11. Assignment of Proceeding
Timothy Alan Simon is the assigned Commissioner and Richard Smith is the assigned ALJ in this proceeding.
1. GRS is an Oregon limited liability company formed in 2007 for the purpose of developing the Proposed Project and is dedicated to exclusively serving the California market. GRS is a wholly owned subsidiary of NW Natural, an Oregon-based company that provides natural gas distribution services to 652,000 customers in Oregon and southwest Washington.
2. The Proposed Project is comprised of an underground natural gas storage field, a compressor station for injecting and withdrawing gas from the storage field and associated dehydration and control facilities, an approximately 27-mile natural gas pipeline connecting the Proposed Project to PG&E's Line 401, an electric substation located at the compressor station, and a nine-mile 115 kV power line connecting the substation to PG&E's Dairyland-Mendota 115 kV power line to serve the compressors and other facilities.
3. Armstrong, DRA, and Will Gill & Sons filed protests to the PG&E Application, and Armstrong filed a protest to the GRS Application. LGS, WGS, and Meyers filed responses to the GRS and PG&E Applications, and DRA filed a response to the GRS Application.
4. On April 8, 2009, GRS, PG&E, DRA, and LGS filed an unopposed motion for approval of a proposed settlement between these parties. The proposed settlement resolves all issues raised in DRA's and LGS' responses and protest to the Applications.
5. On May 18, 2009, Armstrong withdrew its protests to the GRS and PG&E Applications, and on June 19, 2009, Will Gill & Sons withdrew its protest to the PG&E Application.
6. Except to the extent that PG&E obtains incremental core storage capacity under Commission authorized procedures, the Proposed Project will not serve core ratepayers, and core customers will not bear project costs because PG&E is not seeking to apply new rates to the Proposed Project at this time.
7. GRS' entry into the gas storage market will increase competition among the current non-core storage providers, and, as a result, reduce market concentration in California.
8. Because GRS' rates will be market-based, ratepayers are not financing the Proposed Project and there are no concerns regarding cross-subsidization by ratepayers.
9. Cross-subsidization of the Proposed Project by PG&E's ratepayers will not occur because PG&E's captive ratepayers will not be funding its interest in the Proposed Project.
10. The Final MND (which incorporates the Draft IS/MND) related to the Proposed Project conforms to the requirements of CEQA.
11. Clarifying and combining mitigation measures Bio-17 and Bio-18 in the Final MND and in this decision will be more effective in mitigating or avoiding potential significant effects and will not cause any potentially significant effect on the environment.
12. The Final MND identified no significant environmental impacts of the Proposed Project that could not be avoided or reduced to non-significant levels with the mitigation measures described therein.
13. On the basis of the whole record, there is no substantial evidence that the project will have a significant effect on the environment.
14. The MMRP, included as part of the Final MND, specifically describes the mitigation measures to be taken.
15. Applicants agree to comply with the mitigation measures described in the Final MND and as further clarified in this decision.
16. The Commission considered the Final MND in deciding to approve the Proposed Project.
17. The Final MND reflects the Commission's independent judgment.
18. The Proposed Project includes no-cost and low-cost measures (within the meaning of D.93-11-013, and D.06-01-042) to reduce possible exposure to EMF.
19. The PG&E Application satisfies the GO 131-D requirements for a PTC.
20. We affirm the ALJ's ruling consolidating A.08-07-032 and A.08-07-033.
21. Pursuant to § 1001, the present public convenience and necessity require the Proposed Project.
22. Evidentiary hearings are not necessary.
23. Pursuant to § 1002, the Proposed Project is consistent with community values, recreational and park areas, and historical and aesthetic values.
24. The Commission is the Lead Agency for compliance with the provisions of CEQA.
25. A Draft IS/MND analyzing the environmental impacts of the Proposed Project was processed in compliance with CEQA.
26. A Final MND on the Proposed Project was processed and completed in compliance with the requirements of CEQA.
27. With adoption of the mitigation measures identified in the Final MND and clarified in this decision, the Proposed Project will not have significant effects on the environment.
28. The Draft IS/MND and the Final MND (which includes the MMRP) should be adopted in their entirety.
29. Possible exposure to EMF has been reduced by the no-cost and low-cost measures contained in the EMF Field Management Plan that PG&E will include in the Proposed Project, pursuant to D.93-11-013 and D.06-01-042. The EMF Field Management Plan should be adopted.
30. Applicants should obtain all necessary permits, easement rights or other legal authority for the Proposed Project prior to commencing construction.
31. The Settlement Agreement between the Division of Ratepayer Advocates, Gill Ranch Storage, LLC, Lodi Gas Storage, LLC, and the Pacific Gas and Electric Company meets the tests for Commission adoption and should be approved.
