XII. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with § 311 of the Pub. Util. Code and Rule 14.2(a) of the Commission's Rules of Practice and Procedure. Comments were filed by TURN, CLECA, CARE, CAISO, City and County of San Francisco (CCSF), IEP, CAC/EPUC, PG&E, SDG&E, AReM, and Edison, and reply comments were filed by CARE, AReM, PG&E, CAC/EPUC and Edison. The comments are in the following areas, and we respond as follows:

IEP claims the proposed decision is discriminatory, and violates due process, the federal Public Utility Regulatory Policies Act of 1978 (PURPA), and related FERC practice with regard to confidentiality. It also claims the decision does not link the recent energy crisis to the release of market sensitive information. These arguments repeat asserts made in comments on the proposed decision leading to D.06-06-066 and by other parties on rehearing of D.06-06-066. Thus, we will not respond to them at length here.

IEP's claim is that unless all parties have equal access to information, there is unlawful discrimination. This is an issue dealt with amply - and rejected - in D.06-06-066, and we will not repeat ourselves here. Section 454.5(g) creates a distinction between market participants and non-market participants, so IEP's real quarrel is with state law.

D.06-06-066 also deals at length with the claim that differential access to information denies parties without access their due process rights. We do not repeat those arguments here. As discussed above, the information at issue here is a subset of the universe of utility data in the record for any given proceeding. None of the commenters explain why lack of access to a utility's net short position, or to every piece of data used in a Commission proceeding, constitutes a denial of due process.

Whether due process issues arise in situations where market sensitive information is relevant to an adjudicatory or ratesetting proceeding (rather than a quasi-legislative proceeding such as this proceeding) may be addressed in connection with CAC/EPUC's application for rehearing of D.06-06-066. If the Commission addresses the issue on rehearing, we will follow any decision rendered there.

According to IEP, PURPA's implementing regulations make certain utility cost information publicly accessible. Edison rebutted this assertion at length in Southern California Edison Company's Response to Application for Rehearing of Decision 06-06-066 Filed by the Cogeneration Association of California and the Energy Producers and Users Coalition, filed on August 21, 2006 in this proceeding (Edison Rehearing Response). In brief, the FERC regulations implementing PURPA only require that certain cost data - "generic cost data" - be made available; do not require disclosure of data that would violate the confidentiality of a competitive solicitation process or planning and cost data; and allow states discretion to modify federal data requirements.46

As Edison notes, the proposed decision does no claim that disclosure of confidential data led to the recent energy crisis, but that disclosure of data could affect prices. Edison cites the testimony of its expert, Dr. Charles Plott, in Phase One of this proceeding, cited in D.06-06-066, as evidence that disclosure of confidential information to market participants could lead to higher electricity crisis. "The Commission is rightly trying to prevent a future crisis by limiting access to market-sensitive data."47

Several parties challenge the proposed decision's denial of access to market sensitive information for reviewing representatives who work for market participants, but do not actively engage in trading, buying or selling of electricity. We discuss this issue fully in the decision, and do not alter our conclusion on the matter.

TURN criticizes aspects of our exception to the general definition of market participant, which provides:

3) A person or entity that meets the criteria of 1) above is nonetheless not a market participant for purpose of access to market sensitive data unless the person/entity seeking access to market sensitive information has the potential to materially affect the price paid or received for electricity if in possession of such information. An entity will be considered not to have such potential if:

a) the person or entity's participation in the California electricity market is de minimis in nature. In the resource adequacy proceeding (R.05-12-013) it was determined in D.06-06-064 § 3.3.2 that the resource adequacy requirement should be rounded to the nearest megawatt (MW), and load serving entities (LSEs) with local resource adequacy requirements less than 1 MW are not required to make a showing. Therefore, a de minimis amount of energy would be less than 1 MW of capacity per year, and/or an equivalent of energy; and/or

b) the person or entity has no ability to dictate the price of electricity it purchases or sells because such price is set by a process over which the person or entity has no control; and/or

c) person or entity is a cogenerator that consumes all the power it generates in its own industrial and commercial processes.

