[00:00:05] Speaker 03:
At all, transmission agency of Northern California at all petitioners versus Federal Energy Regulatory Commission.

[00:00:14] Speaker 03:
Mr. Postar for the petitioners, Ms.

[00:00:16] Speaker 03:
Chu for the respondent, Ms.

[00:00:18] Speaker 03:
Koo for the interviewer.

[00:01:08] Speaker 02:
We're ready when you are.

[00:01:18] Speaker 02:
This case turns on a straightforward reading of an unambiguous contract for which the proper standard of review is de novo.

[00:01:26] Speaker 02:
Based on the unambiguous language of the contract, the legal question before the court is whether FERC erred by inserting words into a contract that do not exist, finding that an exception exceeds the underlying obligation.

[00:01:39] Speaker 01:
If we think the contract's ambiguous, not unambiguous, then do you lose?

[00:01:44] Speaker 02:
If the contract is unambiguous, then this Court's President would... No, no.

[00:01:48] Speaker 01:
What if it's ambiguous?

[00:01:50] Speaker 02:
I'm sorry, Your Honor.

[00:01:50] Speaker 02:
If this Court finds that the contract is ambiguous, then this Court's President is to return the contract to the Commission for interpretation.

[00:02:01] Speaker 02:
The contract should also be considered based upon the reading of the contract of an exception should be narrowly construed.

[00:02:14] Speaker 02:
In addition, the interpretation should not create a conflict within the contract, which this interpretation does.

[00:02:20] Speaker 00:
It's not a conflict necessarily as much as an exception, I suppose.

[00:02:25] Speaker 00:
I mean, the language is pretty

[00:02:29] Speaker 00:
definitive PG&E shall not be required to replace any remedial action or element thereof provided under its comprehensive agreement upon cancellation or termination of that agreement.

[00:02:42] Speaker 02:
And our reading, Your Honor, is that the context matters.

[00:02:45] Speaker 02:
This Court has found that where a word is subject to multiple interpretations, look to the context.

[00:02:51] Speaker 02:
And in this situation, the context is a provision that sets out duties for remedial action.

[00:02:57] Speaker 02:
And the exception says, you don't have to provide that remedial action.

[00:03:02] Speaker 02:
And the interpretation of the commission was that not only do you not have to provide remedial action, you don't have to provide anything else as well.

[00:03:11] Speaker 04:
But isn't the known context also the vision of this remedial action in view of physical facilities upgrade and after the passage of time the physical facilities were in fact upgraded plus the regulatory approach have changed?

[00:03:32] Speaker 04:
I mean the context is

[00:03:34] Speaker 04:
quite supportive, I think, of the commissions, or arguably quite supportive of the commissions reading that this was remedial action put in place for a finite period of time.

[00:03:48] Speaker 02:
It was remedial action put in place for the, the remedial action scheme that PG&E has in place remains, but one piece of it, the remedial action, was for a contract period, a very long contract period.

[00:04:03] Speaker 02:
At the end of that contract, which was in place when the entire underlying contract began, the contract were

[00:04:11] Speaker 02:
were examining began.

[00:04:15] Speaker 02:
It was coming to an end, and everybody knew it was coming to an end.

[00:04:19] Speaker 02:
But the purpose of the contract is to maintain the capability of these three lines, which are the crucial link between the Pacific Northwest, the wind and hydro up there, down to the consumers in California.

[00:04:31] Speaker 02:
And there's no indication anywhere in the contract that the parties intended that

[00:04:36] Speaker 02:
that capacity should dissipate, that it should be lessened, that there should be a diminution of that capability, even with this provision, if that's exactly what the commission's interpretation does.

[00:04:48] Speaker 04:
Well, not really.

[00:04:49] Speaker 04:
I mean, we have a shift here from, I'm not sure I'm going to get the nomenclature right, but from firm service contracts to a more pay-as-you-go situation.

[00:05:02] Speaker 04:
And that seems like that's also part of the relevant context.

[00:05:05] Speaker 02:
And that's an important part of the context, because what the Commission finds, for example, the Commission found de minimis effects in one place and in the other.

[00:05:14] Speaker 02:
And that only speaks to the portion of the market that you are addressing.

[00:05:18] Speaker 02:
That is the California- The Kaizo.

[00:05:20] Speaker 02:
The Kaizo.

[00:05:21] Speaker 02:
Petitioners, the line that is primarily owned by the transmission agency,

[00:05:28] Speaker 02:
its members, Sacramento, Municipal Utility District, Torrelochio Irrigation District, et cetera.

[00:05:33] Speaker 02:
They're not part of that market.

[00:05:35] Speaker 02:
They don't operate on that paradigm.

[00:05:37] Speaker 02:
They operate on a firm basis, long-term firm contracts.

[00:05:40] Speaker 02:
They put capacity, transmission capacity out for sale, for long-term sale.

[00:05:44] Speaker 02:
So it's completely different.

[00:05:45] Speaker 02:
They require having a fixed amount of capacity.

[00:05:49] Speaker 02:
The hourly bid isn't applicable to them.

[00:05:51] Speaker 02:
When you have an exception in this situation, this court's recognition is that an exception should be construed narrowly.

[00:06:00] Speaker 02:
In this case, that's particularly important.

[00:06:03] Speaker 00:
Why narrowly, though?

[00:06:04] Speaker 00:
I mean, why not just construed according to its terms, which are not narrow?

[00:06:08] Speaker 02:
But it's particularly important because we think it's inconsistent with the underlying obligation, which is remedial action.

[00:06:21] Speaker 02:
It reads the provision to mean more than remedial action.

[00:06:24] Speaker 02:
And then it creates a conflict within the contract.

[00:06:26] Speaker 00:
And the conflict is that- These are very sophisticated parties who know what they're doing.

[00:06:33] Speaker 00:
And the industry was aware of what was going on here.

[00:06:39] Speaker 00:
and the language is sweeping.

[00:06:43] Speaker 02:
With the language is specific to remedial action.

[00:06:46] Speaker 02:
And the contract otherwise has very specific obligations that require the parties to maintain this capability.

[00:06:54] Speaker 02:
And if there's any adverse effect on this capability from a modification or if there's none due burden from other actions, the contract provides that there is a remedy to the parties.

[00:07:05] Speaker 02:
By interpreting it the way the commission interpreted it, we have a conflict.

[00:07:08] Speaker 02:
And that brought them to the point where the commission said,

[00:07:11] Speaker 02:
So we now have to apply the principle that the specific overrides the general.

[00:07:17] Speaker 02:
And the specific being the exception and the general being the two provisions, 8.7.2.2 and 12.1, that provide remedies.

[00:07:28] Speaker 02:
And the commission said, well, those override.

