regeneration to the grid and under that more accurate direct cost allocation system third party generators like the state water project did not pay for costs they did not understand that they were sure the system that they had is more was more advantageous to live in the system that they now have and but i'm asking what what require them to stick with that old system if most parts of the country maybe far as i can tell all other parts of the country question remains if all the rest of the country is allowed to use the role in system that you don't like why is p g any required to stick with its old function which brings in less revenue i think there are examples  subsidiaries what for not done here they have not provided any valid reason in law or in fact for the system to change so that third party generators such as the state water project have to pay these costs they have not incurred when you say they haven't provided a reason for a change that sounds to me like an argument that they have a system that they previously specifically approved and therefore they need to give an articulated reason to justify the change from a system they've previously approved yet as i read the briefs they say well it would never litigated before well actually it was litigated before and i think that as i read prepared for today's argument and review the briefs i think that the parties are system litigated or was there ever any holding that the subfunction system was required there was there was a at least one situation where there was a hearing in front of administrative law judge and first ended up adopting the the strategic a lip service from the brief prepared for your side that said p g and e represents and that part was left out and it simply said this is the system instead of and i would argue that in your brief which i think you did not wri to say it's very different to speed difference of position of p g and e compared to its position adopted by ferg well i think i think really the focus here is on what is first job first is the agency that's charged with ensuring that all these rates are just and result not p g and in any event as we go forward what we have here is a situation where first has again allowed this decades old system which is more to write accurately allocated cost to generators to the system  they can but they don't always and there are examples in our briefs that provide that to the court some of the legal points that we would like the court to focus on would be that we think works orders in this case violate both the federal power act more reliable grid well that may in an self be true if that were the case then does that mean that the prior system created a less interested or less reliable grid we think not this is not if this is a change in the grid reliability functions and i believe in the record there is have theirs yes money to the effect that perhaps anywhere from eighty to one hundred percent the potential for that is anywhere from eighty to one hundred percent of their full capacity which means eighty own well studied and well thought out really only in cost scenario they themselves say have established a good factual basis for the fact that the primary purpose of the that the lion's share of what we're in any event we also maintain that for didn't require p g need to meet its first own test in making this accounting change and that test is whether the i s o the california is so has control over the facilities and whether these rates are just unreasonable and i think that in the briefing there's ample evidence and argument that the eye is so really doesn't have control over these facilities we're not even sure which facilities we're talking about with some of the smaller facilities there we we do agree with that initial decision at this point in time basically the result of what has happened in this situation is that ph in these generating subsidiaries and its former generating subsidiaries have received an unfair discriminatory mark and i've been antigens by not having to pay those generally those costs that bring their generation to the grid other third party generators have had to absorb those costs and this and for example the though any large utility you will have a system that will be very amenable to the system we well don't know why i think i come back to my question if that is so all wouldn't a holding here that say i didn't ask could i said must twice why must it not meets the regulation under the federal power act and first on regulatory scheme then that would certainly give other third party generators additional ammunition to to to address roldan system making  reliability or integration of whatever bridge they're dealing with at that in that part of the country then it's very likely this can spread across the country yes that certainly would be an additional piece of authority that would ensure a more direct and accurate  system we're talking about an accounting system here now you wanted to save some time just destroy alert shoot page twenty three in the red brief which refers to pages thirty seven and thirty eight in your brief great thank explain the factual and legal basis why this change in accounting is just unreasonable and meets the federal power act and first sound standards then we would happen much arguably we could have a much harder job here on appeal in front of you could settle that it remains to be seen the state water project takes the position that the evidence isn't in the record nor is the law in favor of for making that kind of finding but it would remain to be seen we just don't know because they didn't do it well i'm puzzled as to class i think maybe i'm confused as to what you're asking me not certainly possible i know in this case here we've got order for sixty six for sixty six and for sixty six p correct yeah ok and you're talking about maybe there will be a good morning it please the court and carol bans have representing the commission time permitting i'd like to see the three minutes to interveners council at the end of my time i will begin by clearing up i think there was some miscommunication between judge hudson and  seal for rate filing which is an entirely separate filing that was handled separately by the commission was settled and the parties have preserved this ten month period that's covered by the tier three rate filing they've preserved their disputes in that regard and i think if if the court were to change to reverse the commission if something different were done i believe there