ORDER NO. 98-505

ENTERED DEC 7, 1998

This is an electronic copy. Appendices and footnotes may not be included.

OF OREGON

UG 132

 On November 6, 1998, Northwest Natural Gas Company, d.b.a. NW Natural, requested the issuance of a Protective Order to govern the disclosure of confidential information in this docket. NW Natural makes two requests. First, it seeks the issuance of a Standard Protective Order to limit the use and disclosure of certain confidential customer information and confidential business plans and strategies. Second, it seeks additional protection for certain highly sensitive proprietary company information by limiting the disclosure of certain information solely to the Commission Staff. No party filed an objection to either request. The Commission addresses each separately.

Standard Protective Order

NW Natural states that a rate case proceeding places a significant portion of the company’s confidential and proprietary information within the scope of discovery. This confidential information includes such items as business plans, corporate strategy, investment cost information, and storage development information. It adds that certain confidential customer information is included in the workpapers and other documentation, such as names, account numbers, and natural gas usage information.

NW Natural contends that the release of this confidential information could provide advantages to its competitors, and impair its ability to enter into necessary contracts and honor confidentiality provision of existing agreements. Therefore, it requests the Commission issue a Standard Protective Order to govern the disclosure of confidential information in this docket.

Disposition

The Commission finds that good cause exists to issue a Standard Protective Order, attached as Appendix A. Under the terms of that order, a party may designate as confidential any information it believes falls within the scope of ORCP 36(C)(7). Once designated as confidential, the information may be disclosed only to "qualified persons" associated with parties that have agreed to be bound by the terms of the protective order by signing the signatory page set forth in Appendix B.

Paragraph 3 of the protective order establishes two categories of "qualified persons." The first category, set forth in subsections (a) through (d), includes the authors of the confidential material, the Commission or its Staff, and counsel of record for a party or persons directly employed by counsel. This group of persons is entitled to review confidential information without the need to give notice to the party desiring confidentiality or execute an additional statement agreeing to be bound by the terms of the order. As noted above, however, a party must sign the signatory page before anyone associated with the party, including its counsel, may review the confidential material.

Subsections (e) through (g) of Paragraph 3 set forth the second category of qualified persons. These include unaffiliated party experts, persons approved by the party desiring confidentiality, and persons designated as qualified by Commission order. As a prerequisite to gaining access to confidential information, this second category of qualified persons must execute a consent to be bound. Prior to disclosing confidential information to an unaffiliated expert, the party seeking to disclose the information must also notify the party desiring confidentiality. See Paragraphs 7 and 8.

Paragraph 9 provides the procedures for when a party desires to disclose information to a person who is not qualified under Paragraph 3. In such circumstances, the party must request permission from the party desiring confidentiality and provide certain information, including the identity of the unqualified person and the specific reasons why disclosure is necessary. If the party desiring confidentially fails or refuses to grant the request, the party seeking disclosure may file a motion to qualify the person by Commission order.

All persons who are given access to confidential information have the duty to monitor their own conduct to ensure their compliance with the Protective Order. Such persons shall not use or disclose the information for any purpose other than the purposes of preparation for and conduct of this proceeding, and shall take all reasonable precautions to keep the confidential information secure.

 Additional Protection for Highly Sensitive Proprietary Information

In addition to the Standard Protective Order, NW Natural seeks greater protection of certain information it deems highly sensitive. This information includes workpapers, internal memoranda, and other data (including electronic files) associated with the industrial customer class. NW Natural specifically identifies this information as: (a) the electronic industrial repricing spreadsheet created as a Zip file called "industrial.zip" (expanding into an Excel Spreadsheet file called workpa~1.xls); (b) all workpapers of witness DeFerrari (with the exception of workpaper 4 and the Washington special contract information that has already been made publicly available); and (c) the portion of the LRIC Study performed and presented by witness Hanson entitled "Bypass Cost Estimates Summary and Detail."

NW Natural contends that the disclosure of this information to parties, even if subject to a Standard Protective Order, would be extremely harmful and prejudicial to the company and could result in irreparable and long-lasting economic harm. Therefore, it requests that the Protective Order in this proceeding contain a provision that bars disclosure of this information to any party other than Commission Staff.

NW Natural makes several arguments in support of its request. First, it states that it is concerned about the long-term economic harm that would result to the company and its core customers from the disclosure of this highly sensitive proprietary information to any party except Staff. NW Natural points out that this information includes proprietary and customer-specific information, including confidential assumptions made by the company regarding changes in the customers’ gas usage, bypass potential, and bypass costs. NW Natural contends that the release of this information to parties other than Staff would harm the company in conducting future negotiations, reveal gas purchasing strategies, and reveal strategic decisions. NW Natural is especially concerned about the release of assumptions about a particular customer’s ability to physically bypass the company’s distribution system. It does not want to be placed in a position where it is required to negotiate a special contract with a potential bypass customer when that customer has NW Natural’s internal assumptions, cost, impact, and other sensitive proprietary information already in hand.

NW Natural adds that several lawyers and consultants that represent current industrial customers and bypass-candidate customers are likely to participate in this proceeding. NW Natural contends that allowing these individuals access to certain commercially sensitive and proprietary information regarding customers they do not represent would have a long-term negative impact on the company as such information could be used by their clients to revive or institute new contract negotiations.

Disposition

NW Natural’s request for a protective order that limits disclosure of certain specified information to any party other than staff is granted. The Commission rarely issues protection beyond that granted in our Standard Protective Order. Nonetheless, the provisions of ORCP 36C provide for greater protection if circumstances warrant. In this case, the circumstances make an exception to the standard protective order appropriate. In drawing this conclusion, the Commission balances the potential harm from disclosure of the material against any benefit which might accrue from that disclosure. The Commission notes that this ruling is based on the pleading filed by NW Natural and the fact that no party filed an objection to the request. This ruling is subject to reconsideration if circumstances change.

The Commission finds that NW Natural’s concern about irreparable and long-lasting economic harm from disclosure of the information is persuasive. The identified information may reveal assumptions and strategic decisions made by NW Natural regarding its core customers’ gas usage and ability to bypass the company’s distribution system. Some of these customers are likely to become parties to this case. It is reasonable for NW Natural to fear that access by these parties to the information involved could distort future negotiations to the detriment of NW Natural and its ratepayers. In reaching this decision, the Commission notes that the conclusions in this ruling do not reflect on the integrity of any attorney or other person involved in this matter. Disclosure of sensitive material may be inadvertent and may be undetectable especially over long periods.

The Commission emphasizes that this ruling is intended to be narrow and applies only to the specific information identified by NW Natural in its motion. NW Natural may designate this information as "Confidential – Subject to Protective Order – Staff Review Only." As noted above, the Commission will reconsider this ruling if necessary.

IT IS ORDERED that the request for a Standard Protective Order and provision that bars disclosure of certain specified information to any party other than Staff is granted.

 Made, entered, and effective ____________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements of OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070. A party may appeal this order to a court pursuant to ORS 756.580.