G. Comments on Draft Decision

1. Comments on ALJ Thorson's Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on March 18, 2004, and reply comments were filed on March 23, 2004. Comments were received from AES entities, Duke Energy North America, Elk Hills Power, High Desert Power Project, Mirant entities, PG&E, Reliance entities, San Diego Gas & Electric Co., Southern California Edison, and West Coast Power. (See Attachment C for the full corporate names of these entities.)

Many of the general comments questioned the Commission's jurisdiction to implement and enforce the GO. Many of the comments also suggested enforcing Pub. Util. Code § 761.3 requirements through the ISO's tariff. These issues were previously addressed in the Draft Decision or in our companion decision on Thermal Logbook Standards. Since these comments reargue positions already asserted before the Commission in this proceeding, we give them no weight.³⁴ Another general comment criticized the "piecemeal" approach to implementing section 761.3. The Committee has been developing and approving individual sets of standards and filing them with the Commission for implementation and enforcement. Through the adoption of a GO with "place-holders" for forthcoming sets of standards, the Commission is creating the type of integrated document suggested by the comment.

With reference to comments on the major sections of the GO, the Commission responds as follows:

Section 1.0, Purpose. The comment about the underlying authority for the GO was previously addressed on page 1, Attachment B, of this decision. The language has been slightly modified to specify that the purpose of the GO also includes the enforcement of other standards, such as logbook standards, adopted pursuant to Pub. Util. Code § 761.3.

Section 2.0, Definitions/Acronyms. Several comments were offered about the vagueness or breadth of some definitions, such as "Generating Asset Owner." We do not believe any changes are warranted. Any exclusion of out-of-state or jointly owned facilities is premature. The applicability of section 761.3 and the GO to these types of facilities should be based on a more complete, tested factual record. Normally, we would not consider individual employees or contractors to be Generating Asset Owners, but these persons may have regulatory obligations under the GO (such as the obligation to testify, when requested by the Commission) and, under certain circumstances, they could be considered to exercise managerial or operational control over a Generating Asset.

Section 4.0, General Duty Standards. Comments concerning the authority to adopt, implement, and enforce General Duty Standards was previously addressed in Part E(2) of this decision.

Section 5.0, Generator Logbook Standards (Thermal Energy). Several difficulties were noted in this section including discrepancies concerning the obligation of small generators and the meaning of "compliance document." We have clarified that Generating Assets of less than 50 megawatts are exempt from all requirements of section 5.0, and this threshold is now consistent with our decision on Thermal Logbook Standards. We have included a definition of "compliance document," which refers to logbook requirements.

Section 7.0, Generator Maintenance Standards. Some comments repeated the request that the GO provide a method for CPSD to review and approve maintenance plans. We have previously addressed this concern, discussing the resource constraints on the Commission. With more resources in the future, Commission staff may be able to provide more feedback on content of these plans. Another comment indicated that the GO, in subsection 7.3, requires the submission of maintenance plan changes during recertification, but does not require the submission of maintenance plans in the first instance. We have corrected this error to clarify that amendments to maintenance plans are not submitted to the Commission.

Section 9.0, Independent System Operator (ISO) Outage Coordination Protocol. The comments raised jurisdictional issues that we have addressed previously, both in this decision and the accompanying Thermal Logbook Standards decision.

Section 10, Information Requirements. Some comments were offered on those GO provisions requiring generators to submit information directly or indirectly to the Commission. In response to concerns that CPSD's information requests might exceed statutory authority, we have added language indicating that the requests must be reasonably related to the enforcement of standards adopted pursuant to Pub. Util. Code § 761.3. We have clarified that the information to be submitted to NERC is of the type that organization accepts. We have also modified subsection 10.4, "Safety-related Incidents," to clarify the generator's obligations. We have not changed the response period for information requests, but we note that the existing language specifies "a minimum of five business days" for such responses. We are confident that CPSD will set reasonable response deadlines based on the relative urgency of the need for such information and on the breadth of the information request. We address confidentiality concerns in our response to comments made on section 15.4, infra.

