relates to liability that may arise from a specific IP product contracted by SDG&E with either a third party or NewCo Sub. Regarding the first type of liability, SDG&E states that one of its reasons for establishing NewCo Sub is so that NewCo Sub, as a separate legal entity, will “bear the burden of its own financial and legal risks including, but not limited to, financial losses, litigation related to NewCo Sub’s products sold, and other risks that commercial ventures often face.” (SDG&E’s Opening Brief at 42.) As SDG&E asserts, structuring NewCo Sub as a separate entity, “complete with its own governance structure, administration and operations, would serve to contain liability at the subsidiary level.” Regarding the second type of liability that may arise out of particular IP products, SDG&E states that it will negotiate liability limitations with NewCo Sub on a contract-by-contract basis, as it currently does with third party contracts. The intervenors express concern that despite SDG&E’s assertions, there is a potential for ratepayers to be responsible for liability arising out of NewCo Sub or a particular IP transaction. The intervenors recommend that the Commission direct any financial or legal loss arising out of liability from an IP transaction or NewCo Sub to be borne solely by shareholders and not ratepayers. (TURN’s Closing Brief at 17; UCAN’s Opening Brief at 10; ORA’s Opening Brief at 7.) The Commission agrees with the intervenors about any potential legal or financial liability. While SDG&E protests the recommendation that SDG&E shareholders accept responsibility for liability borne by SDG&E as a result of these IP transactions, the utility simultaneously asserts that the subsidiary structure is designed to ensure SDG&E is insulated from potential liability. Beyond that, it is not reasonable to subject ratepayers to liability risks from commercial transactions that do not relate to core energy services on which their
relates to liability that may arise from a specific IP product contracted by SDG&E with either a third party or NewCo Sub. Regarding the first type of liability, SDG&E states that one of its reasons for establishing NewCo Sub is so that NewCo Sub, as a separate legal entity, will “bear the burden of its own financial and legal risks including, but not limited to, financial losses, litigation related to NewCo Sub’s products sold, and other risks that commercial ventures often face.” (SDG&E’s Opening Brief at 42.) As SDG&E asserts, structuring NewCo Sub as a separate entity, “complete with its own governance structure, administration and operations, would serve to contain liability at the subsidiary level.” Regarding the second type of liability that may arise out of particular IP products, SDG&E states that it will negotiate liability limitations with NewCo Sub on a contract-by-contract basis, as it currently does with third party contracts. The intervenors express concern that despite SDG&E’s assertions, there is a potential for ratepayers to be responsible for liability arising out of NewCo Sub or a particular IP transaction. The intervenors recommend that the Commission direct any financial or legal loss arising out of liability from an IP transaction or NewCo Sub to be borne solely by shareholders and not ratepayers. (TURN’s Closing Brief at 17; UCAN’s Opening Brief at 10; ORA’s Opening Brief at 7.) The Commission agrees with the intervenors about any potential legal or financial liability. While SDG&E protests the recommendation that SDG&E shareholders accept responsibility for liability borne by SDG&E as a result of these IP transactions, the utility simultaneously asserts that the subsidiary structure is designed to ensure SDG&E is insulated from potential liability. Beyond that, it is not reasonable to subject ratepayers to liability risks from commercial transactions that do not relate to core energy services on which their
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