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PACIFIC GAS AND ELEC. CO. v. LYNCH

July 25, 2002

PACIFIC GAS AND ELECTRIC CO, PLAINTIFF,
V.
LORETTA M LYNCH, HENRY M DUQUE, RICHARD A BILAS, CARL W WOOD AND GEOFFREY F BROWN, IN THEIR OFFICIAL CAPACITIES AS COMMISSIONERS OF THE CALIFORNIA PUBLIC UTILITIES COMMISSION, DEFENDANTS. THE UTILITY REFORM NETWORK, INTERVENOR.



The opinion of the court was delivered by: Walker, District Judge.

  ORDER

By its complaint, Pacific Gas and Electric Company (PG & E) attacks the regulatory restructuring scheme California developed and later implemented for its electrical public utilities. PG & E names as defendants Loretta M Lynch, Henry M Duque, Carl W Wood, Geoffrey F Brown and Michael R Peevey*fn1, in their official capacities as Commissioners of the California Public Utilities Commission (CPUC). PG & E has moved for summary judgment on its first and second claims for relief (Doc # 111) while defendants have filed cross-motions for summary judgment or, in the alternative, for partial summary judgment on PG & E's preemption claims. Doc # 104. Applicant in intervention The Utility Reform Network (TURN) also moves for summary judgment against PG & E. Doc # 119.

I

A

PG & E filed its original complaint against defendants on November 8, 2000, in this court, bringing the same claims as in its present complaint, with the addition of an equal protection claim. See Compl in PG & E v. Lynch, et al, No C-00-4128 (SBA) (NDCal), in PRJN I (Doc # 49, Exh # 3). That action was subsequently transferred to Judge Lew in the Central District of California, who was presiding over a similar lawsuit filed by Southern California Edison (SCE). After PG & E amended its complaint, defendants moved to dismiss. See Def Mot in PG & E v. Lynch, et al, No C-01-1083-RSWL (SHx) (CDCal), in PRJN I (Doc # 50, Exh # 11). On May 2, 2001, Judge Lew granted defendants' motion to dismiss without prejudice on ripeness grounds, because "many of the decisions to which PG & E refers in its [first amended complaint] as violating federal law are non-final interim orders that will become final upon a grant or denial of rehearing." 5/2/01 Order at 38, attached in PRJN I (Doc #49, Exh #2). Judge Lew noted that PG & E could refile its complaint once the "CPUC interim orders it challenges become final decisions." Id at 39.

On August 8, 2001, PG & E filed the instant action before Judge Hamilton in this court, asserting that two of the orders central to its complaint had become final under state law. See Compl in PG & E v. Lynch, et al, No C-01-3023-PJH (Doc # 1). On September 24, 2001, defendants moved to dismiss PG & E's complaint. Doc # 24. Also on September 24, TURN moved to intervene and to dismiss PG & E's complaint. Docs ## 18 and 20. On December 18, 2001, the undersigned determined that C-01-3023-PJH was related to a bankruptcy appeal brought by PG & E and pending before the undersigned, C01-2490-VRW, and C-01-3023-PJH was reassigned to the undersigned.

The court heard oral argument on defendants' and TURN's motions to dismiss on February 7, 2002. See Doc # 85. At the March 7, 2002, case management conference, the court determined that the court's consideration of the issues raised would benefit from a further development of the record and set a hearing date on any summary judgment motions for May 24, 2002. See Doc # 90.

B

The instant action is one of many filed in response to California's attempt to restructure its regulatory scheme for the generation and sale of electricity. As codified in Assembly Bill 1890 (AB 1890), California's restructuring reflected the CPUC's determination that:

the interests of the ratepayers and the state as a whole will be best served by moving from the regulatory framework * * * in which retail electricity service is provided principally by electrical corporations subject to an obligation to provide ultimate consumers in exclusive service territories with reliable electric service at regulated rates, to a framework under which competition would be allowed in the supply of electric power and customers would be allowed to have the right to choose their supplier of electric power.

