10. Discussion

As discussed above, PG&E's CEMA request is consistent with the requirements identified in Resolution E-3238.

The all-party settlement attached to this decision as Appendix A, describes the agreements of the parties.

We agree that the settled total revenue requirement is reasonable. After an adjustment for a $7.0 million calculation error, PG&E's total request was for $85.1 million. ORA's recommendations, not including the calculation error, was $67 million. Weil's testimony generally agreed with the ORA Report and discussed other monetary issues not addressed by ORA, specifically the disallowance of $1,164,000 in revenue requirement allegedly included in rates, $768,000 in revenue requirement for hydroelectric repair costs, and unknown amounts that might be recovered through PG&E's Non-nuclear Generation Capital Additions Memorandum Account. By comparison, the settled amount is $69.8 million of total (electric and gas) revenue requirement in the year 2000.

We believe this outcome meets the Commission's criteria for settlements. We conclude that the all-party settlement conforms with the requirements of Article 13.5 of our Rules of Practice and Procedure. All active parties support the settlement. No party opposes it. The settlement meets the tests we outlined in San Diego Gas & Electric Co. (1992) 46 CPUC2d 538 (D.92-12-019) in that each party is adequately represented; the interests of all ratepayers have been asserted by ORA; Weil represents residential ratepayers; no terms of the settlement contravene any statutory provision or any decision of this Commission; and the settlement, together with the record in this proceeding, convey sufficient information to permit us to make an informed evaluation. The settlement should be adopted and the motion for approval of the settlement should be granted.

Rule 51.1(b) requires that before signing any settlement, the Settling Parties must convene a properly noticed settlement conference. The Settling Parties request a waiver of the rule to the extent that it might apply to the Amendment. The Settling Parties did convene a properly noticed settlement conference on September 23, 1999, prior to signing the Settlement Agreement. Only one other party attended the settlement conference, and no party has opposed the Settlement Agreement or Amendment. For these reasons, we agree that a waiver of Rule 51.1(b) is justified.

Rule 51.2 allows settlements to be filed any time after the first prehearing conference but within 30 days after the last day of hearing. The only evidentiary hearing in this proceeding was convened on September 14, 1999. At the hearing, the Settling Parties announced that they had reached agreement in principle regarding all disputed issues. There was no cross-examination; however, four rounds of prepared testimony were submitted. Remaining hearing time was devoted to identification and receipt of exhibits. The 30th day after the hearing was October 14, 1999, prior to issuance of D.99-10-057. Because the ALJ's proposed decision regarding the Settlement Agreement had not been issued and because no party opposes the Settlement Agreement or Amendment, a waiver of Rule 52 is justified.

Further, we agree that the Amendment is reasonable because it restores the overall balance that was reached in the Settlement Agreement. The Amendment is the result of good faith negotiations by the Settling Parties and there is no opposition from any other party. We believe that the public has a strong interest in settlement of disputed issues in order to avoid lengthy and costly litigation. The Amendment promotes the public interest and should be approved.

However, we caution the Settling Parties that we are not approving any Amendment that could be construed as contravening D.99-10-057. The Settlement provides that recovery will occur in the remaining months of 2000. The Amendment essentially allows the settling parties to renegotiate recovery of the $57.8 million in non-generation electric CEMA revenue requirement and provides for accelerated recovery should PG&E's rate freeze be forecast to end before December 31, 2000. No carryover will be allowed.