5. Assignment of Proceeding

Mark J. Ferron is the assigned Commissioner and Katherine MacDonald is the assigned ALJ in this proceeding.

Findings of Fact

1. San Joaquin is a 10.75 MW natural gas-fired cogeneration facility near Atwater, California. PG&E entered into a 30-year Standard Offer 2 power purchase agreement with the Trust, which began on April 30, 1991.

2. San Joaquin has not delivered power to PG&E as required under the power purchase agreement since September 2008

3. San Joaquin's firm capacity level was de-rated to zero in 2010. On February 8, 2010, PG&E notified San Joaquin that PG&E was due a refund because of early termination of the firm's capacity without the required notice.

4. The Trust transferred ownership of the physical San Joaquin facility to Dole Packaged Foods, dissolved the thermal sale agreement and terminated the ground lease. The transfer did not include a transfer of liability from the PG&E power purchase agreement or the PURPA license.

5. PG&E and San Joaquin entered into a tolling agreement suspending PG&E's rights to collect damages while PG&E attempted to negotiate with a potential buyer to convert San Joaquin into a biogas facility. Negotiations failed and the Trust informed PG&E that it lacked adequate funds to pay damages.

6. Byron Cogen is a 6.5 MW natural gas-fired cogeneration facility in the Altamont Pass area near Tracy California. PG&E entered into a 30-year Standard Offer 4 power purchase agreement with the Trust commencing on May 12, 1990.

7. Byron Cogen failed to meet its firm capacity in August 2008 and again in July 2009. PG&E placed Byron Cogen on probation on March 10, 2010.

8. Byron Cogen removed its gas and electric meters.

9. Byron Cogen's firm capacity level was de-rated to zero on October 26, 2010 after failing to cure its probationary status.

10. PG&E entered into a tolling agreement with Byron Cogen suspending PG&E's rights to collect damages while PG&E attempted to negotiate with a potential buyer to convert Byron Cogen into a biogas facility. Negotiations failed.

11. Byron Cogen and San Joaquin leased the land where each facility was located from different owners.

12. PG&E's investigation determined that both facilities were in a dilapidated state. Byron Cogen had been vandalized and mined of copper.

13. PG&E hired an independent consultant who determined that it was unlikely PG&E's would to recover damages from San Joaquin, Byron Cogen, or the Trust.

14. The Trust informed PG&E it was insolvent and unable to pay its debts to PG&E. Negotiations revealed the Trust lacked assets making collection of any potential judgment unlikely.

15. After engaging in a series of negotiations with the Trust, PG&E negotiated settlement agreements to recover a modest amount of damages.

16. While the remainder of the terms of each Settlement Agreement is confidential, PG&E has furnished the Commission full details of both Settlements under seal.

17. No protests of the application have been filed.

18. PG&E seeks a protective order for certain portions of the Application, the entirety of Exhibit 1 (which contains the San Joaquin Settlement Agreement and San Joaquin power purchase agreement, the entirety of Exhibit 2 (which contains the Byron Cogen Settlement Agreement and Byron Cogen power purchase agreement), the entirety of Exhibit 3 (which contains a declaration from the Trust), Exhibit 4 (which contains a declaration from the Trust, and for certain portions of Exhibit 6 (which contains communications between the parties) on the grounds that dissemination of the contents of these documents would harm PG&E and ratepayers.

19. The categorization of ratesetting is affirmed; no hearing is necessary.

Conclusions of Law

1. PG&E exhausted all options, plans and proposals for the recovery of damages from San Joaquin, Byron Cogen and the Trust.

2. The Settlements benefit ratepayers by avoiding the uncertainties of litigation, attorney's fees and costs of litigation, and the improbability of collecting any judgments that might be awarded to PG&E.

3. The parties negotiated the Settlements at arm's length and there is no evidence of collusion.

4. The Settlements between PG&E and San Joaquin, Byron Cogen, and the Trust are reasonable in light of the whole record, consistent with law, and in the public interest.

5. The Settlements should be approved as provided in the following order.

6. The amounts recovered pursuant to the Settlements should be included by PG&E in the Energy Resource Recovery Account as a credit to ratepayers.

7. PG&E's motion for protective order should be granted as set forth in the order.

8. In order that benefits of the Settlements may be realized promptly, this order should be effective immediately.

ORDER

IT IS ORDERED that:

1. The application of Pacific Gas and Electric Company for approval of the settlement of damages related to the early termination of a power purchase agreement by the JRW Associates, L.P., also known as the San Joaquin Cogeneration Project, between Pacific Gas and Electric Company and the Ridgewood Electric Power Trust III, as set forth in Exhibit 1 to the application, is granted.

2. The application of Pacific Gas and Electric Company for approval of the settlement of damages related to the early termination of a power purchase agreement by the Byron Power Partners, LP, also known as Byron Power Partners Cogeneration Project, between Pacific Gas and Electric Company and the Ridgewood Electric Power Trust III, as set forth in Exhibit 2 to the application, is granted.

3. Pacific Gas and Electric Company's motion for a protective order is granted to the extent set forth below:

Designated portions of Pacific Gas and Electric Company's Application of Pacific Gas and Electric Company for Order Approving the Termination of Qualifying Facility Contracts with San Joaquin Cogeneration Project and Byron Power Partners Project and the entirety of Exhibits 1, 2, 3, and 4, plus designated portions of Exhibit 6, all of which Pacific Gas and Electric Company filed under seal as an attachment to its motion for protective order, shall remain under seal for a period of three years from the date of this decision. During that period, the foregoing documents or portions of documents shall not be made accessible or be disclosed to anyone other than Commission staff except on the further order or ruling of the Commission, the assigned Commissioner, the assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge.

4. To ensure that ratepayers receive all quantitative value attributable to the substantial benefits of the Settlements, Pacific Gas and Electric Company must include amounts received pursuant to the Settlements in the Energy Resource Recovery Account as a credit to ratepayers.

5. The categorization of ratesetting is affirmed; hearings are not necessary.

6. Application 11-11-014 is closed.

This order is effective today.

Dated May 24, 2012, at San Francisco, California.

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