CalPubUtilCode § 330.

California's restructuring scheme involved the creation of two new non-governmental corporations to orchestrate the transmission and sale of electricity, organized under California law but regulated by the Federal Energy Regulatory Commission (FERC): the Independent System Operator (ISO) and the California Power Exchange (PX).

Before it ceased operation, the PX operated a continuous state-wide auction, matching bids for the sale and purchase of wholesale electricity. Bidders of supply into the PX included independent generators of electricity, and other entities that had purchased electricity from such generators for resale. The PX matched these supply bids with requirements for the delivery of electricity, as expressed by demand bids from buyers. Starting in July 1999, a division of the PX, CalPX Trading, operated a block forward market (BFM), an exchange that matched bids to buy specified amounts of power for various time periods with offers to sell power for the same periods in advance of the contracted delivery date. BFMs provided a degree of predictability in the future cost of power.

The ISO, which continues to operate, assumed control over the transmission systems of all three of California's investor-owned utilities (IOUs): PG & E, SCE and San Diego Gas & Electric Co. (SDG & E). The ISO operates the electrical grid for the state and purchases power as necessary to ensure non-discriminatory access and system reliability. Although PG & E continues to own its transmission system, the ISO has operational control. At all times relevant to PG & E's complaint, if PG & E's customer demand was not met by scheduled supplies into the PX or other sources, the ISO was required to procure additional electricity to serve PG & E's requirements and maintain the stability of the grid. See Compl (Doc #1) at ¶ 120.

Prior to August 3, 2000, the CPUC required PG & E to procure electricity solely through the PX, unless, as discussed above, PG & E's customer demand could not be met by the scheduled power supply available on the PX. After August 3, 2000, the CPUC authorized PG & E, and the other California IOUs, to purchase a limited amount of wholesale electricity through bilateral contracts outside the PX and ISO markets, subject to certain restrictions. See Kubitz Decl (Doc # 115) at ¶¶ 4-9. As a consequence of this regulatory change, PG & E has divided its preemption claim into two parts: one concerning the period before August 3 and one concerning the period after.

In order for AB 1890 to be implemented and for the PX and ISO to begin operation, the FERC, which has jurisdiction to regulate the sale of electricity in interstate commerce, was required to approve certain filings by the ISO, the PX and the IOUs. Beginning in late 1996, as part of the shift to a competitive electricity market, the FERC granted a series of requests by owners of generation plants, including the IOUs and recent purchasers of plants previously owned by the IOUs, for authorization to sell electricity on the PX and other wholesale markets at market-based rates. PG & E during restructuring would be both a purchaser and a seller of electric wholesale power.

In enacting AB 1890, the California legislature did not effect an immediate transition to this new regime. Rather, California imposed a rate freeze on retail rates during a transition period. This transition period was set to end the earlier of March 31, 2002, or the date that the IOUs recovered so-called "stranded costs."

Addressing stranded costs is a central problem in restructuring electricity markets. Stranded costs are historic investments and contractual obligations of the utilities that exceed the value of the underlying assets in a competitive environment. Examples of stranded costs are the expenses of certain generating plants or long-term power supply contracts that cannot be recovered from customers through competitive electrical prices. Historic investments in transmission lines and facilities, which, in a competitive market must be made available to competitors, are also considered stranded costs. Because such costs were incurred during a period when IOUs operated pursuant to a cost-of-service regulatory scheme, IOUs would be burdened upon the introduction of a competitive retail market with costs not borne by other entries into the market. Bearing these stranded costs placed IOUs at a competitive disadvantage to electricity generators not similarly saddled with such costs. AB 1890 sought to level the playing field.

One way of addressing stranded costs — the route chosen by California — is to allow IOUs a limited opportunity to recover stranded costs before the introduction of competition. It would, of course, be possible to permit such a transition period to extend indefinitely, until stranded costs were completely recovered. This route, however, would delay the introduction of market incentives for an indeterminate period. California's approach was to introduce both market incentives, in the form of a time constraint, and state mandated retail pricing. Under this regime, PG & E, in theory, had both the opportunity and incentive to maximize its surplus during the transition period.