[00:07:30] Speaker 02:
But there is an interpretation that is reasonable that avoids that conflict.

[00:07:36] Speaker 02:
And this court has found that where there's a reasonable interpretation that avoids a conflict, that gives full meaning to all of the terms, that's the preferred meeting.

[00:07:44] Speaker 00:
Isn't a possible interpretation to say, well, yes, there's a general requirement to avoid imposing undue burdens and a general requirement to avoid adverse impacts, but there's also this sweeping provision that

[00:08:04] Speaker 00:
PG&E shall not be required to replace any remedial action, which means that the parties understand that at least that will not itself be considered an undue burden or an adverse impact because that would negate the whole purpose of the provision.

[00:08:19] Speaker 02:
Because, Your Honor, there's an interpretation that does not negate the exception, we think that is not a possible reading.

[00:08:27] Speaker 02:
The interpretation that does not negate the exception is to find that PG&E would have been in violation of section 8.6.3 without this exception.

[00:08:38] Speaker 02:
The parties came to realize that along the way, and they said, well, we don't intend for PG&E to violate 8.6.3.

[00:08:44] Speaker 02:
Put this exception in.

[00:08:45] Speaker 02:
The exception is,

[00:08:47] Speaker 02:
don't have to replace the remedial action, not in violation of 8.6.3.

[00:08:51] Speaker 02:
That gives the full meeting.

[00:08:53] Speaker 04:
You're basically saying they do need to replace it.

[00:08:55] Speaker 04:
They just don't need to replace it with the remedial action that they had received from State Water.

[00:09:00] Speaker 04:
They could replace it in some other way at their

[00:09:04] Speaker 04:
at their election, they don't need a specific exception for that.

[00:09:09] Speaker 02:
Well, Your Honor, to maintain compliance with Section 8.6.3, they needed this exception.

[00:09:18] Speaker 02:
Because had they done something else in the alternative, they still would be in violation of 8.6.3.

[00:09:23] Speaker 02:
8.6.3 is very specific.

[00:09:27] Speaker 02:
You have to maintain the existing remedial action.

[00:09:29] Speaker 02:
And they weren't going to be able to do that.

[00:09:31] Speaker 02:
And so they needed an exception.

[00:09:32] Speaker 04:
Well, they could have.

[00:09:33] Speaker 04:
If you want it today, you can do it.

[00:09:35] Speaker 04:
Just pay for it.

[00:09:36] Speaker 02:
But if State Water says no, or if PG&E says, I'm not going to sign up for it for whatever reason, then... Right.

[00:09:44] Speaker 04:
It's a very different exception the way you read it.

[00:09:46] Speaker 04:
I understand that.

[00:09:47] Speaker 04:
Now, let me just ask you.

[00:09:49] Speaker 04:
to accept, and this is just by hypothesis, to understand the relationship between your different arguments.

[00:09:56] Speaker 04:
If we were to disagree with you on the reading of the exception and hold that it does absolve PG&E of any obligation to replace the remedial action or otherwise mitigate the impact of the loss of that remedial action,

[00:10:19] Speaker 04:
What is your argument that the new contract for service with State Water is a modification that imposes burdens for which PG&E needs to

[00:10:37] Speaker 02:
take responsibility.

[00:10:39] Speaker 02:
The clock turns, the contract, the comprehensive agreement has terminated, the remedial action is gone.

[00:10:46] Speaker 02:
The next day there's a proposal to replace existing interconnection service and that replacement then has to be judged against the contract, the operation agreement.

[00:11:01] Speaker 02:
The operation agreement hasn't gone away.

[00:11:03] Speaker 02:
It still exists.

[00:11:04] Speaker 02:
Section 8.7.2 that says no undue burden still exists.

[00:11:08] Speaker 02:
Section 12.1 that says no adverse impacts, that still exists.

[00:11:12] Speaker 02:
It's the interconnection that has to be judged.

[00:11:15] Speaker 02:
The flows, the power flows from these generators then has to be assessed, just as it would if there was any other

[00:11:24] Speaker 02:
generator that came along to interconnect with PG&E.

[00:11:27] Speaker 02:
And at that point, the record shows in extensive testimonies of affidavits submitted by petitioners that those have adverse effects on the system and on petitioners and damaged petitioners.

[00:11:44] Speaker 04:
And they were, State Water was already connected.

[00:11:48] Speaker 02:
They were already connected.

[00:11:49] Speaker 02:
That's correct, Your Honor.

[00:11:50] Speaker 04:
So what is the modification?

[00:11:52] Speaker 04:
They were connected before, they're connected after.

[00:11:56] Speaker 02:
Well, the definition of modification in Section 4.27 includes connections and includes removals and includes replacements.

[00:12:05] Speaker 02:
And so the modification is a replacement.

[00:12:08] Speaker 02:
It is a new transmission facility.

[00:12:10] Speaker 02:
It is a new effect on the system.

[00:12:14] Speaker 04:
And to that, FERC says no modifications are only physical.

[00:12:19] Speaker 02:
And FERC adds language to the definition, says they have to be physical and they have to be direct physical.

[00:12:27] Speaker 02:
And that language, that's not founded within the contract.

[00:12:30] Speaker 02:
And so that's one of the problems we have.

[00:12:32] Speaker 02:
We also submitted extensive testimony.

[00:12:35] Speaker 02:
Actually, PG&E is the one that submitted the testimony that said, we're gonna have to reprogram these controllers.

[00:12:42] Speaker 02:
That's part of this system.

[00:12:43] Speaker 02:
We're gonna have to make a change.

[00:12:45] Speaker 04:
And you make a point, well, maybe that counts as physical.

[00:12:48] Speaker 04:
Is there a requirement if there is no physical modification, if there's just a new contract with a client that's already connected?

[00:12:58] Speaker 04:
Do the imposition of burden duties apply there?

[00:13:05] Speaker 02:
Your Honor, the definition of modification includes within it the word modification, and that is a very broad term, and it implies that there are no physical effects.

[00:13:19] Speaker 02:
So I would say the answer is any change to this system could constitute such an effect.

[00:13:25] Speaker 04:
But if there were no physical modification, but just a new contract, if they re-up with, for example, a client that wasn't providing remedial action, if a new contract is drawn up to continue power to such a client, is that renewed by FERC for imposition of burdens or not?

[00:13:48] Speaker 02:
It is reviewed by the California grid operator, the California ISO, under its procedures, and they would determine what the impacts are and, if necessary, file a new contract with the Commission, and it would be reviewed if they felt it needed to be filed.

[00:14:03] Speaker 01:
I just wanted to be sure I'm following your argument here.

[00:14:08] Speaker 01:
On that last point,

[00:14:11] Speaker 01:
I understood that you had two independent arguments.

