5. Why There Was a Settlement - Factual Record

This settlement comes before the Commission with no prior formal assertion of the alleged transgressions by Golden State. Therefore we must rely on the settlement's factual recital by Golden State and Water & Audits of the circumstances which lead us to today's decision. Based on this recital, which forms our factual record, we find the settlement is consistent with the facts as summarized below. (Rule 12. 1(d).)

Richardson Engineering Company was the subject of an internal investigation by Golden State. (Settlement § 2.)

In early 2003, [Golden State's] senior management became aware of allegations of violations of the company's internal procurement policies in Region 1. Specifically, two officers from Region 1 were alleged to have awarded construction contracts to Richardson Engineering Company in violation of [Golden State's] written procurement policy's requirement for competitive bidding. Nearly all of the contracts awarded to [Richardson Engineering Company] were for work in
Region 1. (Settlement § 2.2.)

After concluding its in-house review Golden State determined that, in its opinion, it did not need to report the problems with Richardson Engineering Company to the Commission. (Settlement § 2.7.) However, in February 2007, a former senior officer, no longer with Golden State, informed the Commission's General Counsel at the time that Golden State had investigated its transactions with Richardson Engineering Company but had never informed the Commission. (Settlement § 2.8.) Shortly thereafter Water & Audits, with staff counsel, began an informal investigation. Among the steps taken:

From 2007 through 2010, [Water & Audits] engaged in extensive discovery, including issuing numerous data requests, which resulted in the production of more than
20,000 documents, took several examinations under oath of [Golden State's] senior officers, including [its] former President and Chief Executive Officer, its current Senior Vice President of Regulated Utilities, and its current Vice President of Regulatory Affairs, and [a] limited procurement examination of [Richardson Engineering Company] contracts from 1989 through 2003 primarily in Region 1.
(Settlement § 2.10.)

Section 3 of the Proposed Settlement contains a description of Water
& Audits (identified therein as "Commission Staff") findings and recommendations. In §§ 3.1 - 3.9 there is a description of those various findings and recommendations. Following those findings and recommendations Golden State provides a response in §§ 4.1 - 4.5 which culminated in the agreed terms of settlement in § 6. The entire settlement and motion are available at: http://docs.cpuc.ca.gov/efile/MOTION/138677.pdf.

We accept the narrative of the parties as the factual record of this phase of the proceeding. After reviewing the record we find the terms of settlement to be reasonable and consistent with the record.