Panoche entered into a contract to supply energy to PG&E at a time when the Legislature was considering AB 32, a measure designed to reduce greenhouse gas emissions. The agreement contained an arbitration clause that said arbitrators could exercise only the powers of a judge, thus incorporating the ripeness limitation that keeps judges from resolving abstract disputes. Here, the arbitrators decided and the appellate court held that PG&E had properly invoked arbitration to decide whether Panoche had agreed to bear the costs of complying with the nascent AB 32-required changes. Even though the regulations implementing AB 32 had not been finalized and could eventually provide for a different allocation of compliance costs regardless of what the legacy contracts provided, the issue of what the Panoche-PG&E contract provided was ripe and might influence the regulatory decision. Hence, the arbitration award should be confirmed.
In a dispute over who has to bear the costs of complying with state environmental regulations—power company or its supplier—power company correctly invoked arbitration clause in contract governing parties’ business relationship.