[00:14:14] Speaker 01:
One was the section regarding modifications and one was the section regarding undue burden.

[00:14:19] Speaker 01:
Yes.

[00:14:19] Speaker 01:
Right.

[00:14:20] Speaker 01:
So even if it didn't involve a modification, if it involved an undue burden, there would be a problem.

[00:14:25] Speaker 01:
Yes.

[00:14:26] Speaker 01:
Right.

[00:14:26] Speaker 01:
So if even in the circumstance that Judge Pillard was suggesting or asking about where

[00:14:33] Speaker 01:
You suddenly made a contract with somebody who overburdened the system and prevented, whose demands were so overburdening that it would hurt the system as a whole.

[00:14:43] Speaker 01:
That would come under the undue burden section, even if it wasn't a modification.

[00:14:47] Speaker 02:
Yes, Your Honor.

[00:14:48] Speaker 02:
And there's extensive testimony in the record on that.

[00:14:50] Speaker 02:
Okay.

[00:14:51] Speaker 01:
Now, on the question about the remedial action, my understanding

[00:14:57] Speaker 01:
is not that, of your argument, is not that 8.63 is just about replacing the same remedial action for state water.

[00:15:09] Speaker 01:
Your argument is that this section says they don't have to put any new remedial action in, but doesn't say anything about other things like expanding, increasing the amount of power availability, transfer capability, generation, transmission, those kind of additions, correct?

[00:15:30] Speaker 02:
That's correct.

[00:15:31] Speaker 01:
Now let me ask just one last question.

[00:15:34] Speaker 01:
You said, and I want to know whether it's just a slip of the tongue, you said that the

[00:15:39] Speaker 01:
that FERC had found that there was only a de minimis effect in the Queso area.

[00:15:47] Speaker 01:
My understanding of your argument was, maybe it's my understanding of the FERC opinion, was that they were just stating what Queso said, not that they had made a finding of their own.

[00:15:56] Speaker 01:
Am I wrong about that?

[00:15:57] Speaker 02:
In one place, they characterize what the queso said.

[00:16:02] Speaker 02:
In the second place, in paragraph 42 of the rehearing order, they specifically say, I'm sorry, in paragraph 19, they specifically say diminutive facts.

[00:16:16] Speaker 01:
They do, but the only support they have for that is to go back to the December 29th order.

[00:16:22] Speaker 01:
in which the effect is listed under arguments, not under findings.

[00:16:28] Speaker 02:
That's correct, Your Honor.

[00:16:29] Speaker 02:
So there are two problems with it.

[00:16:30] Speaker 02:
One is that they did not make a finding.

[00:16:34] Speaker 02:
And the second is, even had they made the correct finding, that finding would not have been as the petitioners were not part of the California ISO.

[00:16:41] Speaker 02:
And that testimony isn't relevant to them.

[00:16:43] Speaker 02:
So they never made a ruling on the impact analysis, the undue burden, and the adverse impacts.

[00:16:50] Speaker 02:
I see I'm out of time.

[00:16:53] Speaker 02:
Thank you, Your Honor.

[00:16:57] Speaker 02:
Ms.

[00:16:57] Speaker 02:
Chu.

[00:17:08] Speaker 06:
Good morning.

[00:17:09] Speaker 06:
May it please the Court, Susanna Chu for the Federal Energy Regulatory Commission.

[00:17:18] Speaker 06:
Your Honors,

[00:17:20] Speaker 06:
The commission here gave a common sense interpretation to a provision that is sweeping in its exclusion of excusing PG&E from taking any particular action upon the expiration of the state water contract.

[00:17:38] Speaker 06:
On the basis of the record before the commission and the contract itself, the commission saw no reason at the time to require PG&E to do anything particular to replace the lost remedial action.

[00:17:54] Speaker 06:
But the commission read the entire contract as a whole, and it recognizes that there are obligations on PG&E as one of the parties that operates this three-line transmission system.

[00:18:07] Speaker 06:
And so PG&E continues to have these obligations.

[00:18:12] Speaker 06:
As Your Honor has noted, these aren't very sophisticated parties.

[00:18:15] Speaker 06:
They continue to be in talks about any potential impacts to the system.

[00:18:21] Speaker 01:
Let me ask you first about our standard of review.

[00:18:24] Speaker 06:
Yes.

[00:18:25] Speaker 01:
So your brief repeatedly says that FERC reasonably concluded

[00:18:33] Speaker 01:
It's reading of the agreement was reasonable, right?

[00:18:37] Speaker 03:
Yes.

[00:18:38] Speaker 01:
FERC says it's reading that the agreement is unambiguous, not just that they are reasonably reading it, but that it is unambiguous.

[00:18:49] Speaker 01:
Now, if we were to decide that it was not unambiguous, even if we thought it might be reasonable, we would have to send it back, isn't that right?

[00:18:59] Speaker 06:
I think that the court may decide to do that.

[00:19:02] Speaker 06:
But I think that the commission found section 8.6.

[00:19:06] Speaker 00:
That was not a clear answer on that.

[00:19:07] Speaker 00:
I apologize.

[00:19:10] Speaker 00:
Do you agree or not agree that if it's ambiguous, it has to go back?

[00:19:15] Speaker 06:
I don't agree that it has to go back, because the Commission did find Section 8.6.3 to be unambiguous, but I think that the Court and the Commission were both looking at the entirety of the agreement, and I think the Court could uphold... And what does unambiguous even mean here, because they're finding it's the better reading of the contract

[00:19:40] Speaker 00:
by definition, if they find it unambiguous.

[00:19:43] Speaker 00:
And if it's ambiguous, they're still finding it the better reading of the contract.

[00:19:48] Speaker 00:
It's not like a statute where you have policy making room if there's ambiguity.

[00:19:54] Speaker 06:
Right, Your Honor.

[00:19:55] Speaker 06:
And I think that's where cases like National Fuel Gas Supply and LOMAC are instructive, because those cases involved agency contract interpretations.

[00:20:06] Speaker 06:
And in LOMAC, the court actually found that the agreement at issue there plainly contemplated, quote unquote, that a particular event might transpire.

[00:20:18] Speaker 01:
Let me read you from one of our opinions.

[00:20:21] Speaker 01:
This is the Rain Tree versus FERC.

[00:20:24] Speaker 01:
And it is quoting Amarin versus Ferck.

[00:20:26] Speaker 01:
Quote, if the commission's decision turns on an erroneous assertion that the plain language of the relevant wording is unambiguous, we must remand the matter to the commission to require the agency to consider the question of fresh in light of the ambiguity that we see.

[00:20:43] Speaker 01:
This was with respect to an agreement.

[00:20:46] Speaker 01:
Doesn't that mean that if we thought that this was ambiguous, that we have to send it back?

