Court Opinion

ID: 9795808
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:39:12.027097+00
Date Added: 2024-06-11T08:37:47.765303
License: Public Domain

BAXTER, J., Concurring and Dissenting.
I accept the majority’s conclusion that the terms of the settlement between the Public Utilities Commission (PUC or Commission) and Southern California Edison Company (SCE), which became the basis for a stipulated judgment in federal district court, did not exceed the Commission’s authority under Assembly Bill No. 1890 (1995-1996 Reg. Sess.) (Assembly Bill No. 1890), as codified in Public Utilities Code sections 330-396. (Stats. 1996, ch. 854, § 10.) Unlike the majority, however, I believe the process by which the PUC entered the settlement violated two other important statutes.
First, the PUC contravened the Bagley-Keene Open Meeting Act (Act or Bagley-Keene Act; Gov. Code, § 11120 et seq.). The Commission misused an exception in the Act, intended to permit closed meetings to “confer with, or receive advice from, . . . counsel” about pending litigation (id, § 11126, subd. (e)(1)), to approve in secret a legal settlement in which it guaranteed SCE billions of dollars in past and prospective rate relief, and thus “changed” the rates to be paid by SCE’s customers (id, § 11126, subd. (d)(1)).
Second, the PUC acted illegally under the Public Utilities Code, by so “changing]” SCE’s rates, through a secretly approved settlement, without any “showing before the [Cjommission and a finding by the [Cjommission that the new rate [was] justified.” (Pub. Util. Code, § 454, subd. (a), italics added.)
The Bagley-Keene Act was adopted to require state agencies to exercise their essential regulatory authority through public deliberations and decisions, subject to direct scrutiny and comment from the citizens whose daily lives these decisions affect. Because the PUC’s power over utility rates is especially crucial, the Legislature added specific provisions, in both the Bagley-Keene Act and the Public Utilities Code, requiring the Commission to make its rate decisions openly, and to follow formalities designed to ensure its determination that the approved rates are in the public interest.
The majority’s holding that the PUC could bypass these protections if it did so to settle litigation opens the door to a widespread danger of secret “government by lawsuit,” in which state agencies conduct their most important regulatory business in private, through the device of settling litigation between themselves and the entities they regulate. By the same device, the *807majority allow the PUC to engage in significant ratemaking decisions without showings or findings that the rates thereby set are just and reasonable. I cannot accept such a conclusion. I therefore respectfully dissent from the majority’s answers to questions 2 and 3 certified by the Ninth Circuit Court of Appeals.
I address the two critical statutes in turn.
A. Bagley-Keene Act.
The majority correctly note the general outlines of the Bagley-Keene Act, adopted in 1967 (Stats. 1967, ch. 1656, § 122, p. 4026) and often amended thereafter. The Act states “[i]t is the public policy of this state that . . . the proceedings of [covered state] agencies be conducted openly,” and declares the intent of the statute to be “that actions of state agencies be taken openly and that their deliberation be conducted openly.” (Gov. Code, § 11120, italics added.)
Accordingly, the Act mandates that, except as otherwise specifically provided, a covered “state body” (Gov. Code, § 11121.1) must (1) conduct its “meetings . . . open[ly] and public[ly]” (id., § 11123, subd. (a)), (2) provide advance public notice and an agenda for each such meeting (id., § 11125); (3) allow members of the public to address the body on each agenda item (id., § 11125.7, subd. (a)); and (4) permit public criticism of the body’s policies or actions (id., § 11125.7, subd. (c)). The Attorney General, a district attorney, or an interested person may sue to prevent future violations of the Act, or to determine the applicability of the Act to past or threatened future conduct by a state body. (Id., § 11130, subd. (a).) An interested person may also sue to obtain a judicial determination that an “action taken” in violation of the open-meeting requirements is null and void. (Id., § 11130.3, subd. (a).) Any member of a state body who attends a meeting of that body in violation of the Act, with intent to deprive the public of information to which the member knows or has reason to know the public is entitled under the Act, is guilty of a misdemeanor. (Id., § 11130.7.) “Except as expressly provided by [the Act], no closed session may be held by any state body.” (Id., § 11132.)
A “meeting” includes “any congregation of a majority of the members of a state body at the same time and place to hear, discuss, or deliberate upon any item that is within the subject matter jurisdiction of the state body to which it pertains.” (Gov. Code, § 11122.5, subd. (a), italics added.) An “action taken” includes “a collective decision” of the members and any “collective commitment or promise ... to make a positive or negative decision.” (Id., § 11122, italics added.)
*808Thus, except as otherwise specified, the Act (1) directly prohibits closed or secret meetings of state bodies to discuss or deliberate on public business, and (2) separately provides for nullification of the actions and decisions taken at such illegal meetings.