32. The conditions contained in the Settlement Agreement should be included, without modification, as Ordering Paragraphs in any decision granting the Applications.
33. Pub. Util. Code § 785 does not require the Commission to give priority to production of natural gas from the Gill Ranch Gas Field over the use of the Gill Ranch Gas Field for gas storage services.
34. The Special Facilities Agreement that will be established between Applicants and PG&E complies with the Gas Storage Rules and should be approved.
35. Before commencing operation of the Proposed Project, Applicants should provide the Commission, in a supplemental filing to the Energy Division, the executed Special Facilities Agreement containing the final total cost of the interconnection, including the cost paid by each entity.
36. GRS is a new market entrant with no customers, GRS' interest in the Proposed Project presents no risk to core ratepayers, and neither GRS nor its affiliates own or control gas transportation or other natural gas facilities in California.
37. GRS does not have market power and should be authorized to charge market-based rates for the storage services.
38. GRS should file tariff rates within a rate window, but without cost justification.
39. GRS' and PG&E's requests to waive the need for a cost showing in this application should be approved.
40. The cost cap requirement of § 1005.5 should be waived for GRS and for PG&E.
41. GRS' requests for exemption from the requirements of § 818 and § 851 should be granted because Commission supervision of GRS' financing arrangements is not necessary to protect GRS customers or the public interest.
42. The Competitive Bidding Rule does not apply to GRS because GRS does not have a bond rating.
43. GRS' and PG&E's Applications for CPCNs and PG&E's Application for a PTC should be approved, subject to the mitigation measures set forth in the Final MND and the EMF Field Management Plan.
44. Because the Settlement Agreement is reasonable, consistent with the law, and in the public interest, the Settlement Agreement should be approved.
45. A.08-07-032 and A.08-07-033 should be closed.
46. This order should be effective immediately.
IT IS ORDERED that:
1. Gill Ranch Storage, LLC is granted a certificate of public convenience and necessity to construct and operate the Gill Ranch Storage Project to provide natural gas storage services at market-based rates, and shall be allowed to charge market-based rates within a filed rate zone, subject to the conditions in the ordering paragraphs set forth below.
2. Before commencing its service to customers, Gill Ranch Storage, LLC shall file with this Commission an advice letter and accompanying tariff schedules which shall set forth proposed rate ceilings or floors, and which will comply with the criteria of the Commission's General Order 96-B, and other applicable Commission rules and procedures.
3. The Pacific Gas and Electric Company is granted a certificate of public convenience and necessity to construct and operate the Gill Ranch Storage Project to provide natural gas storage services, subject to the conditions in the ordering paragraphs set forth below.
4. The Pacific Gas and Electric Company shall use its existing tariffs for natural gas storage services provided from the Gill Ranch Storage Project.
5. The Pacific Gas and Electric Company is granted a permit to construct an electric substation and a 115 kilovolt electric power line to provide electric service to the Gill Ranch Storage Project, subject to the conditions in the ordering paragraphs set forth below.
6. The cost cap requirement of Pub. Util. Code § 1005.5 is waived for Gill Ranch Storage, LLC and for the Pacific Gas and Electric Company.
7. Gill Ranch Storage, LLC's requests for exemption from the requirements of Pub. Util. Code §§ 818 and 851 for the initial construction financing and permanent debt financing in connection with development of its 75 percent share in the Proposed Project is granted.
8. The Settlement Agreement between the Division of Ratepayer Advocates, Gill Ranch Storage, LLC, Lodi Gas Storage, LLC, and the Pacific Gas and Electric Company is approved and included in this decision as Appendix A.
9. The authority granted herein is expressly limited to the 20 billion cubic feet storage capacity described in the Applications, with the Pacific Gas and Electric Company owning a 25 percent undivided interest in such capacity (5 billion cubic feet) and Gill Ranch Storage, LLC owning a 75 percent undivided interest in such capacity (15 billion cubic feet).
10. The Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC shall not expand the storage capacity of the Gill Ranch Storage Project beyond the capacity approved by the Commission in this proceeding without first seeking and receiving from this Commission any authority that may be required by laws and regulations applicable at the time of any proposed capacity expansion. To the extent that the Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC plan to expand the facilities and contend that Commission authority is not required by laws and regulations applicable at the time of any proposed capacity expansion, Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC shall provide prior notice to the Commission and all parties to this proceeding of such proposed expansion and a detailed explanation in support of the contention that Commission authority is not required.