[00:20:52] Speaker 01:
Because we don't apply Chevron-like analysis where the agency thought everything was absolutely clear, plain language.

[00:21:00] Speaker 06:
Right.

[00:21:01] Speaker 06:
Well, I think the court could decide that deference should be given to the agency's reading here, even if the contract is considered unambiguous, because the commission has been delegated express authority to regulate these types of contracts, and it has technical expertise.

[00:21:19] Speaker 01:
Well, were they not given the same authority in the Braintree and the Ameren cases?

[00:21:24] Speaker 01:
It is true we don't have to do that, but only by violating our own precedence.

[00:21:28] Speaker 01:
Is that right?

[00:21:29] Speaker 06:
I understand that, Your Honor.

[00:21:34] Speaker 06:
I agree.

[00:21:35] Speaker 06:
I just think it is... There's still pretty much a precedent that court could rely upon, I believe.

[00:21:41] Speaker 00:
What other presidents?

[00:21:44] Speaker 06:
The National Fuel Gas Supply and LOMAC petroleum cases.

[00:21:47] Speaker 00:
I mean, the remand would be pointless, presumably, because they'll just say that was the best reading of this contract, but this is still the best reading of the contract done.

[00:21:55] Speaker 00:
But yeah, it's not like a statutory ambiguity in case.

[00:22:00] Speaker 06:
Right, that is right.

[00:22:01] Speaker 00:
So pointless remands for though are not unheard of.

[00:22:05] Speaker 01:
Can I ask about, you said that the parties were

[00:22:10] Speaker 01:
Skilled and experienced?

[00:22:12] Speaker 06:
Yes.

[00:22:13] Speaker 01:
So if that's the case, why didn't they just say at the end of 8.63, add a sentence that says, and 8.7.22 doesn't apply?

[00:22:25] Speaker 01:
Because instead, what we have here is one paragraph that says you don't have to replace remedial action.

[00:22:34] Speaker 01:
And another paragraph that says, again, without equivocation, extremely sweeping language, each party shall avoid imposing undue burdens on the interconnected electric system of other parties.

[00:22:48] Speaker 06:
Well, Your Honor, I don't know why the parties drafted this particular contract in the way they did, but I will say that the exclusion in 8.6.3 is extremely specific, and when you look at 8.7.2, the avoid imposing undue burdens language is

[00:23:11] Speaker 06:
is not necessarily clear.

[00:23:15] Speaker 04:
Well, the elimination of the remedial action or the relief from the remedial action obligation under the expiring contract, if we think that is taken care of or excused by 8.6.3,

[00:23:34] Speaker 04:
Then isn't the question whether the new interconnection agreement, if that's what it's called, the new contract between PG&E and State Water, is that something that imposes an undue burden?

[00:23:54] Speaker 04:
Is it your position that as a legal matter, you don't look at that for undue burden or that you did but you found no undue burden?

[00:24:02] Speaker 06:
In that proceeding about the interconnection agreements... Determination proceeding?

[00:24:08] Speaker 06:
Correct.

[00:24:09] Speaker 06:
Determination proceeding.

[00:24:10] Speaker 06:
The standard there is whether it's just and reasonable to approve the interconnection agreement.

[00:24:16] Speaker 06:
And the commission found it was just and reasonable to approve it.

[00:24:19] Speaker 04:
I guess as a legal matter, is part of the just and reasonableness inquiry there whether it imposes an undue burden?

[00:24:27] Speaker 06:
No, no, Your Honor.

[00:24:29] Speaker 06:
I think that the question of whether it imposes an undue burden would be a proceeding arising under the operation agreement itself, the agreement that's between transmission agency PG&E and the other owners of the intertie.

[00:24:43] Speaker 06:
With respect to PG&E's separate contractual relationship with its customers, State Water,

[00:24:49] Speaker 06:
There's no reason to impose a standard from a different contract into that proceeding.

[00:24:57] Speaker 04:
So in the termination proceeding, the petitioners here were asserting both that the relief from the remedial action was in violation of the operation agreement and that the new contract

[00:25:19] Speaker 04:
under Kaizo was imposing an undue burden, and FERC found no, it wasn't imposing an undue burden.

[00:25:29] Speaker 04:
What is the basis for that latter determination that there was no undue burden

[00:25:37] Speaker 04:
given that now you had presumably the same load as previously, but without an accompanying remedial action.

[00:25:46] Speaker 04:
Just so as a practical matter as opposed to a legal matter, was there any examination of that?

[00:25:51] Speaker 06:
I think the Commission found that

[00:25:56] Speaker 06:
This is where the commission's consideration of the California ISO studies was relevant.

[00:26:03] Speaker 06:
And the commission credited the California ISO studies that there would be no reliability impacts as a result of losing the reveal.

[00:26:12] Speaker 01:
Where did they credit it?

[00:26:13] Speaker 06:
That's the part I'm having difficulty finding.

[00:26:18] Speaker 06:
The termination rehearing order, paragraph 19, JA 2335.

[00:26:25] Speaker 01:
So in paragraph 19 is a description of the earlier decision.

[00:26:30] Speaker 01:
And it says, the commission further considered the merits of CASOS studies, which demonstrated that termination

[00:26:38] Speaker 01:
dot, dot, dot, would have de minimis economic impacts.

[00:26:40] Speaker 01:
That's what you're talking about, right?

[00:26:42] Speaker 06:
Oh, right.

[00:26:42] Speaker 06:
And on the next page, at 2336... Yeah.

[00:26:46] Speaker 01:
That's where I am.

[00:26:47] Speaker 01:
On page 23... Is that what you're talking about, where it says, the Commission relied on these factors when it determined that the termination was just and reasonable?

[00:26:55] Speaker 06:
Yes, right.

[00:26:56] Speaker 06:
The commission further considered the merits of CAISO studies, which demonstrated that the termination of the remedial action schemes would not reduce the path rating of the entretie and would have de minimis economic impacts.

[00:27:08] Speaker 01:
Right.

[00:27:10] Speaker 01:
But the footnote, just footnote 33 to that, is a reference to the December 29th order.

[00:27:18] Speaker 01:
And it's a reference to paragraph 55, which is in the section

[00:27:23] Speaker 01:
in which the Commission is merely describing the answers and is before the section where the Commission's determination begins, which is Part D. So I don't understand how if you merely describe both sides' arguments, because of course the other side argued that it wasn't de minimis,

[00:27:46] Speaker 01:
how that becomes a finding unless you actually say, and we agree with queso.

[00:27:51] Speaker 01:
But they never say that in the order.

[00:27:54] Speaker 01:
They only say that in the rehearing order by citing something that doesn't say that.

[00:27:59] Speaker 01:
That seems like a problem to me.