As the majority indicate, all agree that the PUC’s decision to approve the SCE settlement was an “action taken” at a “meeting” that did not conform to the open and public requirements of the Bagley-Keene Act. The PUC’s published agenda for the regularly scheduled commissioners’ meeting of October 2, 2001, listed “Conference with Legal Counsel—Existing . . . Litigation. Case name unspecified” as a matter to be discussed in closed session. As suggested by the official minutes of the October 2 meeting, the commissioners unanimously approved the “SCE [settlement” during the closed discussion, then reconvened in public session to announce their action.
To validate the “action taken” at this closed meeting, the PUC, SCE, and the majority invoke an exception to the open-meeting requirements, set forth in subdivision (e)(1) of Government Code section 11126. Subdivision (e)(1) states that “[n]othing in [the Act] shall be construed to prevent a state body, based on the advice of its legal counsel, from holding a closed session to confer with, or receive advice from, its legal counsel regarding pending litigation when discussion in open session concerning these matters would prejudice the position of the state body in the litigation.” (Italics added.) But neither the plain meaning of this language—whether read in isolation or in the overall statutory context—nor its legislative history supports the majority’s conclusion that the limited right to confer with counsel in closed session connotes the additional right to take final action in secret on the matter discussed.
The majority concede that “[o]n its face, subdivision (e)(1) permits a [state] body only to ‘confer with’ and ‘receive advice from’ its attorney regarding litigation.” (Maj. opn., ante, at p. 798, italics added.) Indeed, subdivision (e)(1) uses more restrictive language in this regard than the several other open-meeting exceptions contained in Government Code section 11126. These variously allow the state body, meeting in closed session, to “consider,” “discuss,” “deliberate on,” or even “give instructions” concerning the subject matter addressed. (See, e.g., id., subds. (a)(1) [state body may “consider” employee personnel matters], (c)(3) [state body may “deliberate on” quasi-judicial decision under Administrative Procedure Act], (4) [state body may “consider[]” term, parole, or release of prisoner if public disclosure of subject matter is prohibited by statute], (5) [state body may “consider” conferring of honorary degrees, or gifts, donations, or bequests, where donor desires confidentiality], (7)(A) [state body may “give instructions to” negotiator regarding purchase, sale, exchange, or lease of real *809property], (7)(E) [state body may “discuss[ ]” eminent domain proceedings], (8) [California Postsecondary Education Commission may “consider” appointment or termination of commission’s director], (9) [Council for Private Postsecondary and Vocational Education may “consider” appointment or termination of council’s executive director], (10) [Franchise Tax Board may “consider[ ]” appointment or termination of board’s executive officer], (16) [appropriate state body may “consider[ ]” investment decisions for retirement or pension funds], (17) [state body may hold closed sessions when “discharging responsibilities” with regard to labor negotiations], (18) [state body may “consider” matters posing criminal or terrorist threats to its personnel or property], (d)(2) [PUC may “deliberate” on disciplinary actions against any person or entity under its jurisdiction].)
Moreover, Government Code section 11126, subdivision (e) makes clear that the “confer with counsel” exception is not intended to grant state bodies a general license to decide in secret whether to enter settlements. Instead, the purpose of subdivision (e) is merely to preserve for a state agency, in the context of actual, threatened, or proposed litigation (see id., subd. (e)(2)(A)-(C)), a limited form of the privilege available to private litigants for confidential communications between lawyer and client. Subdivision (e)(2) specifies that “[f]or purposes of [the Act], all expressions of the lawyer-client privilege other than those provided in this subdivision are hereby abrogated. This subdivision is the exclusive expression of the lawyer-client privilege for purposes of conducting closed-session meetings pursuant to [the Act].” (Italics added.)
The legislative history of subdivision (e) of Government Code section 11126 confirms that a state body’s privilege to confer privately with counsel about pending litigation should be construed narrowly, to cover only lawyer-client consultation and advice. As originally adopted, neither the Bagley-Keene Act nor its local-agency counterpart, the Ralph M. Brown Act (Brown Act; Gov. Code, § 54950 et seq.), included any reference to an agency’s right to meet in private to consult with its counsel or discuss litigation. A subsequent Court of Appeal decision, Sacramento Newspaper Guild v. Sacramento County Bd. of Supervisors (1968) 263 Cal.App.2d 41 [69 Cal.Rptr. 480] (Sacramento Newspaper Guild), addressed whether the public-meeting provision of the Brown Act “abrogates by implication the statutory policy [of Evidence Code sections 950-952] assuring opportunity for private legal consultation by public agency clients.” (Sacramento Newspaper Guild, supra, at p. 55, italics added.) The Court of Appeal concluded that public agencies involved in actual or pending litigation, facing the same stakes and realities as private litigants, should have the same privilege as their private counterparts to “ ‘the effective aid of legal counsel,’ ” and thus to the “ ‘opportunity for confidential legal advice.’ ” (Id. at p. 56, italics added.)
