6. Standard of Review for Settlement Agreements

We review this uncontested Settlement Agreement pursuant to Rule 12.1(d) which provides that, prior to approval, the Commission must find a settlement "reasonable in light of the whole record, consistent with the law, and in the public interest." We find the settlement agreement meets the Rule 12.1(d) criteria, and discuss each of the three criteria below.

Initially, we note that the circumstances of the settlement, particularly its endorsement by all parties, generally support its adoption. DRA, which represents ratepayer interests, initially protested the application. DRA actively participated in the proceeding and in the settlement negotiations. In addition to GSWC's application, testimony, and exhibits, DRA served testimony on the issues raised in the application. Thus, the Settlement Agreement was reached after careful analysis of the application by parties representing the interests of both ratepayers and the utility. The record also shows that the Settlement Agreement was reached after substantial give-and-take between the parties which occurred over several settlement meetings. This give-and-take is demonstrated by the positions initially taken by parties in the application, testimony, and the final positions agreed upon in the Settlement Agreement.

The Settlement Agreement is also consistent with Commission decisions on settlements, which express the strong public policy favoring settlement of disputes if they are fair and reasonable in light of the whole record.¹⁶ This policy supports many worthwhile goals, including reducing the expense of litigation, conserving scarce Commission resources, and allowing parties to reduce the risk that litigation will produce unacceptable results.¹⁷ As long as a settlement, taken as a whole, is reasonable in light of the record, consistent with law, and in the public interest, it may be adopted.

As assessed above and in Sections 6.1 through 6.3 herein, we approve the Settlement Agreement, as clarified in Section 6.3 below.

6.1. The Settlement Agreement is Reasonable in Light of the Whole Record

We find that the evidentiary record contains sufficient information for us to determine the reasonableness of the Settlement Agreement.

In assessing whether the Settlement Agreement is reasonable, we consider here the effort GSWC put forth in order to acquire RPS-eligible energy as required by the Commission and the California RPS program. Over several years, GSWC worked diligently to acquire RPS-eligible energy, which resulted in just one viable GPA with BioEnergy. Even when GSWC found that this GPA could not be executed by BioEnergy, it continued its efforts to acquire RPS-eligible energy, which resulted in the Option.

As the only means available to GSWC to acquire RPS-eligible energy at this time, we find that the Settlement Agreement, including the Option, which are supported by the Joint Parties, is a reasonable way to resolve this proceeding. It also reserves for Commission approval at a later date, the price and terms of the requested future GPA, allowing for additional review of the GPA.

6.2. Settlement Agreement is Consistent with the Law and in the Public Interest

The Joint Parties, who represent all parties in the current application, believe that the terms of the Settlement Agreement comply with all applicable laws and decisions. We agree that nothing in the Settlement Agreement contravenes statute or prior Commission decisions.

We also find that the Settlement Agreement is in the public interest and in the interest of GSWC's customers, and commands the unanimous sponsorship of all active parties in this proceeding, one of which being DRA, who fairly represent the interests of the public. Approval of the Settlement Agreement avoids the cost of further litigation regarding both the current application and resolution of BioEnergy's inability to fulfill its responsibilities pursuant to the GPA, and reduces the use of valuable resources of the Commission and the Joint Parties.

6.3. Request to Withdraw A.10-07-012

In Section III of the Settlement Agreement, the Joint Parties request the Commission's permission to withdraw A.10-07-012, GSWC's request for approval of the GPA and the establishment of a GPA memorandum account. This request is contingent upon the Commission approving, without change, the Option.

In order to have a proceeding in which to adopt the Settlement Agreement (i.e. the Option), we must have a proceeding to adopt it in; therefore, we are unable to grant the request to withdraw A.10-07-012. Even though we do not adopt this request to withdraw the current application, through the adoption of the Settlement Agreement, we do not adopt GSWC's initial request in
A.10-07-012 for approval of the GPA and the establishment of a GPA memorandum account. Therefore, we agree that GSWC's initial request set forth in the application is withdrawn. Thus, we adopt the Settlement Agreement as clarified in this section.

¹⁶ See D.05-03-022 at 9.

¹⁷ Id.