During the transition period, AB 1890 temporarily froze the utilities' retail rates at the levels in effect on June 10, 1996, subject to a 10% rate reduction for residential and smaller business customers. The rate reduction and retail price freeze was predicated on an assumption that proved in retrospect to be wildly inaccurate: namely, wholesale prices achieved under FERC's transition to market-based rates would be sufficiently lower than in recent years as to provide "headroom" (i e, excess of retail over wholesale prices). The purpose of this "headroom" was to allow utilities to recover their stranded costs.

AB 1890 charged the CPUC with implementing the ratemaking elements of the bill. Among its responsibilities, the CPUC was directed to determine the stranded costs eligible to be recovered during the transition period and the methods by which the utilities could recover their stranded costs. CalPubUtilCode §§ 367369. Since 1996, the CPUC has issued a series of decisions interpreting AB 1890 and determining the mechanisms for the recovery and accounting of the recovery of stranded costs, as well as the costs of providing electric service during the transition period.

The CPUC established two accounts as the primary mechanisms for tracking costs and revenues during the rate freeze. The first, the transition recovery account (TRA), is used to record operating costs and retail revenues. The second, the transition cost balancing account (TCBA), tracks the recovery of stranded costs. During the rate freeze, retail revenue in excess of cost recorded in the TRA is charged to customers, appearing on customer bills as a competitive transition charge (CTC). When the retail rates during the rate freeze exceeded the cost of providing electricity, as was supposed regularly to occur, California customers paid higher energy bills than they would have before the beginning of the transition period, thereby subsidizing the shift to a competitive market.

The original accounting rules, promulgated by the CPUC in 1997 in Resolution E-3514, provided that both debit balances (liabilities) and credit balances (headroom) would be transferred from the TRA to the TCBA each month during the rate freeze. See Res E-3514, in DRJN (Doc # 106, Exh F). In 1998, the CPUC adopted Resolution E-3527, which changed this rule retroactively and specified that only credit balances in the TRA would be transferred to the TCBA at the end of each month. See Res E-3527, in DRJN (Doc # 106, Exh G). Under this accounting system, PG & E could pay down its stranded costs in months in which revenues exceeded costs. When revenues from frozen rates were insufficient to cover operating costs recorded in the TRA, however, the TRA account accumulated an "undercollection" which was carried over to the following month for recovery and was not set against previous stranded cost recovery. Defendants assert, and PG & E does not dispute, that in the first two years of the transition period, before the prices of wholesale energy in California soared, PG & E was able to transfer billions of dollars of excess revenues from the TRA to the TCBA, paying down stranded costs. See DefBr (Doc # 104) at 8.

Beginning in June of 2000, however, the market-based prices of wholesale electricity in California soared dramatically, setting off a crisis in the California energy market. As wholesale prices soared, PG & E's ability to pay down the approved stranded costs in the TCBA suffered and instead, PG & E began to accumulate massive deficits in its TRA. Between June 2000 and January 31, 2001, PG & E alleges that its wholesale energy costs exceeded the amount available in frozen retail rates by approximately $8.3 billion. As PG & E began to accumulate crippling debt in order to finance the cost of buying electricity on the expensive wholesale market, PG & E's credit rating deteriorated. See PlOppBr (Doc # 148) at 7. PG & E defaulted on commercial obligations and ultimately was forced to seek protection from its creditors by filing for bankruptcy on April 6, 2001.

PG & E blames its debt and bankruptcy on the CPUC's refusal to dissolve the rate freeze and raise retail rates concurrently with the spike in electricity wholesale prices. Defendants, on the other hand, contend that PG & E accepted the risk that prices would exceed frozen rates and expressly relied on the existence of that risk in its appeal to the FERC for marketbased wholesale pricing. Defendants also contend that PG & E, in fact, did not suffer any total debt during the period of the rate freeze, despite the spike in wholesale prices, and was, in fact, able to pay down some substantial portion of its stranded costs. This contention is based, in part, on an adjustment by the CPUC in the accounting rules governing the rate freeze, adopted during the energy crisis.

