VI. Settlement

On September 18, 2000, Sierra and ORA filed a joint motion to adopt a proposed settlement agreement disposing of ORA's protest to the application and agreeing that the Commission should either exempt the divestiture transaction under Section 853 or in the alternative, approve the transaction under Section 851. The joint motion urges the Commission to adopt the settlement pursuant to Rule 51.1 as reasonable in light of the whole record, consistent with the law, and in the public interest.

In the settlement, Sierra and ORA agree that the ratemaking issues raised by ORA in its protest do not need to be addressed or resolved in this proceeding. Instead, Sierra and ORA agree these issues will be addressed by Sierra and reviewed by ORA in a separate proceeding such as "the Competition Transition Cost Balancing Account true-up or valuation of assets under Sections 367(b) and 377 of the Code."¹⁰ The parties also agree that the unique facts in this proceeding support a finding by the Commission to grant an exemption under Section 853 for this auction and divestiture or, in the alternative, a finding authorizing the auction and divestiture under Section 851.

In support of this recommendation, the parties conclude that the auction procedure is substantially the same as that employed by California's large electric utilities. The parties also conclude that tariffs filed with FERC together with PUCN regulatory oversight will assure the level of reliability mandated in Section 362 of the Code. In addition, the parties state that the proposed

divestiture will provide substantial compliance with and satisfies the intent of Section 363(a) of the Code because the auction requires the purchaser to assume relevant collective bargaining agreements and to fulfill other obligations to current plant employees. Finally, the settling parties agree that it is reasonable to afford comity to the electric restructuring process in Nevada, because that process, coupled with proceedings before FERC, will assure the protection of Sierra's California ratepayers.