would be just a refund issue or a money amount for that isolated ten month period d not just reasonable then yes it could have great implications i assume for that he's all of it was resolved by settlement that might be locked in regardless of i don't actually know the answer and perhaps interveners counsel might be able to shed some light on that determine is this just a reasonable not is is any other way of doing this on just an unreasonable or more to the point is doing it this way as opposed to some other way necessarily which as i explained this is not in the generator and connection context the commission is very conscious of the transmission transmission providers ability to discriminate against new incoming generators by imposing costs on  system is much more accurate why is it just and reasonable to use the much less accurate and more disadvantageous cost allocation system i think is a policy determination the commission has explained in a long series of cases because the integrated transmission grid a full widespread well built resilient reliable robust integrated transmission grid is to the benefit of all users and it's made the policy determination that it is  canyon loop is to bring power from the able canyon into the central system and twenty percent is used for other why is the full amount of that allocated to third party generators so it's not the overall grid and the development of a strong transmission system to do it this way and so not just as a quantum as there is there another court of appeals opinion has been presented with this question and has approved the program occasional role interest well the role in system absolutely has been approved much they have to pay for it well that's what these cases deal with and it was not the western massachusetts case and only that went out in the parties who believe that there's something that is being rolled into the rate base that they are not actually using that frequently challenge that's what all these cases are about they say these cases in the more recent cases tend to be about upgrades to the system that were made in connection with a new generator being put onto the system that's where it tends to arise bit of a i'm a bit of a technical net web so i may be explained in the sort of using my example into simplistic terms but i think it may be accurate to say that the functional surer than the advantage to the general eighty percent of it's being used to transmit the other power sold why are we paying for the other why are we putting that additional eighty percent into the costings when the only answer i can give your honor the commission has made a policy decision and the question for the court is this is valid questions whether it's a permissible one it's longstanding has been approved by the courts it is not at all presented in the first instance here and to the extent that you can make arguments and that  a primary purpose for example test would be better or more desirable that's not really something that i'm not in the position to give you the pros and cons of that and the question is is that the court in a position to say that the commission commission has changed its mind or done something different it's an entirely separate scenario as for northern states that i believe as the commission explained it was a part of provider or a utility that wanted to actually reach functionalized generation facilities into the transmission rate base and the commission said you might be able to do that if you need the right ceiling you didn't make that showing here as petitioners have made clear although not always in their briefs we're not talking about re talk of clearly generation facilities whether they should in some way be functional lies transformed to become you know treated as transmission facilities so let me ask this sort of a more general question obviously the california department of water resources is a major generator of electricity and a major third party generator that she expend use the transmission lines but they're not the others as well and it strikes me that if we were to uphold yeah but it's still hard to calculate or some other way that a reasonable suddenly asked them to do i mean when all there are all kinds of possibilities the show up and right regulations and so on what does this do to various forms of alternative generation of electricity three it strikes me that if there is a subsidy you are loading onto various forms of alternative generation a cost that really is not there as a but is rather a subsidy that they're being required to pay his or justification for doing that that there's actually concern that if you functionalized some functionalized if you put these rates directly on generators there is concern about discriminating against those new ones coming in because paying their share of the site if if you'd like but there's a footnote in northeast texas that says the reason that we stay away you have generally been very wary of direct allocation of costs in the barrier to entry for new generators you build your own facility to the point of interconnection correct but transmission provider also has to make certain upgrades to the transmission network too and here i get both my dept as well to maintain the re the network to allow the network to take the power that you are then sending so that so when the new generator yet they build their own line that connects up to the network there's a whole other area policy called the help and the larger point that i would make it even even if the court has doubts about the the wisdom or the policy implic a pricing policy that's been in place for years it is generally in routinely approved across the country the commission has great deference both on the engineering issues and as well as the policy decisions and this was  are not in dispute that every one of these facilities does perform some function in the integrated transmission grid then was it under was it under reasonable for the commission to say counsel for the commission said about barriers to entry i would have framed it in just that way but the reason for that has gone to rolled in rates and has consistently said that's a good thing including for third party generation is under a rolled in approach and under the commission's consistent rulings regarding what portion of costs a generator shall bear to be in our current interconnect it's generating units to the all network it's part of the integrated network and all users of transmission services pay the result that