[00:28:01] Speaker 06:
Well, I think the commission said it and relied on these factors when it determined that termination of the comprehensive agreement was just and reasonable.

[00:28:12] Speaker 01:
You think they did that for the first time in the order denying rehearing?

[00:28:16] Speaker 01:
Is that the idea that that's the first time that they actually considered those factors and made that determination?

[00:28:21] Speaker 06:
No.

[00:28:21] Speaker 06:
I mean, it may have been.

[00:28:22] Speaker 06:
It's more generally stated.

[00:28:24] Speaker 06:
But going back to the complaint rehearing order.

[00:28:27] Speaker 01:
If you say it by the date, it'll help, because they all title the same thing.

[00:28:33] Speaker 06:
Sorry.

[00:28:34] Speaker 06:
February 24, 2015 order.

[00:28:36] Speaker 01:
Yes.

[00:28:36] Speaker 01:
Go ahead.

[00:28:41] Speaker 06:
The commission, beginning at JA 1451, paragraph 55 through 61, the commission actually goes through a number of submissions and arguments by different parties.

[00:28:59] Speaker 06:
And it concludes at paragraph 61 as discussed.

[00:29:03] Speaker 06:
This is a joint appendix, are you on?

[00:29:04] Speaker 06:
I'm sorry, joint appendix 1453?

[00:29:09] Speaker ?:
Yes.

[00:29:10] Speaker 06:
Paragraph 61, the commission concludes that Tank has not met its burden of establishing that PG&E has breached the operation agreement.

[00:29:18] Speaker 01:
And prior to that... So the very next sentence says, this being so, we not need turn to the issue of financial consequences.

[00:29:27] Speaker 01:
And on 1451, which is the beginning of that section, paragraph 55, it says, given our decision to deny the complaint, the commission did not need to specifically address the impact of the expiration of the comprehensive agreement on transfer capability in the region as a whole.

[00:29:44] Speaker 01:
So that sounds like, at least it sounded like to me, that this was a construction of the contract issue, and therefore they didn't, and in their construction of the contract, they didn't have to consider these burdens.

[00:29:56] Speaker 01:
Not that they considered the burdens and decided they were undue.

[00:29:59] Speaker 01:
What's wrong with what I'm saying?

[00:30:01] Speaker 06:
I hear what you're saying, Your Honor.

[00:30:04] Speaker 06:
I think that it's important to remember the Commission recognized that transfer capability, at least available transfer capability, which is what we're discussing in this case, fluctuates.

[00:30:17] Speaker 06:
like on a day-to-day basis.

[00:30:18] Speaker 06:
I mean, it fluctuates in connection with various system operations.

[00:30:22] Speaker 06:
So the commission actually asked the parties to discuss the potential impacts on transfer capability.

[00:30:29] Speaker 06:
And as I understand it, the parties are still in discussions with the agency's dispute resolution division to discuss possible impacts.

[00:30:39] Speaker 06:
And perhaps this really goes back to the standing issue and the fact that transmission agency

[00:30:45] Speaker 06:
just fail to beat its burden, well, strike that, you know, not on America's understanding issue.

[00:30:51] Speaker 06:
Transmission agency has not shown that there will necessarily be an actual reduction in transfer capability, an actual harm as a result of these orders.

[00:31:03] Speaker 04:
I'm a little puzzled why it isn't, and I'm not an expert in this field, let me just say, I'm a little puzzled why part of FERC's argument isn't that

[00:31:14] Speaker 04:
under the new type of contracts, there is a,

[00:31:22] Speaker 04:
fee that is going to fluctuate depending on, for example, congestion.

[00:31:27] Speaker 04:
Yes.

[00:31:28] Speaker 04:
And so isn't the part of the response that if bringing state water in or allowing state water to continue in place is going to burden the intertie, state water is going to have to pay more for that?

[00:31:45] Speaker 04:
Or I guess the question is distributed than maybe several other

[00:31:49] Speaker 04:
clients have to pay more and they think that it should be on PD&E and state water, but it's just puzzling where the evidence is the same, where in fact the whole basis of contracting has changed and none of the briefing really takes account of that.

[00:32:03] Speaker 04:
I'm trying to make sense of that.

[00:32:06] Speaker 06:
No, I understand, Your Honor.

[00:32:08] Speaker 06:
The context was certainly important to the Commission's consideration.

[00:32:11] Speaker 06:
I mean, we're

[00:32:13] Speaker 06:
moving away from this world of firm transmission capacity into a world of competitive markets where people are requesting transmission capacity in real time.

[00:32:22] Speaker 06:
And yes, you're right, in identifying congestion charges, this is a charge that the California ISO imposes when

[00:32:34] Speaker 06:
you know, when there's a lot of demand simultaneously.

[00:32:39] Speaker 06:
So I don't believe, as far as I know, you know, there was no showing by transmission agency that, you know, that there would have to be additional payments, you know, that congestion charges would rise.

[00:32:50] Speaker 06:
I mean, I think that's where the California ISO's evidence that economic impacts would be de minimis.

[00:32:57] Speaker 06:
I think that's where it ties in, you know,

[00:33:00] Speaker 04:
Now, the transmission agency responds to your reliance or, you know, punitive reliance on the Kaizo finding of de minimis burden by saying, that's Kaizo, we're outside of Kaizo.

[00:33:14] Speaker 04:
We have other evidence that shows a much more significant burden.

[00:33:18] Speaker 04:
And I don't see FERC having made findings that account for that.

[00:33:23] Speaker 06:
Oh, right.

[00:33:24] Speaker 06:
So to clarify, the CAISO is – it is a grid operator, but it is also the designated pass operator for the California-Oregon intertie.

[00:33:36] Speaker 06:
And in that capacity, under the contract, it actually has

[00:33:41] Speaker 06:
It has a duty to perform its obligations independently of the parties and without preference or undue discrimination.

[00:33:52] Speaker 06:
That is HAA 119 if you want to take a look at it.

[00:33:58] Speaker 06:
So the California ISO actually performed studies in 2013 in its capacity as path operator.

[00:34:05] Speaker 06:
on behalf of and in coordination with all of the parties to the intertie.

[00:34:10] Speaker 06:
And that study showed that any potential reductions in transfer capability would be extremely limited, that there are potential to begin with, and that they would be extremely limited.

[00:34:24] Speaker 06:
We're talking about potential congestion in like one half of a percentage of cases, something along those lines.

[00:34:31] Speaker 04:
Did it have and deal with the kind of evidence that transmission agency is reported in this record?

[00:34:39] Speaker 06:
I think so.

[00:34:40] Speaker 06:
I think the transmission agency in California ISO were looking at the same things.

