5. Discussion

Rule 12.1(d) of the Commission's Rules of Practice and Procedure provides:

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.

The settling parties have the burden of proving that the settlement should be adopted by the Commission.7 The Commission's standard of proof is the preponderance of the evidence.8

In D.09-11-008, the Commission declined to approve a proposed settlement agreement based on a few key findings, namely that (1) Cal Water's ratepayers were not represented during settlement negotiations and ratepayers did not agree to the settlement agreement, and (2) the settlement was contested. The Commission found that Cal Water and the Emmetts, the only settling parties, had not meet their burden of demonstrating by a preponderance of the evidence that the proposed settlement agreement was reasonable in light of the record, consistent with the law, and in the public interest.9 The Commission also found that requiring the Emmetts to pay a fee for Nelson's benefit prior to obtaining water service from Cal Water would violate Pub. Util. Code §§ 451, 453, and 532.10

All parties to this proceeding seek approval of the current uncontested settlement agreement. The parties note two critical differences in the instant proposed settlement agreement and the 2009 settlement agreement. The first is that this is now an all-party settlement-Nelson has approved the settlement agreement and has joined in this motion. The second critical difference is that the parties submitted the proposed settlement to Division of Ratepayer Advocates (DRA) for review and was informed that DRA did not object to the settlement.

We apply Rule 12.1(d) to evaluate the uncontested settlement agreement against the Commission's settlement approval criteria.

In D.09-11-008, the Commission was unable to conclude that the contested settlement agreement was reasonable in light of the record because the ratepayers were not represented in the settlement negotiations. Here, however, the ratepayers have been represented through DRA.11 The parties submitted the instant proposed settlement agreement to DRA, which estimated the approximate effect of the settlement on the ratepayers in Cal Water's Selma District and had no objection to the Commission's approval of the settlement.12 In addition, it is reasonable to treat $20,000 of the amount Nelson paid toward the purchase price in a manner similar to a refundable developer's advance. Existing and future development of the parcels, enabled by Nelson's payment, will generate revenue for Cal Water in much the same way as a developer's advance would function.

Therefore, because the parties have cured the lack of ratepayer representation with DRA's review and lack of objection to treating $20,000 as a refundable developer's advance for ratemaking purposes in Cal Water's Selma District, we conclude that the uncontested settlement agreement is reasonable in light of the record.

In D.09-11-008, the Commission found that Cal Water's proposed collection of $10,000 from the Emmetts and $20,000 from its ratepayers for Nelson's benefit in the contested settlement agreement was not consistent with the law. The current uncontested settlement agreement resolves a long-standing and unique legal dispute to the satisfaction of all affected parties. The Commission's approval of this arrangement has no precedential value pursuant to Rule 12.6 of the Commission's Rules of Practice and Procedure. Due to the all-party nature of this agreement and the limited applicability, we find that outcome required by the uncontested settlement is consistent with the law. There is no discrimination against the Emmetts because they have voluntarily agreed to pay the fee.

The Moving Parties argue that the settlement agreement is in the public interest because it will allow the Emmetts to immediately proceed with the development or sale of the Trend Homes parcel. Most importantly, and distinct from the 2009 proposed contested settlement agreement, DRA does not object to the treatment of the $20,000 to Nelson as a refundable developer advance. Numerous Commission decisions endorse settlements and support the public policy favoring settlement of disputes that are fair and reasonable in light of the whole record.13 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.14 We conclude that the proposed settlement agreement is in the public interest.

In conclusion, we find that the proposed uncontested settlement agreement is reasonable in light of the record, consistent with the law, and in the public interest. Therefore, the proposed uncontested settlement agreement should be approved.

7 Application of Golden State Water Company for Authority to Implement Changes in Ratesetting Mechanisms and Reallocation of Rates for its Region I Service territory, D.09-05-005, mimeo. at 6.

8 In the Matter of the Application of San Diego Gas & Electric Company (U 902 E) for a Certificate of Public Convenience and Necessity for the Sunrise Powerlink Transmission Project, D.09-07-024, mimeo. at 3-4, citing California Evidence Code § 115.

9 D.09-11-008, Conclusion of Law 1.

10 Id. at Conclusion of Law 3.

11 Joint Motion of California Water Service Company, Dwight Nelson, and the Emmetts for Adoption of All-Party Settlement at 3-4.

12 Ibid.

13 D.88-12-083 and D.91-05-029.

14 D.92-12-019.

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