Free Answer - District Court of Federal Claims - federal

Case 1:07-cv-00352-TCW

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS PACIFIC GAS AND ELECTRIC COMPANY, Plaintiff, v. THE UNITED STATES, Defendant.

Case No. 07-352C (Judge Wheeler)

PLAINTIFF'S ANSWER TO DEFENDENT'S COUNTERCLAIM For its answer to defendant's Counterclaim, plaintiff, Pacific Gas and Electric Company ("PG&E") states as follows: 51. PG&E admits the allegations in the first sentence of paragraph 51. PG&E admits

the allegations in the second sentence of paragraph 51. With respect to the third sentence of paragraph 51, PG&E admits that, under contract 14-06-200-2948A ("contract 2948A"), PG&E agreed to serve the combined loads of both the Western Area Power Administration ("Western") and PG&E, and that contract 2948A specified fees applicable to the services rendered pursuant to contract 2948A. With respect to the fourth sentence of paragraph 51, PG&E admits that Article 32 of contract 2948A specifies that rates and charges under contract 2948A "shall be fair and equitable," and should be adjusted as appropriate on April 1, 1971, and every five years thereafter. PG&E denies the remainder of the allegations of paragraph 51. 52. PG&E admits the allegations in the first sentence of paragraph 52. PG&E denies

the allegations in the second sentence of paragraph 52.

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53. 54.

PG&E admits the allegations in paragraph 53. As to the first sentence of paragraph 54, PG&E admits that it, in Federal Energy

Regulatory Commission ("FERC" or "Commission") Docket No. ER01-424-000, concerning the CAISO's Grid Management Charge ("GMC") and PG&E's GMC Pass-Through Tariff ("GMC PTT"), PG&E argued in the alternative that, if the Commission should find that the GMC PTT does not constitute a new service, it should be approved as an amendment to the existing Control Area Agreements ("CAAs") for which PG&E served as a Scheduling Coordinator ("SC"). PG&E further admits that, in FERC Docket No. ER01-1639-000, PG&E filed to amend Contract 2948A to include GMC, SC charges, and Reliability Services Charges. PG&E admits the allegations in the second sentence of paragraph 54. With respect to the allegations in the third sentence of paragraph 54, PG&E admits that Western filed a motion for partial summary disposition in Docket No. ER01-424-000. The fourth sentence of paragraph 54 states a legal conclusion to which no response is required. To the extent that the fourth sentence of paragraph 54 is construed as an allegation of fact, PG&E admits that in response to Western's motion for partial summary disposition, the presiding judge ruled that issues relating to amending contract 2948A had been previously litigated in Docket No. ER01-1639-000, and were to be removed from the GMC PTT proceeding. PG&E admits that it did not appeal the presiding judge's decision. 55. PG&E admits that, from October 2001 through March 2003, Western paid to

PG&E $8,297,037.03 in GMC assessed by the CAISO and passed through from PG&E to Western. PG&E denies the remainder of the allegations in paragraph 55. 56. PG&E is without knowledge or information sufficient to form a belief as to the

truth of the allegations in paragraph 56, and on that basis denies them.

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57.

PG&E admits that contract 2948A was not amended to allow for GMC charges,

and that it has been terminated. The second sentence of paragraph 57 states a legal conclusion to which no response is required. To the extent that the second sentence of paragraph 57 is construed as an allegation of fact, it is denied. 58. 59. PG&E admits the allegations in paragraph 58. PG&E denies the allegations of paragraph 59 that the $8,297,037.03 was

"wrongly" charged to Western, and that the GMCs were charged "under the contract," to the extent the contract refers to contract 2948A. PG&E admits the remainder of the allegations in paragraph 59. 60. With respect to the first sentence of paragraph 60, PG&E is without knowledge or

information sufficient to form a belief as to the determination made by Western, but denies that any such determination is correct. The second sentence of paragraph 60 states a legal conclusion to which no response is required. To the extent that the second sentence of paragraph 60 is construed as an allegation of fact, it is denied. 61. PG&E denies that it overcharged Western, and that the GMCs assessed against

Western were assessed "under the contract," to the extent the contract refers to contract 2948A. PG&E admits the remainder of the allegations in paragraph 61.

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AFFIRMATIVE DEFENSES COLLATERAL ESTOPPEL AND/OR RES JUDICATA 62. On May 2, 2003, the Commission issued Opinion No. 463. 103 FERC ¶ 61,114.

With respect to PG&E's GMC PTT, FERC determined that acting as an SC for the CAA customers constituted a "new service" that PG&E was not already obligated to perform pursuant to the CAA contracts with wholesale customers, including contract 2948A. The doctrines of collateral estoppel and/or res judicata preclude the United States from re-litigating the following issues already decided by the FERC: (1) PG&E has the right to pass through to CAAs GMCs charged to PG&E by the CAISO, on a dollar-for-dollar basis, under PG&E's GMC PTT; (2) the services performed under the GMC PTT constitute "new services" not included in the services provided under existing CAAs, including contract 2948A; and (3) the CAAs, including contract 2948A, do not have to be amended in order for PG&E to pass through to CAAs, on a dollar-fordollar basis, GMC incurred by PG&E on behalf of CAA customers. 63. PG&E denies that the United States is entitled to the relief requested in its

Counterclaim, or to any relief. Respectfully Submitted,

/s/ Kerry C. Klein KERRY C. KLEIN Pacific Gas and Electric Company 77 Beale Street, B30A San Francisco, CA 94105 Telephone: (415) 973-3251 Facsimile: (415) 973-5520 Attorney for Plaintiff PACIFIC GAS AND ELECTRIC COMPANY Dated: September 26, 2007

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Of Counsel: Mark D. Patrizio PACIFIC GAS AND ELECTRIC COMPANY Robert L. Shapiro GREENBERG TRAURIG, LLP 800 Connecticut Avenue, N.W., Suite 500 Washington, D.C. 20006 Telephone (202) 331-3174 Facsimile: (202) 261-4752

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