[00:34:45] Speaker 06:
The transmission agency evidence on this issue was primarily, I believe, the testimony of Larson.

[00:34:53] Speaker 06:
And that testimony is all about potential reductions in transfer capability.

[00:35:00] Speaker 06:
And the transmission agency complaint itself says that they were

[00:35:06] Speaker 06:
they were using information and assumptions used by the California ISO as path operator.

[00:35:12] Speaker 06:
That's the complaint paragraph 45, JA 46.

[00:35:16] Speaker 04:
Is it your position in terms of, I mean, as part of your ripeness argument, is it your position that if greater burdens than CAISO currently anticipates do materialize, that the

[00:35:36] Speaker 04:
the petitioners that hear could come back and bring a new breach case and would not in any way be concluded by a determination in this case.

[00:35:48] Speaker 06:
Yes, absolutely.

[00:35:49] Speaker 06:
The petitioners could bring a new case to the Commission to the extent that there's a right harm, to the extent that something actually happens where, say, their allocation of transfer capability on a system actually drops off significantly.

[00:36:05] Speaker 06:
They could certainly bring a complaint to the Commission, and the Commission could look at that and determine whether

[00:36:12] Speaker 06:
whether there actually has been a breach of one of these provisions, 8.7.2 or otherwise.

[00:36:18] Speaker 01:
I thought the commission's position was it doesn't matter that the remedial action section sweeps all this in.

[00:36:28] Speaker 01:
Isn't that right?

[00:36:29] Speaker 06:
Well, right.

[00:36:30] Speaker 06:
So at the time, there was no reason, because of the remedial action exclusion in 8.6.3, there was no reason to require PG&E to do anything.

[00:36:40] Speaker 01:
But didn't the commission conclude that that section overrides the undue burden section?

[00:36:48] Speaker 06:
It did.

[00:36:48] Speaker 06:
It did.

[00:36:49] Speaker 01:
So this is a case in which one of the parties, in fact the complainant, in a FERC

[00:36:56] Speaker 01:
proceeding lost, and your position is that they have no standing to appeal FERC's interpretation of the contract?

[00:37:06] Speaker 01:
Until they can show they're harmed by FERC's interpretation of the contract?

[00:37:09] Speaker 06:
Yes, it is our position that the petitioner is under the obligation of showing that it has Article III standing to appeal in this court.

[00:37:17] Speaker 01:
So normally we say that if you're actually the subject of the adjudication,

[00:37:22] Speaker 01:
Unless it's an adjudication for which you didn't have to have standing in the first place, you have standing.

[00:37:28] Speaker 01:
In an ordinary contract case, if the party loses, do we say they can't appeal unless, or they can't even bring their case to court unless they can show that they're injured by the construction of the contract?

[00:37:41] Speaker 06:
I think that

[00:37:47] Speaker 06:
I think there has to be an injury under traditional standing cases.

[00:37:53] Speaker 00:
They're the party, though.

[00:37:55] Speaker 00:
I mean, the standing argument seems very weak to me.

[00:37:59] Speaker 06:
Well, in this one thing to remember.

[00:38:02] Speaker 00:
Or I should say the lack of standing argument seems weak.

[00:38:04] Speaker 06:
Understood.

[00:38:05] Speaker 06:
Understood.

[00:38:06] Speaker 06:
In the context of this case, I mean, transfer capability is just such a moving target.

[00:38:11] Speaker 06:
And there's not necessarily a one-to-one correspondence of loss of remedial action and a drop in transfer capability.

[00:38:19] Speaker 06:
And when you go back to the evidence that was offered by Mr. Larson,

[00:38:25] Speaker 06:
he had said that there would be a loss in transfer capability under certain conditions, like high water levels, and also if PG&E didn't put certain transmission upgrades in place.

[00:38:36] Speaker 06:
I mean, so that's, I mean, these are highly complicated systems that where there are numerous interconnections, and one thing that happens in one part of the system

[00:38:45] Speaker 06:
may be offset by something that happens elsewhere on the system.

[00:38:48] Speaker 01:
Just so I'm clear on what you think the Commission did, did the Commission decide that the undue burden provision was not relevant in light of the proviso in the replacement provision?

[00:39:00] Speaker 01:
Or did it decide that there was no undue burden at all here?

[00:39:05] Speaker 06:
I think the commission decided that transmission agency failed to show that there was an undue burden.

[00:39:11] Speaker 01:
And can you tell me where?

[00:39:12] Speaker 01:
I see the paragraph that you're talking about.

[00:39:14] Speaker 01:
It doesn't mention undue burden.

[00:39:16] Speaker 01:
You're talking about paragraph 19 of the hearing of the rehearing order.

[00:39:20] Speaker 06:
Right.

[00:39:21] Speaker 06:
I think it's I understand it's a very general statement.

[00:39:24] Speaker 06:
But I believe the complaint rehearing order, when it says that tank has not met its burden of establishing the PG&E has breached the operation agreement, I think

[00:39:35] Speaker 06:
That encompasses 8.7.2.2.

[00:39:37] Speaker 06:
I think it's fair to read it that way.

[00:39:40] Speaker 01:
Okay, we'll hear from Ms.

[00:39:49] Speaker 01:
Cuthy, intervener.

[00:39:50] Speaker 06:
Thank you.

[00:40:07] Speaker 05:
May it please the court?

[00:40:08] Speaker 05:
My name is Alyssa Koo, and I represent Intervenor Pacific Gas and Electric Company.

[00:40:14] Speaker 05:
If you may, I'd like to first address a question you raised about remand if you find that the contract is ambiguous.

[00:40:23] Speaker 05:
There is a case that I believe is helpful.

[00:40:25] Speaker 05:
It's Diamond International Corporation versus the FCC 627F2nd 489 DC Circuit 1980.

[00:40:36] Speaker 05:
In this case, Diamond claimed that the AT&T tariff required

[00:40:46] Speaker 05:
sorry, that they were being double-charged under both the AT&T tariff and under a local subsidiary tariff and argued that it turned on the meaning of a term arrangement.

[00:41:00] Speaker 05:
The Commission found that the meaning was clear and that the AT&T tariff was not charging them for these services.

[00:41:10] Speaker 05:
In the DC Circuit Court's decision, they didn't explicitly find that it was an ambiguous term, but they did evaluate both Diamond's argument and the Commission's decision and said it is no less reasonable to conclude that the Commission apparently

[00:41:29] Speaker 05:
found with its technical expertise that the, what the definition of the word was.

[00:41:34] Speaker 01:
I, I, um, let me just say, it's not cited, I'm not familiar with that specific case, but the dates ring a bell.

[00:41:41] Speaker 01:
So that's 1980 case.

[00:41:44] Speaker 01:
Chevron is decided in 1984.