the generators who want to develop a new wind farm in remote location or who want to develop hydro or other alternative energy are paying one hundred percent of that radia line they then only pay their portion which is a very small portion in the scheme of all of users of transmission california of the typically more expensive facilities that are required to upgrade the network in order to accommodate that generation so while appellants council would would argue to this court that the roldan method penalizes third party generators it is intended by for to do just the opposite and i believe it has the effect of filling just the opposite overall it decreases the amount the generating owner will ultimately pay in order to have the system able to receive its power and for that generator to be able to market its power for that reason the roldan rate is absolutely the appropriate policy position for her to have come to they came to it years ago the only utility that was doing anything else was p g and e and historically the reason p g d came to some functionalized rates was as an accommodation and a settlement with a number of large municipal and federal transmission owners to figure out a way to give them a break on some of their transmission because they were also bringing transmission facilities to the integrated networks that made the whole network more robust it was never a system designed to subsidize generation i would point to the interveners brief in support for the description of pages fifteen through seventeen of mr jenkins testimony concerning the loop facilities in the step of transformers your honor was talking about an eighty twenty split of a hypothetical eighty twenty you can't look at it that way if these loops are taken out of network well load isn't capable of being served with the remaining facilities these facilities are only used twenty percent of the hours of the year to keep those the moss landing power plant is out of service as it's being used exclusively for network service yeah i understand that there is no generation often but how much of that generating loop would be needed if all there would probably be a different system configuration if the plant were not there and that is true of every power plant around the system but about my my point is if mass lending had never been built but p g and e figured that for his overall transmission system and needed excess capacity it never in the world would have built in that much excess capacity at that point it likely would have built something that did not look exactly like what is there now and how do your arteries that's true with third party generators that's but you avoided my question when you said it wouldn't be exactly like it would have if marsh landing were not there something that it did built that's not exactly like what i didn't live in the head less carrying capacity in the loop now has it likely would have large facility none of it wasn't the loops the wasn't the step up transformers they were small line segments so the time to get that compliance filing submitted to the commission because the i s o those nomenclature t o three what you referred to your honor as order number for the tio for rate case was settled in a black box settlement all issues so this ruling would not have any effect on the rates during that we need to ask for an increase in rates to cover the cost of those facilities for future rape cases that p g and e would file for this court to find that these facilities should not be included in network transmission rates it would have forward looking presidential effect but for the purposes of this case in terms of dollar adjustments it would be it would affect four million dollars in revenue requirement for a ten month on this case back to her i'd like to say with all due respect that the policy decision the first has made is that we're just wrong and at best it has not been explained and i think just the discussion that the court had with opposing counsel illustrates that issue some of the issues i'd like to highlight here is that there's a question about the step function like system and whether or not that it's been quote approved i would direct the court's attention to eighteen c f r section three five point one three alternative generators that's not the situation we have here in many of the cases cited by the government by africa in this in this matter they do deal with third party generations in actual physical upgrades to the grid and new generation coming onto the great announce where there has been more of a socialization of cost and that's not the situation we have here we also don't have a situation where we've got a third party a new third party generator a new w generator a new hydro generator a new solar generator that is trying to come on the grid that is staying in order to promote this alternative energy we need to have some of our social lives if that situation were to come up for it could deal with that situation and perhaps could explain a valid policy reason for socializing some of these costs what we're talking about here is a change in accounting that advantages ph in the subsidiaries informers that subsidiaries and disadvantages current third party generators including a public entity that reports to the taxpayers of california the state water project the state water project i know you're aware transports water from northern to southern california and provides a crucial public need it is not service question that i addressed to you earlier i'm sorry your honor i got caught up in my post in counsel's argument and i did not address that i could certainly follow up with a letter to the court on that issue if that would please you i'm not sure that is necessary but what the statement in the read brief is that the blue brief left out the language p g any states for that leading into a quotation that if all you read it was without to be and this was raised in the blue in the red re and it was not responded to in the response three it's bad practice i understand what you're saying your honor and we certainly will take that to heart briefs and i can only apologize to the court for that omission but what i would offer to the court is that even if those words had been there first still had an opportunity to undo the make upon finding or holding that the previous sub functional life system was not just and reasonable or did expertise or federal judges in the case of california department of water resources versus firkins now submitted her decision