*810The court reasoned that “[sjettlement and avoidance of litigation are particularly sensitive activities, whose conduct would be grossly confounded, often made impossible, by undiscriminating insistence on open lawyer-client conferences. In settlement advice, the attorney’s professional task is to provide his client a frank appraisal of strength and weakness, gains and risks, hopes and fears. If the public’s ‘right to know’ compelled admission of an audience, the ringside seats would be occupied by the government’s adversary, delighted to capitalize on every revelation of weakness.” (Sacramento Newspaper Guild, supra, 263 Cal.App.2d 41, 56, italics added, fn. omitted.)
The Legislature later codified this principle in the Bagley-Keene Act by adding former subdivision (q) to section 11126. (Stats. 1981, ch. 968, § 12, p. 3690.) As adopted in 1981, former subdivision (q) simply provided that “[n]othing in [the Act] shall be construed to prevent a state body from holding a closed session to confer with legal counsel regarding pending litigation when discussion in open session concerning those matters would adversely affect or be detrimental to the public interest.”
In 1987, however, the Legislature tightened and refined the Act’s provision for private conferences with counsel concerning pending litigation. (Stats. 1987, ch. 1320, § 2, p. 4762.) At that time, former subdivision (q) of Government Code section 11126 was rewritten in language roughly equivalent to that of current subdivision (e). The 1987 amendment removed permission for state bodies to meet with counsel in closed session about pending litigation whenever public discussion would adversely affect the “public interest.” Under the amendment, a closed-session consultation was allowed only when public discussion “would prejudice the position of the state body in the litigation.” (Gov. Code, § 11126, subd. (e)(1); see id., former subd. (q).) The amendment added the further proviso that, for purposes of the Act, the section is the “exclusive” expression of the lawyer-client privilege, which is otherwise “abrogated.” (Ibid.)
The 1987 amendment also included the extensive discussion, now contained in Government Code section 11126, subdivision (e)(2), of when “litigation shall be considered pending” for purposes of the privilege to confer in private with counsel. This requires that (1) an adjudicatory proceeding before a court, an administrative body, a hearing officer, or an arbitrator, to which proceeding the state body is a party, has already been initiated; (2) existing facts and circumstances have persuaded the state body, based on counsel’s advice, that it faces significant exposure to litigation; or (3) based on existing facts and circumstances, the state body has decided to initiate, or is deciding whether to initiate, litigation. (Gov. Code, § 11126, subd. (e)(2)(A), (B)(i), (C)(i); see id., former subd. (q)(1), (2)(A), (3).)
*811Finally, the 1987 amendment added the requirement, still in effect, that counsel prepare and submit to the state body, prior to the closed session if possible, but in no event more than a week thereafter, a memorandum stating “the specific reasons and legal authority for the closed session.” This memorandum must include, in the case of litigation not yet formally initiated, “the facts and circumstances” justifying a belief that the body faces a significant exposure to litigation or should decide whether to initiate such proceedings. (Gov. Code, § 11126, subd. (e)(2)(C)(ii); see id., former subd. (q).)
The source of the 1987 legislation was Senate Bill No. 200 (1987-1988 Reg. Sess.) (Senate Bill No. 200). The bill was described as “codif[ying] the exclusive use of the attorney-client privilege for the purpose of conducting closed sessions,” and as allowing “[c]losed sessions ... to seek the advice of legal counsel with regard to ‘pending litigation’ if discussion with legal counsel in open session would ‘prejudice the position’ of the public entity.” (Assem. Subcom. on Admin. of Justice, Analysis of Sen. Bill No. 200 (1987-1988 Reg. Sess.) as amended May 4, 1987, p. 1, italics added.)
Urging passage of Senate Bill No. 200 in the Assembly, the California Attorney General explained the concerns that had prompted the proposed legislation (which made conforming amendments to both the Brown and Bagley-Keene Acts): “Briefly, the problem is this: Several years ago the courts ruled that, absent specific legislation to the contrary, the Brown Act will not be construed to limit the availability of the traditional attorney-client privilege to local governmental bodies. [Citations.] This leaves . . . public agencies with broad freedom to go into executive session for confidential attorney-client discussion of virtually any issue which may involve ‘pending litigation’ or the ‘avoidance of litigation.’ [f] [Senate Bill No.] 200 will eliminate this loophole by placing clear and reasonable limitations upon when . . . governmental agencies may hold closed meetings to discuss legal issues. It protects the legitimate need of public officials to obtain confidential legal advice on issues which may end up in litigation but does not sacrifice the public’s right to open meetings. In short, the bill strikes an appropriate balance between two important but often conflicting principles of public policy.” (Atty. Gen. John K. Van de Kamp, letter to Assembly Member Lloyd G. Connelly, re Sen. Bill No. 200 (1987-1988 Reg. Sess.) July 10, 1987, italics added.)