In that time frame, specifically, on October 17, 2000, TURN, an advocacy group, filed a petition with the CPUC, requesting that the CPUC modify the accounting rules for tracking PG & E's recovery of stranded costs and, correspondingly, determining the end of the rate freeze. TURN's proposal, which it refers to as a "true-up," would require that, beginning January 1, 1998, both negative and positive balances in the TRA would be transferred to the TCBA on a monthly basis, as opposed to only positive balances (headroom) being transferred. This accounting change was to have a couple of effects. First, it would require excess revenue previously applied to pay down stranded costs instead first to be applied to offset undercollection caused by the soaring prices in the wholesale energy market. Second, by increasing the balance to be paid down in the TCBA in months in which the TRA was undercollected, the TURN accounting change would extend the period of the rate freeze.

One effect of the California energy crisis is that it reversed the incentives of some market actors. When AB 1890 was initially approved, PG & E benefitted from the transition period, which allowed PG & E an extended opportunity to recover the costs of its historic investments that would otherwise be uneconomic upon an immediate transition to a competitive regime. When the frozen rates became insufficient to cover increasing energy costs, however, PG & E, on the retail side at least, would benefit from an immediate end to the retail rate freeze. As a result, on November 8, 2000, while TURN's proposal was pending with the CPUC, PG & E filed its initial complaint in this matter, alleging that the CPUC's actions, including its consideration of the TURN "true-up," exceeded its authority by failing to allow PG & E to recover its energy procurement costs concurrently in retail rates.

During this same period, PG & E repeatedly petitioned the CPUC for rate increases. In November 2000, PG & E sought the CPUC's approval of an emergency rate stabilization plan, including a proposal to increase retail rates to recover PG & E's undercollection. After holding emergency hearings and ordering outside audits of PG & E's financial condition, the CPUC rendered a decision on January 4, 2001, ordering a $.01/kWh emergency surcharge to help pay for future procurement costs. See D01-01-018 in PRJN II (Doc # 117, Exh # 14).

On March 27, 2001, the CPUC issued D01-03-082, which is the central CPUC decision challenged by PG & E. See D01-03-082 in PRJN II (Doc # 117, Exh # 12). This decision approved a further $.03/kWh surcharge increase for the electric utilities' retail rates. More significantly for present purposes, however, D01-03-082 also adopted the TURN proposal for the accounting "true-up." As a result, the CPUC modified its current accounting rules to require that each month the balance in the TRA be transferred to the TCBA, whether positive or negative. See id. at 30. The effective date of the accounting changes was January 1, 1998, the date when Resolution E-3527 took effect. In enacting the decision, the CPUC noted that, in retrospect, the accounting rules of Resolution E-3527 contravened the principles of AB 1890, and that the "true-up is necessary to correct inequities in the current accounting rules which make it appear that the utilities have fully collected their stranded capital costs, while at the same time recording monthly liabilities of billions of dollars in operating costs." Id. at 28.

The true-up accounting decision is central to the instant dispute as it requires PG & E, in general terms, to set its total losses against its total revenues before applying any surplus revenue to paying down its stranded costs. Besides resulting in the recovery of fewer stranded costs, therefore, the enactment of this decision was likely to extend the period of the rate freeze. As the decision was adopted during the wholesale price spike, PG & E was understandably against its adoption.

