8. Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Douglas Long is the assigned ALJ in this proceeding.

Findings of Fact

Settlement

1. PG&E suffered damage to portions of its infrastructure caused by the 2005-2006 Winter Storms. This damage was significant and properly designated as a disaster eligible for CEMA recovery.

2. PG&E complied with the requirements for the CEMA as adopted in Resolution E-3238.

3. The active parties in the proceeding are representative of the stakeholders, and each has ably and vigorously pursued the interests of its constituency, and the parties had a sound and thorough understanding of the application.

4. The settlement is uncontested and resolves all disputed issues.

5. The proposed settlements' results are within the range of reasonable outcomes if the applications had been fully litigated on the parties' testimony.

Ex Parte Violations

6. On or before May 14, 2007, PG&E committed two violations by scheduling a meeting with a Commissioner when it failed to issue a notice or issue a notice and change the date of the ex parte meetings which were held on May 17, 2007.

7. On May 17, 2007, PG&E committed two violations when it conducted two ex parte meetings with a Commissioner without producing a certificate of service of the ex parte meeting notification on all other parties.

8. PG&E committed one violation for inadequate and incorrect reporting on May 21 of the four ex parte meetings held on May 16 and May 17, 2007.

9. The ex parte violations caused harm by diminishing the quality and fairness of the deliberative process.

10. On May 22, 2007 PG&E reported its violations after DRA reported it had not received notice of the ex parte meetings.

11. PG&E has taken steps intended to document, control, and report on ex parte contacts by developing a model of best practices in cooperation with the Commission's General Counsel.

12. PG&E could be subject to a financial penalty of between $500 and $20,000 per violation. Alternative discretionary sanctions include the development of model best practices to document, control, and report ex parte contacts.

Conclusions of Law

Settlement

1. PG&E alone bears the burden of proof to show that its costs were reasonable and are eligible for recovery under the CEMA tariff.

2. The Commission's prudent manager standard is the appropriate reasonableness standard to apply to the costs recorded in a CEMA.

3. The Commission is not dependent on an intervenor performing any specific analysis before the Commission may determine the reasonableness of a pending matter.

4. The settlement meets the criteria of an uncontested settlement under Rule 12 and San Diego Gas & Electric, 46 CPUC 2d 538 (1992).

5. The settlement is reasonable in light of the whole record.

6. The settlement is consistent with the law, and does not contravene or compromise any statutory provision or Commission decision.

7. The settlement is in the public interest.

8. The settlement provides sufficient information for the Commission to discharge its future regulatory obligations.

9. Under Rule 12.5, the adoption of the proposed settlement creates no precedent for subsequent CEMA applications, except for the expressly adopted component to exclude capitalized A&G expenses, which is reasonable.

10. On or before May 14, 2007, PG&E committed two violations by scheduling a meeting with a Commissioner when it failed to issue a notice or issue a notice and change the date of the ex parte meetings which were held on May 17, 2007.

11. On May 17, 2007, PG&E committed two violations when it conducted two ex parte meetings with a Commissioner without producing a certificate of service of the ex parte meeting notification on all other parties.

12. PG&E committed one violation for inadequate and incorrect reporting on May 21 of the four ex parte meetings held on May 16 and May 17, 2007.

13. PG&E could be subject to a financial penalty of between $500 and $20,000 per violation. Alternative discretionary sanctions include the development of model best practices to document, control, and report ex parte contacts.

14. Pursuant to Pub. Util. Code § 2107, sanctions could be imposed on PG&E for violating Rule 8.2(c)(2) and Rule 8.3(a)(2).

15. The Commission has the lawful discretion to impose appropriate and relevant alternative sanctions, including the requirement for PG&E to develop model best practices to document, control, and report ex parte contacts.

FINAL ORDER

IT IS ORDERED that:

1. The settlement agreement between Pacific Gas and Electric Company (PG&E) and the Division of Ratepayer Advocates is adopted. PG&E is authorized to recover revenue requirements for its 2005-06 Winter Storms Catastrophic Event Memorandum Account (CEMA) costs. PG&E shall recover $12,138,000 in electric revenue requirements, including interest through December 31, 2010, franchise fees, and uncollectibles, to be collected in rates beginning January 1, 2008, with $9,333,000 collected in rates in 2008, $1,431,000 in 2009, and $1,374,000 in 2010. PG&E shall record the CEMA revenue requirement in its Distribution Revenue Adjustment Mechanism ($11,460,000) and in the Utility Generation Balancing Account ($503,000) for rate recovery through the Annual Electric True-up advice letter.

2. PG&E shall exclude from future CEMA applications any capitalized Administrative and General Expenses in accordance with the terms of this adopted settlement agreement pursuant to Rule 12.5.

3. The August 8, 2007 ruling of the assigned Commissioner and assigned Administrative Law Judge is affirmed in determining that the creation of a written best practices model to document, control, and report ex parte communications is an appropriate remedial action for the identified violations in lieu of a financial penalty.

4. Application 06-11-005 is closed.

This order is effective today.

Dated January 10, 2008, at San Francisco, California.

APPENDIX A

Application of PACIFIC GAS AND ELECTRIC COMPANY to Recover Incremental Costs Related to the 2005-2006 New Year's Storms and July 2006 Heat Storm Recorded in the Catastrophic Event Memorandum Account (CEMA) Pursuant to Public Utility Code Section 454.9.

(U 39 E)

    Application No. 06-11-005

SETTLEMENT AGREEMENT BETWEEN

PACIFIC GAS AND ELECTRIC COMPANY AND THE

DIVISION OF RATEPAYER ADVOCATES

RESOLVING ISSUES IN THE

CATASTROPHIC EVENT MEMORANDUM ACCOUNT PROCEEDING

(APPLICATION NO. 06-11-005)

In accordance with Article 12 of the California Public Utilities Commission's (Commission) Rules of Practice and Procedure, the Division of Ratepayer Advocates (DRA) and Pacific Gas and Electric Company (PG&E) (together the "Settling Parties"), by and through their undersigned representatives, enter into this Settlement Agreement resolving issues in the Catastrophic Event Memorandum Account (CEMA) proceeding, Application 06-11-005. As a compromise among their respective litigation positions in Application 06-11-005, PG&E and DRA agree to and support all of the terms of this Settlement Agreement.

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