[00:41:45] Speaker 01:
And that, and after 1984, we start applying the two-pronged Chevron test to the reading of agreements by

[00:41:55] Speaker 01:
So I'm not sure that a pre-Chevron case really applies.

[00:42:05] Speaker 01:
Am I wrong about that?

[00:42:08] Speaker 01:
What's the answer to that point?

[00:42:09] Speaker 05:
I think it's still, obviously it is pre-chevron, but it still does indicate that the commission's kind of technical expertise interpreting a term that they find to be unambiguous can still be evaluated by the court.

[00:42:31] Speaker 05:
So and then we also had,

[00:42:37] Speaker 05:
heard about the issue of section 8.6.3 versus section 8.7.2.2, kind of the duties proviso versus undue burden.

[00:42:49] Speaker 05:
And on that point, the duties proviso should not just be looked at with regard to the limited language that the petitioner cite of to operate, maintain, and replace remedial action facilities, but in terms of the entire

[00:43:05] Speaker 05:
section, which also talks about the fact that the remedial action is used to maintain the available system transfer capability at the levels that were in effect as of the effective date.

[00:43:21] Speaker 05:
And then the duties proviso says that PG&E is not obligated to replace the remedial action once the comprehensive agreement terminates.

[00:43:30] Speaker 05:
I think in the context of that language, it's clear that the parties understood that this benefit provided by the third party, DWR, that would increase the levels of the available system transfer capability was coming to an end, and therefore PG&E should not be responsible for replacing it.

[00:43:48] Speaker 05:
In contrast, section – the undue burden section, section 8.7.2.2, is a very general statement of undue burden.

[00:43:57] Speaker 05:
And the Court has found that when it's a specific term, the parties are clearly thinking about that issue and have meant to address it.

[00:44:06] Speaker 05:
If it's a general term, there's no clear intention on whether they had RAS at all in mind.

[00:44:16] Speaker 05:
In addition, then, as far as the modification term, Section 12.1, the use of the word physical is not in the contract.

[00:44:26] Speaker 05:
It's not in the operation agreement.

[00:44:27] Speaker 05:
That was the Commission's shorthand.

[00:44:30] Speaker 05:
way of referring to the fact that they looked at the definition of modification, they looked at what the definition said, and they did not find the reprogramming of the RAS controllers to not use the DWR pumps to fall within that definition.

[00:44:49] Speaker 01:
Because everything else in the definition is physical.

[00:44:53] Speaker 05:
It's more than just physical.

[00:44:55] Speaker 05:
It has very specific, it's connecting of generating facilities and loads and substation equipment, kind of improvements.

[00:45:04] Speaker 05:
It's kind of, they looked at that definition and didn't find that the reprogramming of the RAS controllers fit within that category or those categories of activities.

[00:45:20] Speaker 01:
Thank you.

[00:45:21] Speaker 05:
So on the – you also had a question on the termination – sorry, did you have a question, Nick?

[00:45:28] Speaker 01:
No, but we're over time.

[00:45:29] Speaker 01:
But I'll let you finish.

[00:45:30] Speaker 01:
It's okay.

[00:45:30] Speaker 01:
You don't have to jump back.

[00:45:31] Speaker 01:
We'll let you make your point.

[00:45:34] Speaker 05:
Thank you.

[00:45:34] Speaker 05:
Just on the question of the termination docket.

[00:45:37] Speaker 05:
There was no change, no change in the electrical characteristics, no change in the interconnections.

[00:45:44] Speaker 05:
DWR had been connected to the PG&E system for decades, and they would continue to be connected exactly the same way.

[00:45:51] Speaker 05:
The only change was, in fact, the fact that DWR wasn't participating in the remedial action scheme any longer.

[00:45:59] Speaker 05:
Thank you.

[00:46:00] Speaker 04:
And was there no change in the nature of the contract because of the, was it unbundling

[00:46:07] Speaker 04:
So I was a little mystified by that.

[00:46:09] Speaker 04:
On the one hand, the assertion that there was no change, and on the other hand, that there's actually a whole underlying change in contracting approach.

[00:46:20] Speaker 05:
Well, you are correct.

[00:46:22] Speaker 05:
The comprehensive agreement provided for PG&E to interconnect with DWR and provide transmission service.

[00:46:30] Speaker 05:
The new agreements only provided for the interconnection of PG&E and the Department of Water Resources because the transmission service would be provided by the CAISO under the CAISO tariff.

[00:46:42] Speaker 05:
So when I say no change, I mean no change in the electrical interconnections.

[00:46:47] Speaker 05:
But PG&E was no longer providing firm transmission service.

[00:46:52] Speaker 04:
And maybe this is really a question for the other side, but how is it that on the same grid, some customers are operating under the tariff system and others are operating under firm specifications?

[00:47:10] Speaker 05:
That's actually the exact problem why the comprehensive agreement had to terminate.

[00:47:16] Speaker 05:
Agreements like the comprehensive agreement were leftovers from arrangements from before the ISO commenced operations.

[00:47:24] Speaker 05:
And under commission policy, they do not want those agreements to continue unnecessarily because it creates this discrepancy between the ISO market

[00:47:36] Speaker 05:
versus these one-on-one arrangements.

[00:47:39] Speaker 05:
But to be fair to these existing transmission contract holders, like the Department of Water Resources, didn't require that they terminate prematurely, but let them sort of die out on their own.

[00:47:53] Speaker 05:
As they terminated under their own terms, they're just not allowed to.

[00:47:57] Speaker 04:
Right, but I think my question is a little bit different, which I think transmission agencies, they still operate

[00:48:02] Speaker 04:
in their bailiwick under firm service contracts.

[00:48:05] Speaker 04:
And I'm just trying to understand how those two things interact, given that the grid is one physical grid under which service and the burdens that service imposes on the physical structures cannot be differentiated.

[00:48:20] Speaker 05:
That is actually a very challenging problem of managing kind of the California independent system operator and other ISO RTOs like them.

[00:48:30] Speaker 05:
versus the entities that choose not to be, not to fall under the grid operated by the CAISO-like transmission agency.

[00:48:39] Speaker 05:
In fact, there have been other cases coming before the circuit dealing with the arrangements and how do you balance these issues.

[00:48:45] Speaker 05:
It is a very complicated balancing act between the CAISO and the other entities.

[00:48:54] Speaker 01:
Thank you.

[00:48:54] Speaker 05:
Thank you.

[00:48:55] Speaker 01:
I know the petitioner has no time, but since we've given everybody else more time, we'll give you two minutes.

[00:49:04] Speaker 02:
Thank you.

[00:49:05] Speaker 00:
Can you tell me where you raise the argument that the contract is ambiguous?

[00:49:17] Speaker 02:
Throughout our brief, we raised that it's ambiguous.