The 1987 amendments, and the accompanying analyses and comments, do not directly address whether, during a closed lawyer-client litigation conference, a state body may make its final decision on how to resolve the pending proceeding. However, the amendments do confirm these general principles: First, Government Code section 11126, subdivision (e) defines, and strictly limits, a state agency’s exercise of its attorney-client privilege under the *812Bagley-Keene Act. (See Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 373-381 [20 Cal.Rptr.2d 330, 853 P.2d 496] [construing parallel provisions of the Brown Act].) Second, this privilege has been statutorily narrowed over time, and is not coextensive with a private party’s rights to maintain secrecy in litigation matters. Third, the scope of the privilege has been carefully calibrated to allow the state body to conduct necessary private consultations with its counsel about pending litigation, while still maintaining, to the maximum possible extent, the Act’s overall requirement of public deliberation and decision. All these circumstances suggest that the privilege must be narrowly, not broadly, construed, where final decisionmaking by the agency is at stake.
The majority’s expansive interpretation of the privilege contravenes these tenets. The majority imply, on the basis of obsolete authority, that the public and private attorney-client privileges are coextensive. (Maj. opn., ante, at p. 798, citing Sacramento Newspaper Guild, supra, 263 Cal.App.2d 41, 55.) More importantly, the majority’s construction far exceeds a public agency’s need for attorney-client confidentiality, while unduly restricting the right of the people to public decisionmaking by state agencies.
As major support for their conclusion that the closed-session provision extends beyond the limited privilege to confer with counsel, and encompasses a final decision by the state body to accept a proposed settlement, the majority cite another provision of the Bagley-Keene Act, Government Code section 11126.3, subdivision (a). Under this provision, a state body that intends to consult its counsel in closed session about already existing litigation must publicly identify, by name or other specific means, the litigation to be discussed “unless the body states that to do so would jeopardize ... its ability to conclude existing settlement negotiations to its advantage.” (Ibid., italics added.) The PUC availed itself of the privilege not to identify the SCE settlement as the subject of its closed session on October 2, 2001, stating in its public agenda that “ ([d]isclosure of case name would jeopardize existing settlement negotiations).”
Focusing on the single word “conclude” in Government Code section 11126.3, subdivision (a), the majority reason broadly that this must mean the state body can use the cloak of confidentiality, not only to discuss the pros and cons of settlement with its counsel, but also to “conclude” the settlement. But this is a thin reed for the majority to grasp. Just as the inability to confer with counsel in private might compromise the agency’s strategy and jeopardize its ability to “conclude” a settlement to its advantage, a requirement that the agency prematurely identify the matter to be discussed in such a conference may also do so. But however confidential such preliminary legal discussions and negotiations may be, nothing in section 11126.3, subdivision (a) states or implies that the agency may actually resolve pending *813litigation in a regulatory matter without warning that a settlement of the particular case is imminent, explaining in public the proposed settlement terms, and allowing public response, at a public meeting, before making its final decision.
Certainly a state body may frankly discuss with its counsel, in private, the progress of ongoing settlement negotiations, including a candid assessment of the agency’s negotiating strategy, the “strength and weakness” of the agency’s position, and the “gains and risks, hopes and fears” a settlement entails, without affording its opponents “ringside seats” at these preliminary discussions. (Sacramento Newspaper Guild, supra, 263 Cal.App.2d 41, 56.) No doubt the agency may privately instruct its counsel, negotiating on its behalf, concerning terms it is inclined to accept.1 Moreover, it may well be that in subsequent public consideration of the matter, the state body need not fully disclose the litigation-related concerns that it discussed privately with its counsel under cover of the attorney-agency privilege, even if this means the public is less than fully informed about all the reasons the agency is tentatively prepared to accept a resolution on particular terms.
But none of this implies that a final regulatory decision, framed as the settlement of a pending lawsuit, itself can be undertaken without any public scrutiny or input, as occurred here. Government Code sections 11126, subdivision (e) and 11126.3, subdivision (a) were not intended to provide state agencies conducting the public’s business with the same right private litigants may have to resolve their disputes entirely away from the public’s prying eyes. Where significant regulatory decisions are at stake, parties involved in litigation with a state agency must understand that this is so. Whatever incidental litigation disadvantage this may impose on state agencies in the conduct of their regulatory business, as opposed to individuals and organizations in the conduct of their private affairs, is a necessary corollary to the express statutory policy of public decisionmaking.
To this extent, I am not persuaded by the California Attorney General’s construction of Government Code section 54956.9, the Brown Act analog to section 11126, subdivision (e)(1). (75 Ops.Cal.Atty.Gen. 14 (1992).) The Attorney General reasoned that the language of section 54956.9 (a local governmental body may meet in closed session to “confer with, or receive *814advice from, its legal counsel regarding pending litigation”) allows a local government body not simply to consult and confer in private on litigation matters, but also to take final action to settle a lawsuit.
For this conclusion, the Attorney General first cited language in the Brown Act’s “personnel” exception, now contained in subdivision (b)(1) of Government Code section 54957, which permits closed meetings “to consider the appointment, employment, evaluation of performance, discipline, or dismissal of a public employee . . . .” (Italics added; see Gov. Code, § 11126, subd. (a)(1) [parallel Bagley-Keene Act personnel exception].) Noting that several Court of Appeal decisions had construed the personnel exception to permit not only deliberation, but final action, the Attorney General asserted that the operative word “consider” in the personnel exception, and the operative word “confer” in the pending-litigation exception, were enough alike to dictate a similar interpretation of the latter provision. (75 Ops.Cal.Atty.Gen., supra, at p. 19.)
