JMH/JET/hl2 5/9/2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning.	Rulemaking 04-04-003 (Filed April 1, 2004)
Order Instituting Rulemaking to Promote Consistency in Methodology and Input Assumptions in Commission Applications of Short-run and Long-run Avoided Costs, Including Pricing for Qualifying Facilities.	Rulemaking 04-04-025 (Filed April 22, 2004)

ADMINISTRATIVE LAW JUDGES' RULING
ON PROTECTIVE ORDER AND REMAINING DISCOVERY DISPUTES

Certain discovery disputes, including the terms of a proposed protective order for this proceeding, were heard before Administrative Law Judge Julie Halligan and Administrative Law Judge (Law and Motion) John E. Thorson on January 27, 2005. These issues were raised by (a) the Cogeneration Association of California's and the Energy Producers and Users Coalition's (jointly CAC/EPUC) Motion for Order Compelling Compliance with Federal Law and Production of Complete, Non-Redacted Responses to Data Requests (Dec. 9, 2004); (b) the Independent Energy Producers Association's (IEP's) Motion to Compel Responses to Data Requests (Jan. 4, 2005); (c) the CAC/EPUC's Draft Protective Order (Jan. 21, 2005); and (d) other parties' responses to and comments on these pleadings.

The pending matters were taken under submission at the conclusion of the January 27th hearing, and the parties concerned about a protective order were ordered to meet and confer in an effort to agree on an appropriate order or, at least, to narrow their differences. The parties filed separate reports on February 4, 2005, indicating partial success in reaching agreement on the terms of a protective order. See Pacific Gas and Electric Company's Proposed Protective Order for Use in Rulemaking 04-04-025 (Feb. 4, 2005); California Cogeneration Council, Comments of the California Cogeneration Council Regarding the Proposed Protective Orders (Feb. 4, 2005).

On March 4, 2005, the California Cogeneration Council (CCC) filed a Motion to Compel Responses to Data Requests. Pursuant to a March 8, 2005, ALJ ruling shortening time for responses to the CCC's Motion, responses were filed on March 10, 2005. In its Motion, the CCC reports that despite frequent meet and confer sessions conducted between January 22, 2005 and the date of the Motion, and the initial belief that it was making progress on both the data requests and Protective Order, the discussions have reached a standstill.

In this ruling, we first address the dispute over the terms of a protective order. We then review and determine the unresolved, contested discovery requests.

1. Protective Order

The debate over the protective order between the utilities and the Qualifying Facilities (QF) generators, which participate in the market, has narrowed to the degree of access QF representatives will have to the utilities' confidential, market-sensitive information. In their most recent proposals, the utilities agree to allow a limited number of attorneys and experts working for QF parties' to have access to this information-but only if these individuals forego involvement in certain energy marketing activities for three years. The QF representatives oppose this restraint and argue that it would detrimentally impact the careers of these individuals.

The Commission often faces the tension between transparency of information and the potential adverse impacts the release of some information may have on markets and ultimately ratepayers. As recently directed by the state legislature, the Commission will soon open a rulemaking to revisit confidentiality issues. See SB 1488, 2004 Cal. Stat. Ch. 690 (Sept. 22, 2004)
("to ensure that the Commission's practices . . . provide for meaningful public participation and open decision making"). In its most recent statement on confidentiality in R.04-04-003, the Commission reiterated its "desire to move towards more open and transparent decision making . . . ."¹

In E-3816, issued May 8, 2003, the Commission "wrestled with whether, and to what degree, to disclose [contract pricing] information submitted to us under seal" (p.2). The Commission observed that:

It is incumbent upon this Commission to keep sensitive information confidential while still making plain to the public at large the bases for Commission decisions. In the final analysis, it is the Commission's responsibility to make decisions in the light of day, and we give that obligation great weight in determining whether commercial information is of such critical sensitivity as to override broader public concerns. (E-3816, p.2)

In E-3816, the Commission also noted that it has broad discretion on disclosure issues pursuant to Public Utilities Code Section 583:

The Commission has broad discretion under Section 583 to disclose information. See, for instance, Southern California Edison Company v. Westinghouse Electric Company, 892 F.2d 778 (1989) in which the United States Court of Appeals for the Ninth District stated (at p. 783):

On its face, Section 583 does not forbid the disclosure of any information furnished to the CPUC by utilities. Rather, the statute provides that such information will be open to the public if the commission so orders, and the commission's authority to issue such orders is unrestricted.²

It is, in short, within this Commission's sole discretion to determine whether to release or keep confidential information submitted pursuant to § 583. The current discovery requests come at a time in which the Commission has continued to "shape and define the hybrid power market in California so as to advance the positive benefits of competition and deliver California's energy services according to the priorities of state policy" (D.04-12-048, p.3). Thus, resolution of this discovery dispute must balance both the public interest in transparency and the confidentiality issues while not impeding the development of the hybrid energy market.

Many of the discovery requests at issue concern data related to the utilities' procurement of energy, therefore Public Utilities Code Section 454.5(g) governs the manner in which we address such issues. The code provides that the Commission "shall ensure the confidentiality of any market sensitive information submitted in an electrical corporation's proposed procurement plan or resulting from or related to its approved procurement plan including, but not limited to, proposed or executed power purchase agreements, data request responses, or consultant reports, or any combination, provided that the Office of Ratepayer Advocates (ORA) and other consumer groups that are nonmarket participants shall be provided access to this information under confidentiality procedures authorized by the commission" (emphasis added).

In R.04-04-003, the ALJ issued a protective order that followed FERC protective orders and allowed market participants to have access to confidential materials. However, the Commission remains protective of ratepayers who could be adversely affected if sensitive market information prepared by the utilities became available without restraint to QF marketing personnel.

Accordingly, we have prepared a protective order (Attachment A) that balances the QF parties' need for certain information to participate meaningfully in this proceeding with the utilities need (and, implicitly, the ratepayers' need) to prevent certain sensitive market information from being used by the QF parties' marketing personnel in the preparation of actual bids. While market participating parties will not have access to certain proprietary information and will not have complete access to market sensitive information, non-market participants will have complete access to all information and will be able to provide the Commission with the information and arguments necessary to reach informed decisions on the substantive issues in this proceeding.

We have used the utilities' proposal as the basis for this protective order, modified in two respects to mitigate the burden on the personnel assisting market participants in the preparation of their case. First, we have reduced the ban on future work from three to two years. Second, we have limited such future work only if it is reasonably likely to affect California energy markets, either wholesale or retail, in a meaningful way (See Protective Order, Attachment A, at paragraph 7.)

We have also modified the utilities' proposed protective order in paragraph 12 to indicate that the Commission will determine whether Protected Materials are excluded from public inspection when actual requests are made for the information.

¹ In re Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning, D.04-12-048 (Dec. 16, 2004).

² Resolution No. L-290, California Public Utilities Commission, 2000 Cal. PUC LEXIS 1087, June 22, 2000.