ALJ/MSW/hkr DRAFT Item 5

3/21/2002

Decision DRAFT DECISION OF ALJ WETZELL (Mailed 2/19/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

North American Refractories Company,

Complainant,

vs.

Pacific Gas and Electric Company,

Defendant.

Case 93-06-015

(Filed June 2, 1993)

John L. Clark, Attorney at Law, for North American Refractories Company, complainant.

Donald K. Tamaki and Lauren Harris, Attorneys at Law, for Pacific Gas and Electric Company, defendant.

ORDER DISMISSING COMPLAINT

TABLE OF CONTENTS

Title Page

ORDER DISMISSING COMPLAINT 2 2

Summary 2 2

Procedural History 2 2

Background 3 3

NARCO's Complaint 5 5

PG&E's Response 9 9

Discussion 13 13

Authority to Sign 14 14

Harm 16 16

Mistake 19 19

Unconscionability 23 23

Public Utilities Code Sections 451 and 489 25 25

Comments on Draft Decision 26 26

Findings of Fact 26 26

Conclusions of Law 26 26

ORDER 27 27

ORDER DISMISSING COMPLAINT

Summary

This complaint involves a dispute between North American Refractories Company (NARCO) and Pacific Gas and Electric Company (PG&E) over the applicability of use-or-pay gas transportation charges billed by PG&E but not paid by NARCO. The issues presented are whether NARCO should be excused from liability for use-or-pay penalties imposed for failure to meet minimum annual gas transportation obligations specified in its Natural Gas Service Agreement (Agreement) for contract years 1991-1992 and 1992-1993 because the Agreement was the result of a mistake; whether PG&E knew or should have known of the mistake; and/or whether NARCO should be further excused from the Agreement because its agent was not authorized to sign it. We find that NARCO's agent had ostensible, if not actual, authority to sign the contract on behalf of NARCO; that PG&E acted in good faith in entering the Agreement; and that NARCO should not be excused from the requirements of the Agreement under a theory of mistake. In doing so, we reject NARCO's argument that it would be unconscionable to enforce the use-or-pay terms of the Agreement. The relief requested in the complaint is denied and the complaint is dismissed.