Judge Lew dismissed PG & E's original complaint largely because D01-03-082 was not yet final. After this decision became final, PG & E re-filed its complaint, with minor adjustments. In its complaint, PG & E alleges that state law, as interpreted and applied by defendants, commissioners of the CPUC, caused it severe financial harm. Compl (Doc # 1) at ¶ 2. PG & E seeks injunctive and declaratory relief to prevent and restrain defendants from "continuing to violate federal law by denying PG & E recovery of its wholesale electricity procurement and transmission costs in retail rates." Id. at ¶ 3. PG & E's complaint is built on its preemption claims, which place heavy reliance on a somewhat esoteric, although tremendously important, regulatory doctrine: the "filed rate doctrine." In particular, PG & E argues that because its electricity costs were incurred pursuant to rate schedules filed with the FERC, the CPUC was required, effectively, to end the rate freeze and raise retail rates once wholesale costs exceeded frozen rates. PG & E also alleges that defendants' actions violate the Takings Clause of the Constitution, the Due Process Clause and the Commerce Clause.

II

Before addressing the substance of the summary judgment motions, the court must first address several preliminary matters.

A

First, the court must address TURN's motion to intervene (Doc # 18), filed concurrently with its motion to dismiss. Doc # 20. TURN is a nonprofit organization that is, in its words, "devoted to protecting the interests of residential and small-commercial consumers of electricity, natural gas and telephone services." TURN Inter B.R. (Doc # 18) at 1-2. TURN has been an active participant in the proceedings forming the basis of PG & E's lawsuit, as well as all litigation stemming from these proceedings. TURN played an active role in the debate over AB 1890, both before and after its enactment. Id at 2. Although TURN generally opposed the CPUC's decision to restructure the energy market, as AB 1890 legislation became inevitable, TURN redirected its efforts to push for the inclusion of rate relief for consumers and small business as part of the restructuring. Id at 3.

PG & E filed a statement of non-opposition to TURN's motion to intervene. This statement, however, amounts only to a non-opposition to TURN's motion to the extent TURN seeks to intervene permissively pursuant to FRCP 24(b). Doc # 44. In fact, PG & E opposes TURN's motion to intervene as of right, pursuant to FRCP 24(a), relying largely on the contention that Judge Lew's decision that TURN may only permissively intervene precludes TURN from intervening as of right in this matter. The court will not, however, apply collateral estoppel to TURN's motion. When Judge Lew ruled on TURN's motion to intervene, the accounting changes advocated by TURN had not yet been finally implemented.

FRCP 24(a) establishes four requirements for intervention as of right: timeliness; an interest relating to the subject matter of the action; practical impairment of the party's ability to protect that interest; and inadequate representation by the parties to the suit. Idaho Farm. Bureau Fed'n v. Babbitt, 58 F.3d 1392, 1397 (9th Cir. 1995), citing United States v. Oregon, 913 F.2d 576, 587 (9th Cir. 1990). TURN moved to intervene less than two months after the filing of PG & E's complaint in this matter, before discovery began or the court made any substantive rulings. TURN's motion is timely. See e.g., Idaho Farm, 58 F.3d at 1397.

"A public interest group is entitled as a matter of right to intervene in an action challenging the legality of a measure it has supported." Id., citing Sagebrush Rebellion, Inc. v. Watt, 713 F.2d 525, 527 (9th Cir. 1983); Washington State Bldg. & Constr. Trades Council v. Spellman, 684 F.2d 627, 630 (9th Cir. 1982). Beyond supporting the measures in dispute, TURN was the acknowledged author and leading proponent of the true-up proposal, adopted in D01-03-082, which is one of the central actions by the CPUC challenged by PG & E. TURN has an interest relating to the subject of the present litigation.

The present action could substantially affect TURN's interest as the disposition of the present action could substantially affect the electrical rates charged to consumers and small business owners. Finally, the court determines that TURN is not adequately represented by defendants. The burden of making this showing is minimal. See e.g., Sagebrush Rebellion, 713 F.2d at 528, citing Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S.Ct. 630, 30 L.Ed.2d 686 (1972). As evidenced by TURN's adaptation of positions relative to the actions taken by the CPUC, TURN and the CPUC do not have coextensive interests and serve different, if overlapping, constituencies.

As a result, the court grants TURN's motion to intervene as of right, pursuant to FRCP 24(a). In the alternative, the court grants TURN permission to intervene permissively, pursuant to FRCP 24(b).