Section 11.0, Audits, Inspections, and Investigations. Some comments repeated a request to include a dispute-resolution process in the GO for disputes arising out of information requests, audits, inspections, and investigations. As we indicated previously, the existing law and motion process provided by Resolution ALJ-164 is limited to "any formal matter pending before the Commission" and does not cover these staff-initiated information requests. Additionally, we believe that CPSD staff has the expertise and professional judgment to make sound decisions about the information that is required for this program. Under subsection 15.4, a generator may raise confidentiality claims; and if formal proceedings are initiated under this GO, generators may raise evidentiary objections to the use of information in those proceedings.

Other comments question the Commission's authority to interview and examine employees and contractors. The Commission has well-established authority under Pub. Util. Code §§ 311 & 314 (now supplemented by § 761.3) to examine persons under oath, and this authority is not circumscribed by any labor contract to which the Commission is not a party. The GO does not, however, over-ride any constitutional or statutory privilege that may be properly invoked by the examined person.

The CPSD-ordered tests and technical evaluations were also questioned in comments. Most of the anticipated testing will be to validate individual equipment to determine whether it was the cause of an outage or how it is operated and maintained. With the exception of boilers and steam generators, most powerplant equipment can be physically isolated for testing without causing a plant to go offline or to reduce generation. We are confident that CPSD staff has the expertise and professionalism to schedule such tests and evaluations, when reasonably possible and in many of the ways suggested in the comments, to minimize the cost and disruption to generators.

Section 12.0, Violations. As discussed in Attachment B, section 12, we have previously considered and rejected suggestions to define violations as reckless or deliberate acts, and we have given our reasons for this decision. The GO includes provisions allowing the mitigation of sanctions in cases where the violation does not immediately endanger public health or safety or jeopardize the reliability of the electric system. We have also explained why we believe retaliatory actions should also be considered violations of the GO.

Section 13.0, Commission Proceedings. Some participants commented that violations should be considered "alleged" until proven, and we have made this change in the appropriate places. We have previously addressed criticisms that the GO delegates sanctioning authority to CSPD staff in assessing a scheduled fine for a violation of the GO. We once again observe that if a fine is assessed, the generator may contest the assessment in which case the burden will be on CPSD to initiate a formal enforcement proceeding (where the generator will have all procedural rights). The generator's acceptance of a scheduled fine is entirely voluntary. This expedited procedure reduces the time and expense that a generator, who admits to violating the GO, otherwise faces as a respondent in a formal proceeding to determine the sanction. One participant suggested that the fines for specified violations are too high in some circumstances. We are confident that CPSD will assess scheduled fines when the circumstances warrant, and generators will be free to reject the assessment.

We have lengthened the time period for generators to contest an assessment of a scheduled fine and clarified the procedure. We also have amended subsection 13.3.2 to allow more flexibility in the type of notice that will be provided when a proposal is made to modify the schedule of fines.

Section 14.0, Sanctions. In Attachment B, section 14.4.2, we have addressed the issue of potentially conflicting government requirements and how the mitigating provisions of this section afford relief to generators in these infrequent circumstances. We are not persuaded to make any changes.

Section 15.0, Miscellaneous Provisions. One comment asked about the relationship of the "Notice of Material Change," subsection 15.1.2, and the "Notice of Significant Changes," set forth at page 3-8 of the Maintenance Standards for Generators with Suggested Implementation and Enforcement Model. The GO enforces only section 1 of this latter document. The "Notice of Significant Changes" is set forth in section 3 of the document, which the Committee has described as a suggested implementation and enforcement model. While based on the recommended "Notice of Significant Change," the "Notice of Material Change" requirement of subsection 15.1.2 has additional requirements and is the document required of generators.

In response to other comments, we continue to require verification by a corporate officer because this elevates the importance of the verification to a higher level of the organization. We recognize that some information is more easily maintained in paper format, and CPSD is able to determine when information is reasonably required to be submitted in an electronic format. In Part E(1)(g) of this decision, we explain our position concerning the duration and amendment of the standards, and our rationale need not be repeated here.

We have modified subsection 15.9 to allow the Executive Director more leeway in granting extensions. We are confident that the Executive Director will issue guidance consistent with section 761.3 and this decision.

Several comments suggested that an immediate effective date might place some generators in immediate violation of the GO. We now indicate that the GO is effective three (3) days after the mailing of this decision, once approved by the Commission.