The Attorney General also reasoned that a public agency’s right to confer with counsel in secret about confidential litigation and settlement strategy necessarily implies the further right to decide, in confidence, what course to take. Otherwise, the Attorney General cautioned, an agency’s litigation adversaries would have “ ‘ringside seats’ ” for its decisions, and public litigants would be “ ‘second-class citizen[s],’ ” at a disadvantage compared to their private counterparts. (75 Ops.Cal.Atty.Gen., supra, at p. 19, quoting Sacramento Newspaper Guild, supra, 263 Cal.App.2d 41, 56.)
For reasons I have already discussed at length, I believe these conclusions are flawed. The words of the pending-litigation and personnel exceptions, respectively, are materially different. The former permits the public entity only to “confer with, or receive advice from, its counsel” in private (Gov. Code, § 11126, subd. (e)(1)), while the latter, by its use of the broader word “consider” (id., subd. (a)(1)), specifically allows active deliberation on the issue under discussion. In light of the 1987 narrowing of the pending-litigation privilege, and given the overall statutory policy of open deliberations and actions, these linguistic distinctions should not be conflated to allow a broad right of agencies to settle regulatory litigation in private.
Moreover, as we have seen, the current pending-litigation exception is not intended to afford public agencies litigation privacy entirely equivalent to that enjoyed by private parties. Instead, the statutory exception seeks to balance competing policies by providing a limited, and exclusive, form of attorney-client confidentiality for public agencies, while interfering as little as possible with the fundamental requirement that the collective actions of such agencies be taken in public. Thus, the pending-litigation exception does not imply a *815loophole allowing agencies covered by the Bagley-Keene Act to meet in secret to make final decisions on matters of significant regulatory interest.
In this age of high-stakes litigation, the majority’s contrary conclusion opens the door to secret “government by lawsuit,” allowing governmental bodies to exercise significant portions of their regulatory authority in private by the device of settling lawsuits between themselves and the entities they regulate. I cannot accept such a weakening of the clear purposes of the Bagley-Keene Act. I conclude that subdivision (e) of Government Code section 11126 did not permit the PUC to act in secret to finally approve a settlement of its litigation with SCE.
But even if Government Code section 11126, subdivision (e) generally allowed state bodies to approve regulatory settlements in closed session, respondent The Utility Reform Network (TURN) correctly urges that the PUC’s approval of this particular settlement nonetheless violated the Bagley-Keene Act. TURN points to another portion of section 11126—subdivision (d)(1)—that deals specifically with this agency and the subject matter of this settlement. Section 11126, subdivision (d)(1) provides that “[njotwithstanding any other provision of law, any meeting of the Public Utilities Commission at which the rates of entities under the [Cjommission’s jurisdiction are changed shall be open and public.” (Italics added.) By any common understanding, the PUC’s agreement to entry of the stipulated judgment in SCE’s federal action constituted the Commission’s commitment to “change[ ]” the electricity rates SCE could charge.
As the majority indicate, the parties to the October 2001 settlement agreed that, because of falling wholesale electricity prices during 2001, SCE’s existing rates “had allowed SCE to collect retail revenues in excess of current costs.” (Maj. opn., ante, at p. 791.) Among other components, these rates included emergency surcharges, totaling 4 cents per kilowatt-hour, which the PUC had granted to SCE, and to Pacific Gas and Electric Company (PG&E), in early 2001, at a time of very high wholesale power prices. When the PUC granted these surcharges, it had restricted their application to future power purchases, not past liabilities, and had made surcharge revenues refundable to ratepayers to the extent not used for this limited purpose. (Application of Southern California Edison Co. (2001) Cal.P.U.C. Dec. No. 01-01-018, pp. 2-3, 10-17, 24, 2001 Cal.PUC LEXIS 44; Application of Southern California Edison Co. (2001) Cal.P.U.C. Dec. No. 01-03-082, pp. 16-18, 60-61, 2001 Cal.PUC LEXIS 217.)
In the settlement, however, the PUC agreed, as its “principal substantive concession” (maj. opn., ante, at p. 791), to permit SCE to recover certain past costs by (1) applying the overcollections already in SCE’s coffers—i.e., *816its “cash on hand” (ibid.)—to this purpose and (2) “maintaining [SCE’s] existing rates until the end of 2003, if necessary,” to allow further such recovery (ibid., italics added). The settlement called for the establishment of a tracking account, known as PROACT, that would record SCE’s progress toward recouping these costs. (Ibid.) PROACT’s initial balance would be the gross amount of SCE’s accumulated past liabilities subject to recovery—an amount the parties agreed to be about $6,355 billion—less the surplus SCE had already collected. (Ibid.) Under this formula, the initial PROACT balance was estimated at some $3.3 billion. (Ibid.) The settlement rates would remain in effect until “the PROACT [account] was paid down to zero or . . . December 31, 2003, whichever came first. [Citation.]” (Ibid.)