B

The parties have requested that the court take judicial notice of an assortment of documents. See Docs##106 and 116. With respect to documents not referenced in PG & E's complaint, the court may take judicial notice of adjudicative facts, which are those to which the law is applied in the process of adjudication. See Adv Notes to FRE 201. A judicially noticed fact may not be subject to reasonable dispute and must be relevant. See FRE 201(b). "A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Id. The court may take judicial notice of pleadings, orders and statutes from other jurisdictions, including agency decisions, if the documents are public records and subject to confirmation by sources that cannot reasonably be questioned. See e.g., United States ex rel Robinson Rancheria v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992).

The only challenge to documents submitted for judicial notice is brought by defendants, who argue that the court should decline to take judicial notice of the stipulated judgment and settlement agreement, see PRJN II (Doc # 117, Exh # 39), between defendants and SCE in a related action in the Central District of California. Doc # 142. Defendants argue that settlement agreements and related documents are inadmissable under FRE 408, which provides:

Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible.

One of the principles underlying FRE 408 is that evidence of a settlement is generally not relevant, because settlements may be motivated by a variety of factors unrelated to liability. See Hudspeth v. CIR, 914 F.2d 1207, 1213-14 (9th Cir. 1990). The court agrees with defendants that documents relating to the settlement between defendants and SCE are not relevant to the instant dispute and, therefore, the court declines to take judicial notice of exhibit # 39 to PG & E's second set of request for judicial notice. All other documents submitted for judicial notice, however, meet the requirements of FRE 201(b) as they are not subject to reasonable dispute and are in the official public records of the CPUC, the California legislature, federal agencies or federal courts and the court will take judicial notice of them.

C

PG & E advances a series of evidentiary objections. First, PG & E objects to the declaration of Douglas Long (Doc # 105), submitted in support of defendants' motion for summary judgment. Doc # 151. PG & E also objects to the declaration of Matthew Freedman (Doc # 121), submitted in support of TURN's motion. Doc # 151. Long is the program manager of the CPUC's energy division. Long Decl (Doc # 105) at ¶ 1. Long's declaration discusses the enactment of AB 1890, various CPUC decisions, the accounting true-up and other elements of the rate freeze generally. PG & E objects to Long's declaration on the basis of lack of personal knowledge and lack of foundation. This objection (Doc # 151) is DENIED. Long sets forth the foundation of his statements. Long was personally involved in many aspects of CPUC activities for a number of years and, pursuant to the broad conception of "expert" embodied in FRE 702, Long appears qualified to testify as witness knowledgeable about the regulatory and accounting aspects of electrical generation, transmission and marketing. See Thomas v. Newton International Enterprises, 42 F.3d 1266, 1269 (9th Cir. 1994).

Long's declaration is, however, argumentative and not very helpful on the issues the court must decide. For example, Long argues that PG & E supported enactment of AB 1890. The import of any such support on the issues at bar is not apparent; CPUC evidently also supported this legislation. That the scheme enacted by AB 1890 turned out badly may well bear on the issues to be decided, but why PG & E's (or the CPUC's) support for the legislation matters is not readily discerned and Long's declaration does not enlighten the reader. Furthermore, Long's declaration advances legal conclusions as assertions of fact. Most notable in this regard is Long's contention that "AB 1890 only afforded the utilities an opportunity to recover their stranded costs, not a guarantee * * *," (Doc # 105 at ¶ 15), which Long seems to suggest should be the conclusion drawn by this court on the legal issues here. These reservations aside, the court will overrule PG & E's evidentiary objections as it has considered the Long declaration for what evidentiary value it may have.