Subsection 10.2, Authorization for Release of Information; subsection 15.4, Confidentiality; and subsection 15.5, Violations of Law. Various comments were submitted concerning the confidentiality provisions of the GO. Participants questioned why the Commission appears to depart from the usual confidentiality procedures under GO 66-C. Many also questioned the sufficiency of protection when confidential information comes to the Commission from another organization or is forwarded by the Commission to another government agency for law enforcement purposes. Some of the comments indicated that the two-year duration of confidentiality protection seems to over-ride statutorily created privileges.

Pub. Util. Code § 583 authorizes the Commission to establish confidentiality policies for information provided to the Commission. For many types of information, GO 66-C has in the past proved useful; but section 583 allows us, as here, to tailor our traditional practices to the needs of a particular implementation and enforcement program. To address concerns about confidential information coming to us from other sources, we have modified subsection 10.2 to provide a more detailed explanation as to when such information will be maintained as confidential. Similarly, in subsection 15.5, we now indicate that, when information is forwarded to another governmental agency, it will be accompanied by any confidentiality claim asserted by the generator. We have not changed the duration period for confidentiality claims, set forth at subsection 15.4.4. Numerous Commission decisions have granted requests for confidentiality for a limited time, requiring renewal of the claims at the end of the period. We have not experienced significant problems with this approach. We agree that often the status of privileged information may not change; but we find it appropriate to require periodic renewal of these claims because circumstances indeed may change over time with regard to both the right of an entity to assert a particular privilege and the balancing of interests for and against disclosure.

Finally, we invited participants to propose categories of information that could be deemed confidential or not confidential in almost all cases. One participant provided an initial list of such categories, albeit without legal or policy analysis to support its choices. We favor an effort to establish prospectively such categories of information that deserve confidential treatment. If participants desire to contribute to such an effort, they may submit their suggested categories directly to the CPSD Director without filing but with service on the service list for this proceeding.

2. Comments on Draft Alternate Decision

On April 22, 2004, the draft alternate decision of President Peevey was filed and served on parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Commission's Rules of Practice and Procedure. Comments were filed and served on April 29, 2004, by PG&E, SCE, SDG&E, Mirant, DENA, AES, WCP, Elk Hills and High Desert Power Project, LLC. Reply comments were filed by AES. Other than as discussed below, the comments do not raise any new issues that have not already been considered and discussed above.

Several parties suggest that, perhaps through inadvertence, an earlier version of the General Order was attached to the circulated alternative decision. These parties prefer the version of the General Order available on the Escutia Table on April 1, 2004. The circulated alternative decision included the earlier version of the General Order, because this version had been sent to the entire service list. The General Order attached to this Decision, however, is the April 1^st version, updated based upon subsequent comments and incorporating a number of additional non-substantive changes.

Several of the parties comment favorably on the alternate decision's conclusion that the Commission should not seek to implement or enforce the General Duty Standards since, in their opinion, these standards are too generic and vague. Our decision today, however, approves the limited implementation and enforcement of most of the General Duty Standards. We do, however, refer one of the General Duty standards back to the Committee for reconsideration and clarification, because we do not believe we are able to implement or enforce it at this time.

Several of the comments argue that the Commission's delegation of authority to the Executive Director in the General Order is too broad and without sufficiently circumscribed criteria. We have addressed this concern by specifying in the General Order requirements of different classes of generators based on their generation capacity. While some parties offered comments on specific provisions of the General Order, these concerns have either been addressed in earlier revisions or comments or they are addressed in the General Order we adopt today. See Rules of Practice and Procedure 77.3 ("Comments which merely reargue positions taken in briefs will be accorded no weight . . . .").

Finally, several of the comments address the time periods and deadlines imposed by this Decision and the General Order. We have modified these as necessary to enable the Commission to begin implementation and enforcement of this program during the 2004 summer season, which promises to strain or exceed the state's electricity resources. For over a year, generators have been aware of the imminent implementation and enforcement of this program, and the ALJ Ruling of April 20, 2004, provided additional notice that generators should continue their preparation for complying with program deadlines. We believe the time periods and deadlines are reasonable given our purpose to ensure electric system reliability during summer 2004.