The settlement thus authorized three fundamental “change[s]” in SCE’s rates. First, it either provided, or extended, a guaranteed duration to the rates in existence at the time of the settlement.2 Second, it cancelled, nunc pro tunc, ratepayers’ rights to refunds of amounts SCE had already collected under the 2001 surcharges, but had not used for ongoing power purchases as the terms of those surcharges originally required. Third, it removed, for the future, the original limitation on SCE’s use of the surcharges. That allowed SCE to continue to assess the surcharges, and to retain the revenues therefrom, under circumstances not permitted by the original terms and conditions of these special rates.
The majority insist the PUC did not agree in the settlement to “ ‘change[ ]’ ” SCE’s rates, but only made a “commitment ... to maintain the then existing rates for an agreed period.” (Maj. opn., ante, at p. 802.) This pinched and hypertechnical analysis ascribes too narrow a meaning to the broad statutory phrase “rates ... are changed.” (Gov. Code, § 11126, subd. (d)(1).) Surely it does not comport with the legislative purpose to ensure that the PUC’s core ratemaking decisions be open and public.
The complex and crucial task of ratemaking does not simply set the amount of money a utility may charge for a unit of service at any particular moment. It also necessarily establishes the terms and conditions attached to the authorized charge. When, as here, the PUC agrees to grant or extend a rate freeze, or alters the circumstances under which a rate may be charged or its revenues retained, it “change[s]” the rate.
*817The majority reject TURN’S argument that the settlement “changed” rates because it will lead to higher future rates than customers would otherwise have paid. This is an impossible standard to apply, the majority reason, because “it depends on the unknowable course of future events under hypothetical conditions.” (Maj. opn., ante, at p. 802.) In other words, the majority explain, for all we know, events other than the settlement, whether regulatory, legal, or economic, would have produced those same future rates.
This rationale misses the point. The settlement’s effect was to (1) provide, or extend, the guaranteed duration of a rate, (2) allow SCE to retain past and future surcharge revenues that would otherwise have been subject to refund, and (3) there by narrow the opportunity for electricity customers to obtain rebates, or to enjoy lower future rates, based on the conditions that might then prevail. In making these fundamental alterations in the structure of SCE’s existing rates, the settlement “changed” the rates. And the effect on SCE’s ratepayers was hardly minimal. The settlement’s avowed purpose was to enable SCE to secure from its customers billions of dollars in excess of current operational costs that were deemed necessary to restore SCE to financial health.3
The Legislature cannot have meant to allow ratemaking decisions with such significant effect on the public to escape the open-meeting requirement set forth in subdivision (d)(1) of Government Code section 11126. Indeed, this is confirmed by the legislative history of subdivision (d)(1), a factor discounted by the majority. The substance of present subdivision (d)(1) was adopted in 1975 as part of former subdivision (p). (Stats. 1975, ch. 959, § 5, p. 2238.) Legislative analyses of this provision, as enacted by Senate Bill No. 1 (1975-1976 Reg. Sess.) (Senate Bill No. 1), frequently described its effect as prohibiting the PUC from holding closed sessions for “deliberation on rate proceedings” (Legis. Analyst, analysis of Sen. Bill No. 1, as amended Apr. 24, 1975, p. 1; see also Assem. Off. of Research, 3d reading analysis of Sen. Bill No. 1, as amended Aug. 12, 1975, p. 1), and as requiring any PUC meeting where “rates ... are considered” to be open and public (Assem. Ways & Means Com., Staff Analysis of Sen. Bill No. 1, as amended June 24, 1975, p. 2).
The PUC urges that even if its initial acceptance of the settlement in closed session violated the Bagley-Keene Act’s open-meeting requirement, the Commission “cure[d]” or “correctfed]” the violation (Gov. Code, § 11130.3, subd. (a)) by two subsequent actions taken in public meetings. But the two *818actions the PUC cites merely implemented the terms of a settlement, and the resulting stipulated judgment, already reached in violation of the Act.
By P.U.C. Resolution No. E-3765 (2002), the Commission simply granted, with minor modifications, SCE’s request to establish the PROACT account called for by the settlement. (Cal. P.U.C. Res. No. E-3765 p. 37.) Indeed, in the resolution, the PUC rebuffed an argument by the California Manufacturers & Technology Association that granting SCE’s request would impermissibly change certain prior Commission decisions. According to the PUC, “this . . . issue arguefd] the legality of the [settlement, which [was] beyond the scope of’ the proceeding then before the Commission. (Id., at p. 35.)
