Wednesday, July 6, 2016
Court Restores Arbitration Award to PG&E In Dispute Over AB 32 Compliance
By a MetNews Staff Writer
An arbitration panel did not exceed its authority in ruling for Pacific Gas & Electric Co. in a dispute with an electricity supplier over who should foot the bill for complying with California’s landmark law mandating reductions in greenhouse gas emissions, the First District Court of Appeal has ruled.
Div. Four Friday overturned a trial judge’s ruling that the dispute was unripe for adjudication because the issue was also the subject of a regulatory proceeding.
The court originally ruled for PG&E in a May 6 unpublished opinion. It subsequently granted rehearing, but again ruled for the utility and issued a published opinion.
The utility and Panoche Energy Center LLC, which operates a gas-fired power plant that supplies electricity to PG&E under a 20-year power purchase agreement inked in 2006, have been squabbling for several years over who should bear the costs for complying with AB 32.
The arbitrators rejected Panoche’s motion to delay the arbitration, and sided with PG&E in May 2013. But a San Francisco Superior Court judge vacated the award in October of that year, ruling that the arbitration was premature because the California Air Resources Board and California Public Utilities Commission were still figuring out how AB 32 would be applied to the companies’ “power purchase and sale agreement” and other contracts signed before the law was passed.
Justice Jon Streeter, in his opinion for the Court of Appeal, agreed with the trial judge that the arbitrators lacked the authority to resolve an unripe controversy, based on the arbitration clause of the PPA, which gave the arbitrators no more authority than the superior court. But Streeter concluded that the issue was ripe.
Noting that the parties were in a financially significant dispute over the subject when the issue was submitted to arbitration, Streeter said the controversy was ripe for resolution, regardless of the outcome of the regulatory proceedings.
“The weight to be given the arbitration award by the regulators—indeed, whether they will consider it at all—is entirely up to them, but for purposes of evaluating whether the dispute presented to the arbitration panel was sufficiently concrete for decision and whether its resolution was capable of putting to rest uncertainty around the meaning of the contract, the controversy was ripe,” he wrote.
The case is Panoche Energy Center, LLC v. Pacific Gas and Electric Company, 16 S.O.S. 3324.
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