11. The Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC shall not change the original 25 percent/75 percent project ownership ratio without first seeking and receiving from this Commission any approval that may be required by laws and regulations applicable at the time of the proposed change in the Gill Ranch Storage Project ownership ratio. To the extent that the Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC plan to change the original 25 percent/75 percent project ownership ratio and contend that Commission authority is not required by laws and regulations applicable at the time, the Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC shall provide prior notice to the Commission and all parties to this proceeding of such proposed ownership ratio change and a detailed explanation in support of the contention that Commission authority is not required.
12. The Pacific Gas and Electric Company and/or Gill Ranch Storage, LLC, shall serve on all parties to this proceeding any notice, application and/or advice letter required by Ordering Paragraphs 10 and 11 or by laws and regulations applicable at the time authority is sought.
13. The Pacific Gas and Electric Company and any entity related to the Pacific Gas and Electric Company shall not provide any undue preference to Gill Ranch Storage, LLC, as compared to any other independent storage provider(s) in terms of pipeline operations, including, but not limited to, balancing, interconnection, access to pipeline facilities, classification of interconnection costs, construction and pricing of interconnection and other facilities, scheduling, curtailment, upgrades and expansions, and application or interpretation of applicable Pacific Gas and Electric Company tariffs and rules contained therein.
14. Absent prior written consent from the owner of the information, the Pacific Gas and Electric Company and any entity related to the Pacific Gas and Electric Company shall not share any information obtained by the Pacific Gas and Electric Company in the course of business regarding Lodi Gas Storage, LLC, Wild Goose Storage, LLC, or any other independent storage provider in California with Gill Ranch Storage, LLC, or any entity related to Gill Ranch Storage, LLC, unless such information is of a public nature prior to the time of the release. To the extent that any sharing of this information occurs, the Pacific Gas and Electric Company shall promptly report to the Commission the nature of any such sharing.
15. The Pacific Gas and Electric Company and Gill Ranch Storage, LLC shall promptly report and submit to the Commission and the parties to this proceeding copies of any revisions or amendments to the Operator Agreement, the Joint Project Agreement, the Operating and Balancing Agreement and any exhibits thereto, and shall report to the Commission any circumstances in which Gill Ranch Storage, LLC is allowed to deviate from the aforementioned agreements or where discretionary provisions (e.g., Operating and Balancing Agreement, § 5.8) are relied upon to release or modify obligations imposed upon Gill Ranch Storage, LLC while not releasing or modifying other storage providers' similar obligations.
16. To the extent that the Operating and Balancing Agreement of Gill Ranch Storage, LLC or any existing independent storage provider contains, includes or provides treatment that is different from what the Pacific Gas and Electric Company offers to any other independent storage provider (including Gill Ranch Storage, LLC), the Pacific Gas and Electric Company shall provide any existing independent storage provider or Gill Ranch Storage, LLC, (a) the opportunity to amend its Operating and Balancing Agreement to include comparable terms and (b) comparable treatment under such amended terms.
17. Pursuant to a standing request or an agreement-specific request of any party to this proceeding, the Pacific Gas and Electric Company shall provide copies of any agreements setting forth interconnection arrangements with Gill Ranch Storage, LLC, including all interconnection agreements, special facilities agreements and other agreements pertinent to the construction and operation of the interconnection between the Pacific Gas and Electric Company and Gill Ranch Storage, LLC, or otherwise relating to Gill Ranch Storage, LLC, access to pipeline facilities. To the extent that there are any differences in treatment provided by the Pacific Gas and Electric Company to Gill Ranch Storage, LLC, as compared to other independent storage providers, the Pacific Gas and Electric Company shall provide other independent storage providers with the opportunity to receive comparable treatment.
18. Upon request by any party to this proceeding, the Pacific Gas and Electric Company and the requesting party will make all good faith efforts to resolve issues relating to possible preferential treatment by the Pacific Gas and Electric Company of Gill Ranch Storage, LLC, in an expeditious manner. As part of the process, the Pacific Gas and Electric Company shall provide information reasonably necessary for the requesting party to evaluate whether undue preferential treatment to Gill Ranch Storage, LLC, as compared to other independent storage providers, is occurring or has occurred.
19. The Pacific Gas and Electric Company shall not seek recovery of any costs associated with the Gill Ranch Storage Project from the rates of its core customers in its Year 2011 Gas Transmission and Storage rate case (filed on September 18, 2009) or any other application or advice letter to the Commission which would include such costs prior to the end of the period in which rates determined by the Year 2011 Gas Transmission and Storage rate case are effective.