PG & E similarly seeks to strike Freedman's declaration (Doc # 121). Freedman summarizes PG & E's regulatory filings in support of TURN's contention that PG & E, in fact, recovered its wholesale procurement costs over the period of the rate freeze. PG & E contends that because Freedman did not make these regulatory filings himself, he is not competent to testify about them on the basis of his personal knowledge. Freedman's declaration is highly conclusory and seeks to have the court accept a number of matters that appear to the court to be in dispute. Although Freedman's declaration is not helpful for these reasons and PG & E's objection appears to result from its concern with Freedman's conclusions about the evidence, not a proper ground for objection,

PG & E's objection to Freedman's declaration will be DENIED, notwithstanding the court's determination that this declaration contributes little, if anything, of value. PG & E also moves to strike four declarations submitted by defendants and TURN in opposition to PG & E's motion. Doc # 167. PG & E moves to strike the declaration of Peter Bradford (Doc # 155). Although Bradford's declaration does contain some facts and some opinions about utility restructuring generally that could qualify as opinions, Bradford's declaration simply expands TURN's legal argument that the filed rate doctrine does not, as a legal matter, apply to California's rate freeze. Because this declaration primarily contains legal argument rather than evidentiary matter, PG & E's motion to strike Bradford's declaration (Doc # 167) is GRANTED.

Similarly, the declaration of Michael Florio (Doc # 156), a staff attorney for TURN, contains little more than an elaboration of TURN's legal arguments about the proper time period over which to consider whether PG & E has recovered its costs and the regulatory bargain to which PG & E allegedly agreed. If such "expert" testimony were permitted, the page requirements for briefs filed with the court would become, effectively, moot. PG & E's motion to strike Florio's declaration (Doc # 167) is also GRANTED.

PG & E also objects to the declaration of James Loewen. Loewen's declaration discusses the procurement options available to PG & E in the block forward market. See Loewen Decl (Doc # 138). Again, PG & E's objections to Loewen's declaration appear driven by a disagreement with his conclusions and while Loewen's declaration is unhelpful, it does contribute some factual information to place the issues in context. Accordingly, PG & E's motion to strike Loewen's declaration (Doc # 167) is DENIED.

PG & E also contends that Long's declaration in support of defendants' opposition (Doc # 137) is vague and conclusory. Again, this is little more than an attack on Long's statements. The motion to strike Long's declaration (Doc # 167) is DENIED.

In the main, the declarations and objections are a distracting side show to the central matters at bar. The court hopes that as this litigation proceeds the parties will avoid submissions of lengthy and tendentious declarations that are little more than legal arguments masquerading as factual assertions.

Defendants seek to file the declaration of David E Effross under seal, as it contains information designated as confidential by PG & E. Doc #140. For good cause shown, this motion (Doc # 140) is GRANTED. The clerk is directed to file the lodged document under seal.

Finally, the parties' stipulated protective order (Doc # 103) is hereby ENTERED.

III

PG & E moves for summary judgment on its first and second claims for relief. In these claims, PG & E asserts that state law, as interpreted and applied by the CPUC is preempted to the extent it prohibits PG & E from recovering in retail rates expenses incurred in procuring and providing electricity. See Compl (Doc # 1) at ¶¶ 60-78. Claim one asserts preemption prior to August 3, 2000, and claim two asserts preemption from August 3, 2000, through January 19, 2001. The significance of the August 3 date is that on August 3, 2000, the CPUC granted limited authorization for PG & E and the other utilities to enter into contracts for the purchase of wholesale energy outside the PX.

Defendants move for summary judgment on PG & E's complaint or, in the alternative, on PG & E's preemption claims. Doc # 104. Attempting fully to cover their bases, defendants have also filed a FRCP 56(f) request to continue PG & E's motion for judgment on its preemption claims. Doc # 143. In this motion, defendants contend that if the court is not prepared to deny PG & E's motion, the court should permit defendants to conduct more discovery on PG & E's ability to procure electricity through cheaper sources, under the so-called Pike County exception to the filed rate doctrine. See Pike County Light & Power Co. v. Pennsylvania Pub. Util. Comm'n, 77 Pa. Commw. 268, 465 A.2d 735 (1983).

TURN moves for summary judgment on PG & E's complaint, although its motion is, like that of the other parties, overwhelmingly directed at PG & E's preemption claims. Doc # 119. The state of California has also filed an amicus brief in support ...


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