6. Discussion

In this application, Edison bears the burden of proof to show its requests are just and reasonable and the related ratemaking mechanisms are fair. In order for the Commission to approve any proposed settlement, the Commission must be convinced that the parties have a sound and thorough understanding of the application, the underlying assumptions, and the data included in the record. This level of understanding of the application and development of an adequate record is necessary to meet our requirements for considering any settlement. These requirements are set forth in Rule 12.1, which states, in pertinent part:

The Commission will not approve settlements, whether contested or uncontested, unless the settlement is reasonable in light of the whole record, consistent with law, and in the public interest.

As discussed below, we find the Settlement Agreement consistent with Rule 12.1.

6.1. Reasonable in Light of
the Record as a Whole

As reflected in the application and protest, the parties held both similar and different positions on the various issues involved in this proceeding. The parties reviewed testimony, errata, audit of expenses and capital costs recorded in the account, and data request responses. The parties conducted settlement negotiations after discussion of the issues and consideration of all testimony and information over several months. The parties fully considered the facts and law relevant to this case before reaching a reasonable compromise on the issues raised in Edison's application. In agreeing to a settlement, the parties used their collective experience to produce appropriate, well-founded recommendations. The parties believe the Settlement Agreement balances the various interests affected in this proceeding, reflects appropriate compromises of the parties' litigation positions, and is reasonable. The Commission agrees.

6.2. Consistent With Law and
Prior Commission Decisions

The parties state that they are aware of no statutory provisions or prior Commission decisions that would be contravened or comprised by the Commission's adoption of the Settlement Agreement. The issues resolved in the Settlement Agreement are within the scope of the proceeding. If adopted, the Settlement Agreement would result in reasonable rates for Edison's customers.

The Settlement Agreement is also consistent with Pub. Util. Code § 454.9, which requires the Commission to hold expedited hearings on requests to recover costs recorded in Catastrophic Event Memorandum Accounts.

6.3. The Public Interest

We find that the rate changes proposed by the Settlement Agreement are reasonable and provide adequate funding to Edison for the costs incurred to restore utility service after the 2007 wind and firestorms. The Settlement Agreement reflects a downward adjustment of 22% from Edison's original request, so the Settlement Agreement represents a favorable outcome for ratepayers.

Numerous Commission decisions endorse settlements and support the public policy favoring settlements that are fair and reasonable in light of the whole record.⁴ The Commission's support of this public policy furthers many worthwhile goals, including reducing the expense of litigation, conserving the scarce resources of the Commission, and allowing parties to reduce the risk that litigation will produce unacceptable results.⁵ Furthermore, the provisions of the Settlement Agreement are sufficiently clear and comprehensive as to minimize the possibility of later dispute over the intent of the settlement and its regulatory consequences. Thus, from reviewing the Settlement Agreement and the process used to arrive at these mutually acceptable outcomes, the Commission concludes that the requirements of Rule 12.1 and Pub. Util. Code § 451 have been met.

⁴ D.88-12-083 and D.91-05-029.

⁵ D.92-12-019.