TURN claims that the language in b) would allow entities whose contracts will expire in the near future to gain access to market sensitive information now and use it to impact the price they pay for electricity once the price is no longer constrained by the contract. We modify section b) to accommodate this concern, as we agree with TURN's concern. We also clarify that this exception applies where there is a fixed contract price or tariff, as CAC/EPUC urged in their original comments proposing this exception.48

Edison is concerned with subsection c) because a cogenerator may consume all its power today, but begin selling into the grid in the future. We agree, but it would be impossible to police such behavior. Rather, we modify the decision to indicate that such a cogenerator must be able to prove a need for such information. It is unlikely cogenerators that consume all their own power need information about an IOU's net short or other related information.49

IEP alleges that we are not allowed to decide the market participant/non-participant status of individual groups in a quasi-legislative proceeding such as this one. It asserts it had no notice or opportunity to be heard

that its status would be adjudicated here. Edison responds that it is "difficult to believe" that IEP had no notice that its status as a market participant would be adjudicated in this proceeding.

IEP's assertion that it had no notice and opportunity to be heard has no merit. D.06-06-066 itself stated that, "Parties may submit comments addressing the definition of market participants, how they differ from non-market participants, and what types of groups belong in each category."50 Similarly, the scoping memo for Phase Two of this proceeding stated that, "We plan to address outside of Phase Two the question of who is and is not a market participant under the electric procurement statute."51

Moreover, all parties with a stake in the matter addressed their own status, as well as that of other groups, in comments. While IEP focused more on its clients' access to information than its own, the definitions it urged were also relevant to a determination of how to characterize IEP itself. IEP thus has had ample notice and opportunity to be heard, both in its opening and reply comments that led to the proposed decision, and in comments on that decision.

We lack a record to adjudicate the status of groups that have not participated in this proceeding. Thus, we do not decide whether the Silicon Valley Leadership Group, the California Cogeneration Council, or the City and County of San Francisco are market participants as there is no current record regarding those groups. Parties wishing to determine the status of any group not in this decision may refer to the general market participant definition.

Other groups identified in the proposed decision challenged the determinations of their status. We do not alter those determinations, but do add language where the comments render it necessary.

The proposed decision allows attorneys and consultants to "change hats" by representing non-market participants in one period, gaining access to market sensitive information, and later representing non-market participants, provided a protective order is place. TURN asks for clarification of the decision when an attorney or consultant simultaneously represents market participants and non-market participants. We agree with TURN that simultaneous representation of both groups presents a more serious risk that market sensitive information will be revealed to market participants. Just as it might be a conflict of interest for an attorney or consultant to represent both sides of a dispute in certain circumstances,52 we believe a professional who simultaneously represents both sides of the market participant equation could inadvertently compromise the holder of market sensitive information. We adopt TURN's recommended change and hold that an attorney or consultant that simultaneously represents market participant(s) and non-market participant(s) may not have access to market sensitive data.

If, on the other hand, simultaneous representation is of market participant and non-market participant clients involved in completely different types of matters, there should be no bar (although there may be ethical implications of such representation that we do not address here). If, for example, an attorney represents a market participant in matters unrelated to procurement, resource adequacy, RPS, or the wholesale purchase, sale or marketing of energy or capacity, or the bidding on or purchasing of power plants, or bidding on utility procurement solicitations, in a forum other than this Commission, and simultaneously represents a non-market participant in cases related to these topics before the Commission, there should be no bar to the attorney's receipt of market sensitive data (pursuant to a non-disclosure agreement and protective order) in the latter matter. In close cases, the balance should militate to bar simultaneous representation because of the risks it poses.

We add, at IEP's suggestion, additional findings and conclusions. We make other, minor changes as suggested by the commenters. Where we do not make a suggested change, we reject that proposed change.53

46 See generally Edison Rehearing Response at 9-10.

47 Edison reply comments on proposed decision at 3.

48 CAC/EPUC comments at 6-7.

49 See generally SDG&E reply comments on proposed decision, at 3 ("[I]f a seller's role in the market truly is de minimis, then he/she should have no use for confidential utility data").

50 D.06-06-066, ordering paragraph 15.

51 Scoping Memo and Ruling of Assigned Commissioner and Administrative Law Judge (Phase 2), filed Sept. 21, 2006, mimeo., at p. 5.

52 See, e.g., Flatt v. Superior Court (Daniel), 9 Cal. 4th 275, 284 (1994), 1994 Cal. LEXIS 6585 ("[I]n all but a few instances, the rule of disqualification in simultaneous representation cases is a per se or 'automatic' one").

53 AReM's comments regarding ESP-ESP data exchanges, and its access to IOU data, are beyond the scope of this decision.

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