7. Assignment of Proceeding
Geoffrey F. Brown is the assigned Commissioner and Jean Vieth is the assigned ALJ in this proceeding.
1. With the repeal of PUHCA, the Commission has lost the remedy of applying to the SEC for revocation of the PUHCA-exemptions formerly held by Respondent holding companies.
2. Respondents contend that our concerns about their compliance with the Affiliate Transaction Rules are speculative and that recent compliance audits do not reveal any problems. Respondents' have not accurately characterized the audit findings. Respondents also ignore California's history, which reflects serious affiliate abuse problems in the past.
3. All audits referred to herein are public documents.
4. Respondent electric and natural gas utilities exist to provide energy services in a safe, reliable and environmentally sustainable manner at the lowest reasonable cost. This fundamental principle must guide the Commission in balancing the public interest and the private interests of unregulated utility affiliates and the individuals employed within the holding company structure.
5. The staff proposals for amendment to the Affiliate Transaction Rules have been reviewed and refined to better balance the Commission's regulatory need for information and the burden of compliance.
6. The Revised Affiliate Transaction Rules are designed to close existing loopholes, primarily by ensuring that key utility and holding company officers understand the Rules and their obligations under them, providing greater security against the sharing within the corporate family, through improper conduits, of competitively-significant, confidential information, and ensuring a utility's financial integrity is protected from the riskier market ventures of its unregulated affiliates and holding company parent.
7. The staff proposals for amendment to GO 77-L have been reviewed and refined to better balance the Commission's regulatory need for information and the burden of compliance.
8. GO 77-M has been developed to yield a more complete and accurate picture of Respondents' compensation practices while protecting reasonable privacy interests.
9. No hearing is necessary.
1. IEP's motion to become a party is moot; IEP's Post-Workshop Statement should be filed.
2. Respondents' unopposed motion for leave to file the declaration of Steven M. Fetter should be granted.
3. We may adopt rule changes in a quasi-legislative Rulemaking such as this one, as long as we provide notice and an opportunity for comment.
4. Where the Commission has not reviewed an audit in a formal proceeding and made its own findings, we may nonetheless take official notice merely to highlight the disparity between Respondents' characterizations and the findings in the audits themselves, but make no assessment of the merits.
5. As revised by today's order, the amendments to Affiliate Transaction Rules are reasonable and should be adopted.
6. As revised by today's order, the amendments to GO 77-L are reasonable and should be adopted.
IT IS ORDERED that:
1. The Affiliate Transaction Rules Applicable to Large California Energy Utilities, appended as Appendix A-3 to this decision, and General Order (GO) 77-M, appended as Appendix B-3 to this decision, are adopted. Both apply to Respondents (Southern California Edison Company/Edison International, Pacific Gas and Electric Company/PG&E Corporation, and Southern California Gas Company and San Diego Gas & Electric Company, both owned by Sempra Energy).
2. Within three months of the effective date of today's order, or as otherwise extended by the assigned Commissioner or assigned Administrative Law Judge and in order to avoid confusion, Commission staff shall place on the Commission's public meeting agenda a draft Rulemaking which proposes amendment of the Affiliate Transaction Rules adopted by Decision 97-12-088 as subsequently amended by other Commission decisions, for the sole purpose of exempting the large energy utilities from them. The amendments proposed shall include a cross-reference to today's order and The Affiliate Transaction Rules Applicable to Large California Energy Utilities Revised Rules.
3. The Motion of the Independent Energy Producers Association to Become a Party, filed September 29, 2006, is moot. The Post-workshop Statement attached to the Motion shall be filed as of September 29, 2006.
4. Respondent Utilities' and Holding Companies' Motion for Leave to File Declaration of Steven M. Fetter, filed September 29, 2006, is granted.
5. Rulemaking 05-10-030 is closed.
This order is effective today.
Dated December 14, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
Commissioners
D0612029 Appendices A-1 through A-3, B-1 through B-3
