ORDER NO. 99-281

ENTERED APR 16 1999

This is an electronic copy. Appendices and footnotes may not appear.

OF OREGON

UE 102

DISPOSITION: WESTINGHOUSE STIPULATION APPROVED

In Order No. 99-033 in this docket we noted that PGE and Westinghouse had entered into a settlement on a legal action filed by PGE. We stated:

PGE received cash and other consideration from Westinghouse as a settlement for PGE's lawsuit related to steam generators at Trojan. The settlement provided PGE with some future benefits. Details of the settlement are subject to an order of the U.S. District Court for the Western District of Pennsylvania requiring confidentiality. PGE believes all the consideration should go to shareholders. Staff disputed PGE's position. Staff and PGE entered into a settlement on this issue. The Commission will issue a separate order on that matter in the future.

On February 18, 1999, PGE submitted for Commission approval a Stipulation between PGE and Staff regarding the Westinghouse litigation issues along with a joint explanatory brief.

Background

PGE began its efforts to pursue litigation in 1992 and filed its claim against Westinghouse in February 1993. PGE incurred $6.7 million in legal costs from 1992 through 1996 in pursuit of this claim. PGE and Westinghouse entered into a settlement on April 26, 1996.

In its tariff filing in this docket, PGE asked that all the cash and future consideration from the Westinghouse settlement be given to shareholders. Staff opposed PGE's position, contending that the benefits should be shared with ratepayers.

 In December 1998, PGE and Westinghouse entered into an amendment to the Westinghouse settlement which would allow the transfer to and use by Enron Engineering and Construction Company (EECC) of certain benefits under the Westinghouse Settlement Agreement. PGE has entered into an Assignment Agreement with EECC allowing EECC to receive benefits under the amended Westinghouse Settlement Agreement. At its April 6, 1999, public meeting, the Commission approved PGE's Application to transfer those benefits to EECC. See Order No. 99-258.

The Stipulation

In the Stipulation, Staff and PGE have agreed to a sharing of the proceeds from the Westinghouse Settlement Agreement. Customers will receive $3,997,069 credited at PGE's authorized rate of return on rate base upon approval of the transfer. This amount is based on customer contribution, relative to PGE's shareholders, to damages claimed and documented in the Westinghouse litigation.

Staff and PGE represent that the Stipulation will increase the expected present value of the potential settlement with Westinghouse for PGE's shareholders and customers, and will allow PGE to guarantee benefits for its retail customers that might otherwise not be realized.

Conclusions

The Commission has examined the Stipulation, the confidential recitals supporting it, and the explanatory brief, which contains a confidential portion. These documents are made part of this order as Appendix A and Confidential Appendix B. We conclude that adoption of the Stipulation will result in a fair sharing between PGE's shareholders and customers of the benefits from the Westinghouse Settlement Agreement. We conclude that adoption of the Stipulation is in the public interest.

The Commission notes that much of the information pertinent to our decision must be kept confidential in compliance with the order of the federal court involved. While we have no choice but to obey that order, we are aware that the confidentiality makes it difficult for the public to review our decision. We hope that eventually the court will lift the confidentiality requirement so that all the bases for our decision will be clear. We will condition our approval of the Stipulation by requiring PGE to immediately notify us if the confidentiality requirement is removed or modified.

ORDER

IT IS ORDERED that:

1. The Stipulation entered into by PGE and Staff regarding the settlement of the Westinghouse litigation is approved.

2. PGE is directed to immediately notify the Commission if the confidentiality requirement relating to the Westinghouse Settlement Agreement by the United States District Court for the Western District of Pennsylvania is terminated or modified.

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.