5. Discussion of Proposed Settlement Agreements

Pursuant to Rule 12.1 of the Commission's Rules, Commission settlements must be reasonable in light of the record, consistent with the law, and in the public interest.

5.1. Reasonableness in Light of the Whole Record

The settling parties represent that the thorough factual record developed in the OIIs provides an ample basis for review and approval of the proposed Settlement Agreements.

In the CPSD-SDG&E Settlement Agreement, SDG&E provided a statement of apology regarding lack of cooperation and has taken on significant remedial measure commitments to address public safety issues raised in the OIIs. SDG&E has also agreed to make a substantial payment of shareholder funds to the General Fund of the State of California. CPSD and SDG&E represent that their Agreement was carefully and extensively negotiated as a package, and they believe that the record or the circumstances of this case individually support each of the items. They maintain that the CPSD-SDG&E Agreement is closely based on the record developed by the parties, and is reasonable because it effectively addresses the specific issues raised by the evidentiary record.

CPSD and Cox contend that the increased inspection and maintenance measures provided for by their proposed accord are consistent with the Commission's goal of enhancing fire safety, and exceed in certain significant respects the requirements mandated of other CIPs under applicable Commission rules. CPSD and Cox submit that their Agreement not only reduces the time, expense, and risk of litigation, but also conserves scarce Commission resources.

We find that both Settlement Agreements resolve the issues in the proceeding in a manner that reflects a reasonable compromise among the litigation positions taken by the settling parties in their testimony. Thus, we conclude that the settlements are reasonable in light of the whole record.

5.2. Consistent with the Law

CPSD and SDG&E assert that their accord resolves the Witch/Rice and Guejito OIIs, and agree that it is consistent with State and Federal law. They are unaware of any conflicts in this regard.

CPSD and SDG&E submit that while the Commission does not have an extensive record of comparable enforcement cases relating to electric utilities, they have looked to previous Commission settlements and decisions for guidance, and noted three applicable decisions.¹² The decisions involved settlement agreements in electric utility investigations with remedial measures undertaken, shareholder payments into the General Fund of the State of California, and vegetation management inspection and compliance protocols. CPSD and SDG&E claimed that to the best of their knowledge, the provisions of the proposed Settlement Agreement are not inconsistent with any orders or requirements in any of these decisions, or any other Commission decisions.

CPSD and Cox also represent that nothing in their Agreement contravenes any statute, Commission decision, or rule.

We concur that the settlement agreements are the product of good faith negotiations, compromise, and do not conflict with State and Federal law. Therefore, we conclude that both settlement agreements are consistent with the law.

5.3. In the Public Interest

CPSD and SDG&E contend that the proposed Settlement Agreement provides significant and direct benefits to SDG&E's customers. The accord requires SDG&E to make payments totaling $14, 750,000. Additionally, a number of remedial measures will provide going forward benefits in the form of system fire-prevention improvements and additional training to employees and agents in a variety of related areas. SDG&E will also conduct further training regarding the Accident Reporting Requirements. Finally, the settling parties note that SDG&E has issued a statement of apology for falling short in meeting its obligation and duty regarding cooperation with CPSD investigations into the Witch/Rice and Guejito fires.

CPSD and Cox maintain that their Agreement reflects a reasonable compromise between their positions and will avoid the time, expense, and uncertainty of evidentiary hearings and further litigation. It will also facilitate the implementation of additional enhanced inspection, maintenance, documentation, record keeping and reporting by Cox, on a more expedited schedule than would have been possible in the absence of the Settlement Agreement.

We concur with both settling parties' assertion that the proposed agreements provide numerous public interest benefits, and conclude that the proposed settlements are fully in the public interest.

We further concur that these proposed agreements address the alleged violations at issue in the Witch/Rice and Guejito Fire Investigations. Therefore, we approve and adopt both settlement agreements

¹² D.06-02-003, D.99-07-029, and D.04-04-065.