Representative, e.g., Reviewing Representatives may not be employees of market participants, all market participant parties may use Reviewing Representatives in accordance with our procedures. This criterion applies to all parties, whether they are market participants or non-market participants. D.06-12-030 provided that employees of market participants, whether IEP's, or an investor-owned utility's, or an electric service provider's, may not serve as Reviewing Representatives. IEP's right to use Reviewing Representatives shall be no different from that of other party. We shall modify D.06-12-030 to delete the above quoted language from that decision.
7 Hereinafter, all references to the Commission's Rules of Practice and Procedure are to hereinafter "rule."
8 The Coalition Parties do not join the Joint Utilities in their analysis of this issue, and do not offer their own analysis or comment on it.
9 IEP comments that "[p]arties are not required to have `equal information,' an impossible requirement, but the Commission should strive to ensure that all parties ... have equal access to ... information that underlies the Commission's decision...."
(July 2, 2009 IEP Opening Comments at 29.)
10 "Our concern is protecting ratepayers by balancing the mandate that we ensure the confidentiality of market sensitive information with the due process rights of parties in Commission proceedings. California ratepayers were victims of an Energy Crisis not too long ago and we must do all we can to ensure that we protect them from any repeat experience." (D.09-03-046 at 13.) "... [O]ur duty and commitment [is] to protecting the interests of ratepayers and ensuring that Californians are not subject to experiencing abuses similar to those visited upon the State during the 2000-01 Energy Crisis."
(D.09-03-046 at 19.)
11 See also, e.g., July 2, 2009 Opening Brief of HEI at 10-11; and July 30, 2009 Joint Closing Brief of Joint Unities and Coalition Parties, Attachment 1: Charles R. Plott's Research on the Disclosure of Buyer Information to Sellers (February 22, 2004) at 2-5.
12 See e.g., Railroad Com. of California v. Pacific Gas and Electric Co. (1938) 302 U.S.
393-394; Western Oil and Gas Association v. Air Resources Board (1984) 37 Cal.3d 502, 528; Los Angeles v. Public Utilities Com. (1975) 15 Cal.3d 680, 698; Strumsky v. San Diego County Employees Ret. Assn. (1974) 11 Cal.3d 28, 35; San Francisco v. Superior Court (1951) 38 Cal.2d 156, 162-163; Franchise Tax Board v. Superior Court (1950) 36 Cal.2d 538, 549; Rivera v. Division of Industrial Welfare (1968) 256 Cal.Ap.2d 576, 586-587.
13 By this decision we are modifying D.06-12-030 to delete language that may have been construed to exclude certain market participant parties from use of reviewing representatives.
14 This decision shall also modify D.06-12-030 to delete the words "directly or indirectly," with respect to engagement in the purchase, sale or marketing or electrical energy or capacity, natural gas, or power plants, from the criteria for whom may act as a reviewing representative, as well as the clarifications discussed in Section 4.1 supra.
15 We emphasize that market participants cannot employ the same individual to simultaneously act as reviewing representatives (with access to market sensitive information) in regulatory proceedings before this Commission, and as participant in wholesale commercial transactions. The Commission cannot tolerate this regime because the danger is just too great that the commercial negotiations will be skewed against the interests of the ratepayers this Commission has a duty to protect.
16 See D.09-03-046 at 11.
17 This discussion subsumes and resolves the related issues separately identified as issues 8, 9 and 10 in the Scoping Memo and Ruling referenced in Part 2, above.
18 See e.g., Cal. Const. Art. 12, § 2; Pub. Util. Code § 701.
19 Rule 1.1 provides: "Any person who signs a pleading or brief, enters an appearance, offers testimony at a hearing, or transacts business with the Commission, by such act represents that he or she is authorized to do so and agrees to comply with the laws of this State; to maintain the respect due to the Commission, members of the Commission and its Administrative Law Judges; and never to mislead the Commission or its staff by an artifice or false statement of fact or law."
20 Reply Brief of IEP, at 9.
21 We note that on their respective FERC Form 566 for 2010, SCE and PG&E have identified several EPUC members as being among their 20 largest retail purchasers. Pursuant to Rule 13.9, we take official notice of the FERC Form 566 filing.