[00:49:20] Speaker 00:
That it's ambiguous.

[00:49:21] Speaker 02:
We do not argue that it's ambiguous.

[00:49:23] Speaker 02:
I apologize.

[00:49:24] Speaker 00:
You never argue that it's ambiguous, nor do you argue in the alternative that if it's ambiguous, there should be a remand.

[00:49:31] Speaker 02:
We don't state that.

[00:49:33] Speaker 00:
Right.

[00:49:34] Speaker 00:
And we don't usually consider arguments that are not made.

[00:49:36] Speaker 00:
And so I'm not sure where the ambiguity, you've been talking at least in the opening, there was some discussion about ambiguity equals remand.

[00:49:45] Speaker 00:
You've never made that argument.

[00:49:47] Speaker 02:
Your Honor, we do not believe the contract is ambiguous.

[00:49:50] Speaker 02:
We believe that applying this Court's standards for reviewing a contract, the contract is unambiguous.

[00:49:58] Speaker 00:
There's only a reason you didn't make that argument is because it doesn't do much for you.

[00:50:02] Speaker 02:
If the Court were to disagree with us that it is ambiguous, then clearly the Court's precedent is return the contract.

[00:50:08] Speaker 00:
You never said that in your brief.

[00:50:10] Speaker 01:
In fact, you specifically argued the contrary.

[00:50:12] Speaker 01:
We don't argue that.

[00:50:13] Speaker 01:
Your argument is it's unambiguous in the opposite direction?

[00:50:16] Speaker 02:
That is correct, Your Honor.

[00:50:17] Speaker 01:
And you want us to apply de novo review?

[00:50:20] Speaker 01:
That is correct, Your Honor.

[00:50:20] Speaker 01:
You do not want us to apply differential review?

[00:50:22] Speaker 02:
That is correct, Your Honor.

[00:50:25] Speaker 02:
Returning to just briefly to one or two points.

[00:50:29] Speaker 02:
One is the Commission's decisions with respect to the controllers that we were talking about and whether those are modifications

[00:50:41] Speaker 02:
Judge Garland's decision in Carpenter's makes clear that the Commission has to provide its reasoning.

[00:50:47] Speaker 02:
Motor vehicles, there has to be a rational connection between the facts and the choices, and the Commission didn't do that in this case.

[00:50:53] Speaker 02:
It didn't explain how it decided that, what the basis was for finding that the physical changes were not modifications.

[00:51:07] Speaker 02:
Your Honor, I think that a key factor here is the Commission decided this case on a contract basis.

[00:51:13] Speaker 02:
It made no findings of fact with respect to any of Petitioner's evidence.

[00:51:19] Speaker 02:
And in fact, we filed a

[00:51:23] Speaker 02:
complained for anticipatory breach eight months before this contract was terminating.

[00:51:29] Speaker 02:
The case was decided before the contract terminated.

[00:51:32] Speaker 02:
Since termination occurred, petitioners have carefully tracked impacts and there have been just as forecasted

[00:51:40] Speaker 02:
in their testimony significant impacts on petitioners because the capability of the system was reduced by the grid operator, the California ISO, because of the loss of remedial action.

[00:51:53] Speaker 02:
So exactly what we said in the direct case has occurred.

[00:51:57] Speaker 02:
And that's why this case is live before this court.

[00:52:01] Speaker 02:
It is not a situation where we can wait for the next case.

[00:52:05] Speaker 02:
We are burdened now and seek relief at this point.

[00:52:09] Speaker 04:
If we were to credit Burke's reliance on the CAISO study, it's not – I know you say, well, we're not under CAISO, but isn't the point that you're concerned that because it's all interconnected that if CAISO has less capacity, that will burden the intertie that you control?

[00:52:33] Speaker 04:
But if CAISO says, no, we're keeping our house in order, we're not overflowing, then why isn't that a sufficient response to your evidence?

[00:52:43] Speaker 04:
I understand you have different facts, but the commission didn't embrace them.

[00:52:47] Speaker 02:
The owners of the lines share the capacity equally among the three lines, which gets one third.

[00:52:53] Speaker 02:
And as the capacity is reduced because of the loss of remedial action,

[00:53:01] Speaker 02:
Petitioners pick up one-third of the reduction and so we are burdened by the loss of remedial action.

[00:53:07] Speaker 02:
The California customers served by the California ISO have incurred substantial costs because of the loss of remedial action.

[00:53:16] Speaker 02:
That's their problem and they don't seem to argue that so we're leaving that alone.

[00:53:20] Speaker 02:
But our problem is we operate

[00:53:23] Speaker 02:
in a different balancing authority.

[00:53:27] Speaker 02:
And so we are affected.

[00:53:28] Speaker 02:
We can't reserve share with the Pacific Northwest.

[00:53:31] Speaker 02:
We can't import as much power as we want hydro and wind from the Pacific Northwest.

[00:53:37] Speaker 04:
And if you lose on the reading of the replacement of remedial action provision, that

[00:53:46] Speaker 04:
You don't have another way of raising those burdens, right?

[00:53:49] Speaker 04:
It all rises or falls based on?

[00:53:52] Speaker 02:
Well, we do through the interconnection, the new interconnection agreements, Your Honor.

[00:53:56] Speaker 02:
The new interconnection agreements impose undue burdens on.

[00:54:00] Speaker 04:
But relative to what?

[00:54:01] Speaker 04:
Isn't your argument still going back to the situation with the remedial action as your baseline?

[00:54:08] Speaker 04:
You say the burden is undue because compared to what the situation was with the remedial action,

[00:54:14] Speaker 04:
that state water was providing, now there's a burden.

[00:54:19] Speaker 04:
But if you say, well, no, it was legitimate to eliminate that remedial action, then it's not a burden.

[00:54:26] Speaker 02:
The question of undue burden is a question of fact that the Commission will make, and they haven't made that.

[00:54:34] Speaker 02:
But our argument is that the capacity of the lines are rated at 4,800 megawatts, and no one disputes that.

[00:54:41] Speaker 02:
And that's the measure.

[00:54:43] Speaker 02:
To the extent that we are below 4,800 megawatts, we need to assess why are we below it.

[00:54:49] Speaker 02:
And the engineering analysis shows it's because PG&E's lines

[00:54:54] Speaker 02:
can't carry the capacity that's needed.

[00:54:56] Speaker 02:
And so that's the undue burden that we would argue.

[00:55:02] Speaker 02:
I see a lot of time, Your Honor.

[00:55:04] Speaker 01:
Thank you very much.

[00:55:04] Speaker 01:
We'll take the matter under submission.

[00:55:06] Speaker 01:
We'll give the other next case lawyers a chance to move up and we'll take a brief break.