5. DRA/Golden State Stipulation & Standard of Review
On August 17, 2007, DRA and Golden State filed a motion requesting that the Commission adopt their Stipulation. The motion stated that DRA and Golden State convened settlement conferences between June 15 - 20, 2007 and, prior to the meetings, provided formal notice to all parties to the proceeding of the upcoming meetings. Only DRA and Golden State attended these meetings. The August 17, 2007 motion requested the Commission to adopt the Stipulation in its entirety.
Prior to adopting any settlement, such as the Stipulation presented by DRA and Golden State, the Commission must review the settlement to ensure that the agreement is "reasonable in light of the record, consistent with the law, and in the public interest," as required by Article 12 of the Commission's Rules.
We also take into consideration that the Commission has long favored the settlement of disputes. This policy supports many worthwhile goals, including reducing the expense of litigation, conserving scarce Commission resources, and allowing parties to reduce the risk that litigation will produce unacceptable results.1
The Stipulation is not opposed by any party and the City of Ojai and Kathy Staples did not participate in the publicly noticed settlement meetings. The Commission's policy is that contested settlements, or settlements presented by less than all the parties, should be subject to more scrutiny compared to an all-party settlement.2 As we explained in D.02-01-041:
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 demonstrated by the record.3
For these reasons, we will review the Stipulation's resolution of every contested issue, considering each issue raised by the City of Ojai and Kathy Staples.
The Stipulation presented by DRA and Golden State covers a broad array of topics in each of the seven districts. Notably, the parties actively litigated some of these matters and only resolved their disputes after evidentiary hearings.
Golden State filed its applications accompanied by direct testimony with exhibits and subsequently served rebuttal testimony to address DRA's presentations. Golden State also presented witnesses at the evidentiary hearings and filed briefs. Overall, Golden State has shown itself well capable of advocating its interests throughout this proceeding. DRA is charged with upholding the ratepayers' long-term economic best interests. In carrying out that charge, DRA evaluated Golden State's applications, exhibits and testimony, engaged in an in-depth examination of the materials, and prepared, presented and defended extensive reports and testimony setting forth its own positions. Both Golden State and DRA were represented by technical staff and legal counsel in the proceeding.
The Stipulation represents a compromise between DRA and Golden State arrived at through extensive negotiations, in the interest of avoiding the expense and uncertainty inherent in litigation. The Stipulation describes the agreement reached for each issue. The reconciliation exhibits prepared by Golden State and DRA indicate each party's initial and final positions on each line item of the summary of earnings for each district and for all proposed capital projects. We have evaluated DRA's and Golden State's exhibits and testimony as they relate to the stipulated items, reviewed in detail their initial positions, and compared them with the Stipulation and accompanying explanations. In each case, the results are supportable within the range of possible outcomes based on the whole record.
Accordingly, we conclude that the sponsoring parties are fairly representative of the affected interests and the resulting Stipulation reached is reasonable in light of the whole record. The parties state that they are not aware of any statutory provision or prior Commission decision that might conflict with any provision of the stipulation on remaining issues. The principal public interest affected by this proceeding is the delivery of safe, reliable water service at reasonable rates. The Stipulation advances the public interest. We conclude that the Golden State and DRA Stipulation is in the public interest and should be approved.
1 D.05-03-022, mimeo., pp. 7-8.
2 D.96-01-011, 1996 Cal. PUC LEXIS 23, pp. 39-40 (This more detailed review and heightened scrutiny is especially appropriate when the settlement is not all-party.)
3 D.02-01-041, mimeo., p. 13.
