IV. Discussion

In order for a settlement to be approved by the Commission, the settlement must be: (1) reasonable in light of the whole record, (2) consistent with law, and (3) in the public interest. Rule 51.1(e).⁸

A. Reasonableness in Light of the Whole Record

The settlement addresses all pertinent issues raised in the complaint, without establishing broad policy that might affect parties not named in the complaint. Thus, the settlement entirely disposes of the claims PG&E raises against defendants, but has no impact on issues of broader scope. It is appropriate that the settlement here addresses only the dispute between PG&E and defendants, rather than broader issues related to gas transportation generally.

All parties that filed comments support the settlement. For example, TURN states that the Agreement meets the "reasonable in light of the whole record" standard based on TURN's review of the Agreement and PG&E's agreement to share with the Commission, TURN, and the Office of Ratepayer Advocates (ORA) any notices it receives from defendants pursuant to the Agreement. It states that it has discussed the Agreement in some detail with the settling parties, and has reviewed certain confidential materials provided in the context of the settlement negotiations. It finds that the "settlement is a reasonable compromise of strongly held positions." TURN agrees that "preserving the larger policy issues for resolution in a forum more conducive to broad public participation than a complaint proceeding serves the public interest." Finally, TURN states that it has "reviewed PG&E's proposed allocation of the settlement proceedings and consider[s] it reasonable given the modest amounts involved."⁹

Wild Goose also supports the Agreement because it only resolves historic claims between PG&E and the named defendants, rather than prejudging what it claims are broader policy issues raised by the complaint. Wild Goose states that it intervened in the proceeding because of its concern that the relief sought by PG&E in the complaint "had ramifications which would extend far beyond the named parties." Whether or not this is true, Wild Goose's support of the Agreement constitutes an acknowledgment that the settlement resolves only those issues between PG&E and the defendants, without creating impacts for "other participants in the natural gas industry. . . ."¹⁰

Duke essentially echoes Wild Goose's stance, noting that the settlement "is a reasonable compromise of the parties' interests [that] gives the parties an opportunity to pursue further resolution of some of the underlying issues, without unduly restricting the parties' rights to pursue their interests in proceedings before the Commission."¹¹

Finally, CNGPA similarly supports the settlement because it "resolves factual issues regarding the relationship between the parties to the Settlement Agreement . . . but leaves resolution of broader, industry-wide, issues to other proceedings where a broader array of parties can participate and assist the Commission in determining the public interest with respect to those industry-wide policy issues."12

Thus here, as in D.03-04-007,13 the Settlement Agreement is very closely based on the record developed by the parties, and is reasonable because it addresses the specific issues raised in the complaint. The settlement is reasonable in light of the whole record.

B. Consistent with the Law

The Settlement Agreement resolves the issues set forth in the complaint and is the product of good faith negotiations between the parties. No party claims that the settlement itself, or the allocation of proceeds, runs counter to law, rule or tariff. We have analyzed the allocation of proceeds and also find the settlement consistent with the law. PG&E correctly represents that the allocation is consistent with its tariffs, and its calculations of volume appear reasonable.

The settlement provides for payment of PG&E's attorneys' fees. We have allowed settlements to include such payment in the past.¹⁴ PG&E's total legal fees amount to $584,049. However, PG&E has voluntarily agreed to limit its recovery to fees charged by outside counsel through December 18, 2003.¹⁵ These fees total $278,749. We approve the settlement agreement's payment of PG&E's outside counsel fees.

Thus, here, as in D.03-04-007, we conclude that the settlement is consistent with the law.

C. In the Public Interest

The Commission has up until now limited the transmission of natural gas to monopoly energy providers such as PG&E. The settlement preserves this

status quo while not affecting how the Commission might address this issue in the future.

For these reasons, the Commission finds that the settlement is reasonable in light of the whole record, is consistent with the law, and is in the public interest. We note that nothing in the Agreement binds the Commission or should be construed to constitute a Commission statement of policy on the conduct alleged in the complaint. The Commission is free in the future to interpret the conduct alleged in the complaint, or like conduct, as it sees fit, consistent with the law.

The settlement should be approved.