VII. Discussion

The Commission has developed criteria for evaluating all-party settlements. These criteria are that: (1) all active parties must sponsor the settlement; (2) the sponsoring parties must be fairly reflective of the affected interests; (3) the settlement cannot contravene statutory provisions of prior Commission decisions; and (4) the settlement must convey sufficient information to allow the Commission to discharge future regulatory obligations with respect to the parties and their interests.²

The Settlement meets these requirements with respect to the issues it resolves. Park and RRB are the only two parties in the proceeding. The sponsoring parties, Park and RRB, are fairly reflective of the interests affected by this ratemaking proceeding, RRB representing ratepayer interests and Park representing its own interests. No party has proposed that the Settlement or any part of it contravenes statutory provisions or prior Commission decisions, and it does not. Finally, the Settlement conveys sufficient information for the Commission to discharge its regulatory duties. The Settlement sets forth clearly the ratemaking treatment associated with each issue it resolves. Thus, the Settlement between Park and RRB meets these all-party criteria.

The Commission's Rules also address criteria for the adoption of settlements. Under its rules, the Commission will not approve a settlement unless it is reasonable in light of the whole record, consistent with the law, and in the public interest.³ The Settlement between Park and RRB meets these requirements, as well.

The Settlement is reasonable in light of the whole record. Table 1 (above) summarizes the revenue requirement increases (1) requested by the utility, (2) recommended by RRB, and (3) proposed under the Settlement. Based on the testimony of Park and RRB, we believe that the proposed revenue requirement increases under the Settlement of 8.7% for 2001 and 3.4% for 2002 and 2003 are reasonable. Likewise, the agreed upon returns on rate base of 9.65% for 2001 and 9.64% for 2002 and 2003, are reasonable.

The Settlement is consistent with the law. Neither Park nor RRB has suggested that the Settlement's resolution of any issue is inconsistent with the law. There is no reason to conclude otherwise.

The Settlement is in the public interest. Our assessment of whether the proposed rate increase is in the public interest must consider the future viability of the utility to provide service. At the same time, we must consider the customers' need for fair and reasonable rates and the needs of low-income customers. It is the Commission's obligation to balance these competing interests. The Settlement document describes the positions of the parties on the issues and the agreed-upon resolution of each issue. We believe that the Settlement as a whole strikes a reasonable balance; and, therefore, is in the public interest.

Accordingly, we conclude that the Settlement should be adopted.