4. Standard of Review
In reviewing settlements, we have often acknowledged California's strong public policy favoring settlements. This policy supports many worthwhile goals, such as reducing litigation expenses, conserving scarce resources of parties and the Commission, and allowing parties to reduce the risk that litigation will produce unacceptable results.
In assessing settlements we consider individual settlement provisions but, in light of strong public policy favoring settlements, we do not base our conclusion on whether any single provision is the optimal result. Rather, we determine whether the settlement as a whole produces a just and reasonable outcome.
We have specific rules regarding approval of settlements:
"The Commission will not approve settlements whether contested or uncontested, unless settlement is reasonable in light of the whole record, consistent with law, and in the public interest." (Rule 12.1(d).)
As first articulated in 1992, we condition our approval of an all-party settlement on the following factors:
a. The settlement agreement commands the unanimous sponsorship of all active parties;
b. Sponsoring parties are fairly reflective of the affected interests;
c. No settlement term contravenes statutory provisions or prior Commission decisions; and
d. The settlement conveys sufficient information to permit the Commission to discharge future regulatory obligations with respect to parties and their interests.6
Settling Parties assert that the MCRA Settlement and the five rate design settlements each meet the all-party tests. Further, they contend that each of these settlements meet the broader tests of being reasonable in light of the whole record, consistent with law, and in the public interest.
We recently affirmed our long-standing policy "that contested settlements should be subject to more scrutiny compared to an all-party settlement."7 We explained the rationale behind this heightened scrutiny in D.07-03-044:
In judging the reasonableness of a proposed settlement, we have sometimes inclined to find reasonable a settlement that has the unanimous support of all active parties in the proceeding. In contrast, a contested settlement is not entitled to any greater weight or deference merely by virtue of its label as a settlement; it is merely the joint position of the sponsoring parties, and its reasonableness must be thoroughly demonstrated by the record. (D.07-03-044, p. 13 (quoting D.02-01-041, p. 13).)
Accordingly, we undertook a careful review of every issue raised by the parties contesting the settlement at issue in D.07-03-044.
The MM settlement is not an all-party settlement. It is contested and opposed by TURN. Therefore, in considering whether it warrants adoption we must review it as the joint position of PG&E and BOMA, who have the burden to thoroughly demonstrate its reasonableness. This is accomplished further in the decision where we address TURN's objections to the MM settlement and BOMA's and PG&E's responses to those objections.
6 D.92-12-019 (64 CPUC 2d 538, 550-551).
7 D.07-03-044, Opinion Authorizing PG&E's GRC Revenue Requirement for 2007-2010, mimeo., p. 13 (citing D.96-01-011, Finding of Fact 5).
