III. Settlement Agreement

The Settlement Agreement resolves: (a) PG&E's claims for a retroactive adjustment of energy payments made to QF Switchers from June 1, 2000 through January 18, 2001; and (b) PG&E's claims for a retroactive adjustment of SRAC payments made to QF Switchers from December 1, 2000 through March 31, 2001 arising from the Court's Remand.

The Settlement Agreement contemplates that the QF Switchers who have entered into the Settlement Agreement¹⁵ will return a portion of the payments they received by a deduction of $1.50/Megawatt hour (MWh) applicable to the energy price paid to QF Switchers that have not otherwise settled with PG&E.

The deduction is effective for two and one-quarter to six years depending on the date the QF Switcher elected to switch to PX-based pricing. Two of the Indicated QF Switchers that no longer sell power from their facilities, Wheelabrator Hudson and Covanta Power Pacific, Inc. (Santa Clara), have agreed to make negotiated lump sum payments to PG&E of $35,200 and $16,800, respectively, in lieu of the $1.50/MWh deduction. The Settlement Agreement also includes a mutual release and waiver of claims arising from the settled issues described above.¹⁶

¹⁵ Appendix A to the Settlement Agreement lists the Indicated QF Switchers (14) and the additional QF Switchers (8) who have not entered into the Settlement Agreement.

¹⁶ Although D.06-07-032 adopted a settlement between IEP and PG&E that resolved both the Remand and QF Switcher Disputes, that decision also included other settlement terms not included in today's decision.