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ALJ/TIM/jt2 Date of Issuance 10/18/2010

Decision 10-10-001 October 14, 2010

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Central Valley Gas Storage, LLC for a Certificate of Public Convenience and Necessity for Construction and Operation of Natural Gas Storage Facilities.

Application 09-08-008

(Filed August 19, 2009)

DECISION GRANTING APPLICATION FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT AND OPERATE A GAS STORAGE FACILITY

TABLE OF CONTENTS

DECISION GRANTING APPLICATION FOR A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT AND OPERATE A GAS STORAGE FACILITY 2

1. Summary of Decision 2

2. Procedural Background and Chronology 2

3. Summary of the Application 4

3.1. Description of the Applicant 4

3.2. Description of the Proposed Project 6

3.3. Reporting Requirements and Affiliate Transaction Rules 9

3.4. CEQA 10

4. Summary of Intervenor Positions 10

4.1. DRA 10

4.2. Enerland 11

4.3. Gill Ranch 12

4.4. Lodi 13

4.5. PG&E 13

4.6. SoCalGas 14

4.7. Wild Goose 14

5. Applicant's Response to the Intervenors 15

5.1. Response to Enerland's Safety Concerns 15

5.2. Response to SoCalGas's Proposed Reporting Requirements 17

6. Discussion 18

6.1. Designation as a Public Utility 18

6.2. CPCN 19

    6.2.1. Pub. Util. Code § 1001 19

    6.2.2. Pub. Util. Code § 1002(a) 21

    6.2.3. CPCN Granted 23

    6.2.4. Waiver of § 1005.5(a) 23

    6.2.5. Waiver of Rule 3.1(f) 24

6.3. Market-Based Rates 25

6.4. Tariff 26

6.5. Waiver of § 818, § 851, and the Competitive Bidding Rule 27

6.6. Public Safety, Insurance, and Indemnification 27

6.7. SoCalGas's Proposed Reporting Requirements 34

6.8. The Settlement Agreement 36

    6.8.1. Summary of the Settlement Agreement 36

    6.8.2. Responses to the Settlement Agreement 39

    6.8.3. Approval of the Settlement Agreement 39

      6.8.3.1 Reasonable in Light of the Record 40

      6.8.3.2 Consistent with the Law 40

      6.8.3.3 The Public Interest 41

    6.8.4. Waiver of Rule 12.1(b) 42

7. Environmental Review 43

7.1. Proponent's Environmental Assessment 43

7.2. Initial Study and Draft Mitigated Negative Declaration 44

7.3. Mitigation Monitoring, Compliance, and Reporting Program 44

7.4. Public Notice and Review 45

7.5. Comments on Draft IS/MND 45

7.6. Final MND 46

8. Proceeding Category and Need for Hearings 47

9. Comments on the Proposed Decision 48

10. Assignment of the Proceeding 48

Findings of Fact 48

Conclusions of Law 50

ORDER 53

Appendix A: Settlement Agreement

DECISION GRANTING APPLICATION FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT AND OPERATE A GAS STORAGE FACILITY

1. Summary of Decision

This decision grants the application filed by Central Valley Gas Storage, LLC (CVGS) for a certificate of public convenience and necessity to construct and operate an underground natural gas storage facility in Colusa County, including a 14.7-mile pipeline to connect with Pacific Gas and Electric Company's (PG&E) natural gas transmission system (CVGS Project or Project). This decision also grants CVGS's requests to be designated a public utility pursuant to Pub. Util. Code § 216 and § 222, and to charge market-based rates. In addition, this decision adopts a settlement agreement in which CVGS agrees to pay all costs to connect with PG&E's gas transmission system and to provide specified reports to Commission Staff. Finally, this decision certifies the Mitigated Negative Declaration for the CVGS Project and authorizes the issuance of a Notice of Determination for the Project pursuant to the California Environmental Quality Act.

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