2. Background

On January 29, 2009, the Commission opened this Order Instituting Investigation, Notice of Opportunity to Be Heard, and Order to Show Cause (OII/OSC) into the Operations and Practices of Calpine Power America-CA, LLC (CPA) to determine whether CPA violated Commission resource adequacy program rules, regulations, or orders in its October 31, 2007 year-ahead compliance filings. The OII/OSC identified potential penalties amounting to $739,567. The basis of the OII/OSC is the Consumer Protection and Safety Division (CPSD) "Investigation Report of CalpinePower America-CA, LLC," dated December 5, 2008.

A prehearing Conference was held on March 11, 2009. The Assigned Commissioner's Ruling and Scoping Memo that was issued on March 20, 2009 identified the following issues:

· Whether there were procurement deficiencies in CPA's year-ahead system resource adequacy requirement (RAR) and local RAR compliance filings for the 2008 calendar year.

· Whether, and to what extent, any such deficiencies were in violation of the RAR rules.

· Whether, and to what extent, penalties should be imposed.

The direct testimony of CPA was issued on May 11, 2009.

The rebuttal testimony of CPSD was issued on June 12, 2009.

On September 14, 2009, the first day of scheduled evidentiary hearings, CPA and CPSD indicated that a settlement in principle of all issues had been reached, and that a settlement would be filed shortly. Exhibits were identified, and hearings were then adjourned. A joint CPSD and CPA motion for approval of "Settlement Agreement Between the Consumer Protection and Safety Division and Calpine PowerAmerica-CA, LLC" (Settlement Agreement) was filed January 22, 2010. To accommodate the settlement process, the statutory deadline for resolving this proceeding was extended from January 29, 2010 to May 29, 2010, by Decision (D.) 09-12-033.