5. Tests for Approving Amended Settlement Agreements

Settlements must comply with Rule 51.1(e), which provides:

The Commission will not approve ... settlements, whether contested or uncontested, unless the ... settlement is reasonable in light of the whole record, consistent with law, and in the public interest.

In determining whether a settlement is fair, adequate, and reasonable, the Commission has examined a number of factors. These factors have included whether the settlement negotiations were at arm's length and without collusion, whether the parties were adequately represented, how far the proceedings had progressed when the parties settled, and whether the major issues were addressed.⁶

When, such as here, a settlement is presented as an "all party" settlement, the Commission also reviews it for conformance with four broad guidelines adopted in Re San Diego Gas and Electric Company.⁷ The parties contend that the settlement comports with each of those guidelines. The guidelines provide:

a. a proposed all-party settlement commands the unanimous sponsorship of all active parties to the instant proceeding;

b. the sponsoring parties are fairly reflective of the affected interests;

c. no term of the settlement contravenes statutory provisions or prior Commission decisions; and

d. the settlement conveys to the Commission sufficient information to permit us to discharge our future regulatory obligations with respect to the parties and their interests.