The PUC also points to its Decision No. 02-11-026, 2002 Cal.PUC LEXIS 720, which modified Application of Southern California Edison, supra, Cal.P.U.C. Decision No. 01-03-082. As indicated above, Decision No. 01-03-082, issued in March 2001, had granted both PG&E and SCE a 3-cent surcharge (and had also made “permanent” an additional 1-cent surcharge granted to those utilities in January 2001), but had restricted use of these surcharges to ongoing power procurement and made them otherwise refundable. Decision No. 02-11-026 relaxed this restriction by allowing the 2001 surcharges to be used both for future power purchases and for the more general purpose of “returning each utility to financial health.” (Application of Southern California Edison Co. (2002) Cal.P.U.C. Dec. No. 02-11-026.)
But Decision No. 02-11-026 neither mentioned the SCE settlement nor reflected any effort to reconsider its terms. Moreover, as applied to SCE, repeal of prior restrictions on use of the 4-cent surcharge had already occurred by virtue of the settlement, and was required in any event by the resulting stipulated judgment in the federal action, entered October 5, 2001. Nothing in Decision No. 02-11-026 indicates it was a sincere and effectual attempt by the Commission to reassess the SCE settlement itself in an open and public meeting.4
*819For all these reasons, I would answer “yes” to the Ninth Circuit’s question whether the PUC’s approval of the SCE settlement in a closed session violated the Bagley-Keene Act.
B. Public Utilities Code section 454.
As indicated above, the Public Utilities Code separately provides, in pertinent part, that “no public utility shall change any rate or so alter any classification, contract, practice, or rule as to result in any new rate, except upon a showing before the [Commission and a finding by the [CJommission that the new rate is justified. . . .” (Pub. Util. Code, § 454, subd. (a) (section 454(a)), italics added.) The obvious purpose of the statute is to require a demonstration by the utility, and a resulting determination by the Commission, that the rate change is just and reasonable.
As discussed above, the settlement between the PUC and SCE constituted their agreement to a “change” in SCE’s rates. The settlement either froze rates or extended a freeze already in effect. It eliminated, for both past and future purposes, prior restrictions on SCE’s use of the 2001 surcharges. It cancelled ratepayers’ rights, both past and future, to refunds of surcharge amounts overcollected by SCE under the terms and conditions originally applicable to these rates. It thus afforded SCE the opportunity to recover from its ratepayers some $6,355 billion in liabilities already accrued by SCE, with approximately $3.3 billion of that amount to appear on their future electricity bills. Insofar as the PUC accepted this “change” without resort to the requirements of Public Utilities Code section 454(a), it acted illegally.5
SCE and the PUC argue that even if the settlement did authorize a change in SCE’s rates, Public Utilities Code section 454(a) has no relevance here. *820According to SCE and the PUC, the statute and its implementing regulations are concerned solely with the procedures by which a utility may seek the Commission’s approval to change the utility’s “tariff,” or published schedule of rates (see, e.g., Pub. Util. Code, §§ 489, subd. (a), 491; Cal. P.U.C. Gen. Order No. 96-A (1996) §§ I.B., III.C., VI; Pacific Bell v. Public Utilities Com. (2000) 79 Cal.App.4th 269, 274 [93 Cal.Rptr.2d 910])—procedures that simply do not pertain to a settlement and stipulated judgment in a lawsuit. (See also maj. opn., ante, at p. 804.)
Moreover, SCE and the PUC insist, a utility may change its rates only through the formal alteration of its tariff. (See Pub. Util. Code, §§ 489, subd. (a), 491, 532; Cal. P.U.C. Gen. Order No. 96-A, supra, § VI; see also Transmix Corp. v. Southern Pacific Co. (1960) 187 Cal.App.2d 257, 265 [9 Cal.Rptr. 714].) As SCE and the PUC observe, any modification of SCE’s tariff did not occur directly by virtue of the settlement and stipulated judgment, but only through implementing decisions, such as P.U.C. Resolution No. E-3765 (see discussion, ante), that resulted from formal Commission proceedings. Hence, these parties conclude, the settlement itself did not violate Public Utilities Code section 454(a).
Neither SCE nor the PUC cites authority holding that the Commission may authorize a utility rate change, by means of a legal settlement, without complying with the basic requirements of Public Utilities Code section 454(a). The majority in this case deliberately avoid that issue by concluding, erroneously in my view, that the instant settlement involved no “change” in SCE’s rates. (Maj. opn., ante, at p. 804.)
In any event, the technical arguments advanced by SCE and the PUC obscure the fundamental purpose of the scheme for public utility regulation. Such utilities are subject to control by the Legislature (Cal. Const., art. XII, § 3), which has mandated in the Public Utilities Act that their rates be “just and reasonable” (Pub. Util. Code, § 451). Regulatory authority over the rates of public utilities is vested in the Commission (Cal. Const., art. XII, §§ 1, 4, 6), which is responsible, through specified procedures, to assure that these rates meet the “just and reasonable” standard required by law (Pub. Util. Code, §§ 454(a), 728). Allowing the Commission to use a legal settlement to grant a significant change in a utility’s rates, without resort to a showing and finding that the change is just and reasonable, fundamentally undermines this regulatory structure. It invites such utility litigation as a means of “end-running” the established regulatory process.
