IV. Application of Test Approving Settlement Agreements to This Proceeding

SCE states the settlement presented in this application would follow several basic principles:

The settlement resolves all disputed issues as required by Commission precedent;

The settlement would not set a precedent for SCE's transactions with other power suppliers;

The settlement results in substantial ratepayer benefits considering the relative merits of the parties' claims and litigation risks;

The settlement would require Commission approval.

SCE claims the settlement comports with Rule 51.1(e) of the Rules of Practice and Procedure and is "reasonable in light of the whole record, consistent with law, and in the public interest." SCE presented evidence that the settlement fairly reflects the relative risks of the Arbitrator's decision and costs of potential litigation relating to the Arbitration decision. Further evidence shows the settlement fairly and reasonably resolves the disputed issues, conserves resources, and falls within the range of possible outcomes. SCE states the settlement agreement was achieved at an appropriate stage to avoid litigation, and the negotiations were at arm's length, without collusion, and the parties were adequately represented.

The settlement before us is straightforward and unopposed. The terms of the settlement lie within the range of possible outcomes had the matter been decided by the Arbitrator. There is no evidence of collusion and it appears the parties negotiated the settlements in good faith and with the consultation of technical, legal and economic experts. The settlement reasonably balances the interests of SCE's ratepayers with those of DETM. We herein find the settlement agreement is reasonable and in the public interest. We also find it is reasonable to distribute the settlement proceeds to ratepayers, as described in the Application, through the ERRA balancing account, and that the ERRA credit amount be excluded when calculating ERRA Trigger or AB 57 threshold amounts on a recorded basis.