2. Standards for Reviewing QF Contract Settlements

The Commission has traditionally evaluated proposed QF settlements under the same standards that it uses for other settlements. Those standards are set forth in Rule 12.1(d) of our Rules of Practice and Procedure (Rules), which provides in full:

"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."⁴

In determining whether a QF settlement satisfies the three standards in Rule 12.1(d), PG&E notes that Commission decisions have considered a number of factors, including:

· Whether the settlement reflects the relative risks and costs of continued litigation;

· Whether the settlement fairly and reasonably resolves the disputed issues and conserves public and private resources;

· Whether the agreed-upon settlement terms fall within the range of possible outcomes if the parties had continued to litigate their dispute;

· Whether the settlement negotiations were at arm's length and without collusion, whether parties were adequately represented, and how far the proceedings had progressed when the parties settled, and

· Whether the dispute between the QF and the utility presents a colorable claim that raises substantive issues of law or fact.

(See D.00-11-041 at 6-7 (citing cases); D.00-05-046, 6 CPCU3d 201, 202-03.) In the discussion below, we consider each of these five factors in the context of this case.

⁴ Recent decisions in which QF settlements have been approved using these factors include D.06-05-034 and D.06-07-032.