V. Discussion

Rule 51.1(e) of the Commission's Rules of Practice and Procedure provides that the Commission will not approve settlements or stipulations, whether contested or not, unless they are reasonable in light of the whole record, consistent with law, and in the public interest. As discussed below, the proposed settlements meet these criteria.

The revenue requirement settlement adopts a revenue requirement that is below the mid-point of the range of values proposed by PacifiCorp and ORA.¹⁰ It is based on more recent recorded information, a more recent depreciation study, and is consistent with recently adopted rates of return on equity for other energy companies. In addition, the settlement is unopposed. Therefore, it is reasonable in light of the whole record.

The revenue allocation and rate design settlement utilizes the revenue requirement proposed in the revenue requirement settlement, and imposes ORA's recommendation that the revenue requirement allocation to any customer class not exceed 2.5% over the system average increase of 4.7%. The rate design also eliminates an unneeded experimental rate schedule, and revises baseline allowances consistent with D.02-04-026. In addition, the revenue allocation and rate design settlement is an all-party settlement. Therefore, it is reasonable in light of the whole record.

The parties represent that the settlements do not contravene any statute or Commission decision. ¹¹ We agree. Therefore, the settlements are consistent with law.

The parties represent that there is strong public policy favoring settlements to avoid costly and protracted litigation. PacifiCorp and ORA say that the revenue requirement settlement is a reasonable compromise between ratepayer and shareholder interests, and grants PacifiCorp needed rate relief while mitigating the impact on ratepayers. The parties represent that the revenue allocation and rate design settlement reflects a reasonable balance between ratepayer and shareholder interests, and is a reasonable compromise between strongly-held views. For all of the above reasons, we believe that the settlements provide PacifiCorp an opportunity to earn a reasonable return while maintaining adequate reliable service to ratepayers at just and reasonable rates. Therefore, the settlements are in the public interest.

In addition, the following criteria are applicable to the revenue allocation and rate design settlement because it is an all-party settlement:¹²

· The settlement must command the unanimous sponsorship of all active parties to the proceeding.

· The sponsoring parties must be fairly representative of the affected interests.

· No term of the settlement may contravene statutory provisions or prior Commission decisions.

· The settlement must convey to the Commission sufficient information to permit it to discharge its future regulatory obligations with respect to the parties and their interests.

All active parties propose the revenue allocation and rate design settlement. ORA represents the interests of all customers. The California Farm Bureau Federation represents its constituents. Roseburg Forest Products represents itself. PacifiCorp represents itself. Therefore, the affected customers and PacifiCorp are fairly represented by the sponsoring parties. Nothing in the Settlement contravenes statutory provisions or prior Commission decisions. In addition, the revenue allocation and rate design settlement sufficiently states the revenue allocation and rate design to enable the Commission to fulfill its future regulatory obligations with respect to the parties and their interests. Therefore, the revenue allocation and rate design settlement satisfies the above criteria applicable to all-party settlements.

As discussed above, both settlements are reasonable in light of the whole record, consistent with law, and in the public interest. Also, the additional criteria applicable to all-party settlements have been satisfied by the revenue allocation and rate design settlement. Therefore, we will adopt the settlements.

The decision should be effective immediately so that the rates adopted herein can be put into effect as soon as possible.