As TURN suggests, the contention by SCE and the PUC that rates are “change[d],” for purposes of Public Utilities Code section 454(a), only upon completion of the tariff-setting process unduly elevates the ministerial act of *821implementing rate changes already mandated, in essential outline, by a prior Commission decision. Section 454(a) is superfluous unless it means that the fundamental determination whether a proposed change in rates is to be allowed at all can be made only upon a showing and finding, under normal regulatory procedures, that the change is just and reasonable.
I recognize that the regulatory process for approving rate changes is not readily compatible with the practicalities of settling lawsuits. My conclusion that Public Utilities Code section 454(a) nonetheless applies may well mean that the Commission simply cannot engage in significant ratemaking by such means. But any disadvantage this may ascribe to the Commission, or to a financially distressed utility, in a particular case is outweighed by the overarching regulatory policy of assuring that the rates paid by California’s utility customers are just and reasonable.
For all these reasons, I would answer “yes” to the Ninth Circuit’s question whether the settlement and stipulated judgment between SCE and the PUC violated Public Utilities Code section 454.
Appellant’s petition for a rehearing was denied October 22, 2003. Chin, J., and Brown, J., did not participate therein. Baxter, J., was of the opinion that the petition should be granted.

 I note, however, that subdivision (e)(1) of Government Code section 11126, allowing a state body, in closed session, to “confer with, or receive advice from, its legal counsel” concerning pending litigation, does not grant secret negotiating authority parallel to that expressly provided in subdivision (c)(7)(A) of the same section, which, in significantly different words, empowers a state body to “hold[ ] closed sessions with its negotiator prior to the purchase, sale, exchange, or lease of real property by or for the state body to give instructions to its negotiator regarding the price and terms of payment for the purchase, sale, exchange, or lease.” (Italics added.)

 There is considerable confusion about whether the 1996 rate freeze, as authorized by Assembly Bill No. 1890, had ended, with respect to SCE, by the time SCE and the PUC entered the settlement at issue here. As of this writing, it appears the PUC has not finally resolved that issue. If the 1996 rate freeze was still in effect, the settlement “changed” that component of SCE’s then existing rates by extending the maximum duration of the freeze from March 31, 2002 (see Pub. Util. Code, § 368, subd. (a)), to December 31, 2003. If the 1996 rate freeze had ended, the settlement nonetheless “changed” SCE’s rates by placing a guaranteed duration on rates otherwise subject to alteration or fluctuation.

 I am aware that, as the majority indicate, the PUC recently approved SCE’s application to reduce its rates, effective August 1, 2003, upon completion of the PROACT pay-down. (Application of Southern California Edison Co. (2003) Cal.P.U.C. Dec. No. 03-07-029, pp. 2, 5, 12, 16-17, 22, 2003 Cal.PUC LEXIS 404.)

 In a final thrust, the PUC urges that even if its closed-session approval of the settlement violated the Bagley-Keene Act, and even if this violation was not cured or corrected by the Commission’s later actions, the settlement, and the resulting stipulated judgment, must nonetheless be upheld under Government Code section 11130.3, subdivision (b), which provides that “[a]n action [governed by the Act] shall not be determined to be null and void if • • • HI • • • [|] (2) The action taken gave rise to a contractual obligation upon which a party has, in good faith, detrimentally relied.” The Commission asserts that SCE has placed good faith detrimental reliance on the settlement by using resulting rate revenues to pay its creditors. But the quoted language appears to refer to the Act’s special procedures, also set forth in section 11130.3, by which an “interested person,” acting within a specified time, may sue to “obtain[ ] a judicial determination that an action taken by a state body in violation of [the Act] is null and void under this section.” (Id., subd. (a), italics added.) Here, the legality of the PUC-SCE settlement, and the resulting stipulated judgment, is at issue, not by collateral attack *819from an outsider under section 11130.3, but on appeal from the stipulated judgment itself. SCE, a party to the stipulated judgment, and presumably aware at all times that it was subject to reversal on appeal, cannot be said to have detrimentally relied “in good faith” on its terms, in the sense meant by section 11130.3, subdivision (b)(2).

 Before 1988, Public Utilities Code section 454(a) had provided that “no public utility shall raise any rate or so alter any classification, contract, practice, or rule as to result in any increase in any rate” except upon a showing and finding of justification. (Pub. Util. Code, § 454, former subd. (a), italics added.) In that year, the statute was amended to refer more broadly to “change[s]” in rates and “new” rates. (Stats. 1988, ch. 108, § 1, p. 446.) On the other hand, section 454(a) states that its procedures shall apply “[ejxcept as provided in [s]ection 455.” Section 455 deals with filed utility rate schedules “not increasing or resulting in an increase in any rate.” Whatever the interplay between sections 454(a) and 455, the SCE-PUC settlement, by providing a guaranteed future rate structure designed to allow SCE to recover billions of dollars in past costs, appears to have effectively authorized an “increase” in SCE’s rates. No party or amicus curiae has invoked section 455 to argue that the settlement was exempt from section 454(a).