20. To the extent that the Pacific Gas and Electric Company subsequently seeks recovery of any costs associated with the Gill Ranch Storage Project authorized herein, the Pacific Gas and Electric Company shall not be entitled to a presumption that the costs of the Gill Ranch Storage Project are reasonable or prudently incurred and shall bear the burden of proving (a) the prudence and reasonableness of the costs of the Gill Ranch Storage Project in any proceeding in which the Pacific Gas and Electric Company requests authority to include any costs of the Gill Ranch Storage Project in core rates and (b) that the storage costs which it proposes to allocate to the class of customers are consistent with such customers' rights to use and actual utilization of the Gill Ranch Storage Project and other Pacific Gas and Electric Company storage facilities.
21. The Pacific Gas and Electric Company shall continue to obtain incremental core storage capacity through existing competitive procurement processes unless or until such competitive procurement processes are changed by final Commission order.
22. As an independent storage provider and as a condition to the authority granted herein, Gill Ranch Storage, LLC shall:
(a) Semi-annually, on April 30 and on October 31, report to the Director of the Commission's Energy Division, with a copy to the Division of Ratepayer Advocates, the following information about transactions which are not already subject to Pub. Util. Code §§ 852 and 854, (i) the identity of any affiliate that directly or indirectly has acquired or has made an investment resulting in a controlling interest or effective control, whether direct or indirect, in an entity in California or elsewhere in Western North America that produces natural gas or provides natural gas storage, transportation or distribution services; and (ii) the identity of any affiliate that directly or indirectly has acquired or has made an investment resulting in a controlling interest or effective control, whether direct or indirect, in an entity in California or elsewhere in Western North America that generates electricity, or provides electric transmission or distribution services. Information reported pursuant to subsections (i) and (ii) shall include the nature (including name and location) of the asset acquired or in which the investment was made, and the amount of the acquisition or investment. "Affiliate" means any direct or indirect parent entity of Gill Ranch Storage, LLC, any entity controlled by Gill Ranch Storage, LLC, whether directly or indirectly, any entity under common control with Gill Ranch Storage, LLC by a direct or indirect parent entity (e.g., any subsidiary of any Gill Ranch Storage, LLC parent entity). In addition to California, the states of Oregon, Washington, Arizona, New Mexico, Texas, Nevada, Colorado, Wyoming, and Utah, "Western North America" includes the provinces of British Columbia and Alberta, Canada, and the State of Baja California Norte, Mexico.
(b) Provide to the Director of the Commission's Energy Division, for transactions to be completed within one year or less (short-term transactions), true copies of all service agreements for such transactions within 30 days after commencement of the short-term service, to be followed by quarterly transaction summaries of specific sales. If Gill Ranch Storage, LLC enters into multiple service agreements within a 30-day period, Gill Ranch Storage, LLC may file these service agreements together so as to conserve the resources of Gill Ranch Storage, LLC and the Commission. The quarterly summary of transactions shall list, for all tariffed services, the purchaser, the transaction period, the type of service (e.g., firm, interruptible, balancing, etc.), the rate, the applicable volume, whether there is an affiliate relationship between Gill Ranch Storage, LLC and the customer, and the total charge to the customer.
(c) Provide to the Director of the Commission's Energy Division, for transactions that will not be completed within one year (long-term transactions), true copies of all service agreements for such transactions within 30 days after commencement of the long-term service. To ensure the clear identification of filings, and in order to facilitate the orderly maintenance of the Commission's records, service agreements for long-term transactions shall not be filed with summaries of short-term transactions.
(d) Not engage in storage or hub service transactions with its parent, Northwest Natural Gas Company or its successors, or with any entity owned, affiliated with, or controlled by Northwest Natural Gas Company, or its successors.
(e) Provide an annual report to the Division of Ratepayer Advocates detailing its operations in connection with Gill Ranch Storage, LLC's, percentage of undivided ownership interest in the Gill Ranch Storage Project, containing the following information:
(i) The capacity of the Gill Ranch Storage Project storage facilities, i.e., total inventory, injection and withdrawal rights;
(ii) A summary showing average monthly storage inventory, injections and withdrawals for the project, which summary shall be based on the Energy Information Reports Gill Ranch Storage, LLC submits to the United States Department of Energy;
(iii) Daily operating records, aggregated on a weekly basis, based on the Energy Information Reports Gill Ranch Storage, LLC submits to the United States Department of Energy;
(iv) Firm capacity under contract on a monthly and annual basis; and
(v) Interruptible capacity sold on a monthly and annual basis.
(f) Maintain its corporate records at the utility level, make such records available to the Commission pursuant to Pub. Util. Code § 314, and make available utility officers, employees and agents as required by Pub. Util. Code § 314(a).
23. As an owner of a portion of the Gill Ranch Storage Project and as condition to the authority granted herein, the Pacific Gas and Electric Company shall:
(a) Provide an annual report to the Division of Ratepayer Advocates detailing its operations at the Gill Ranch Storage Project, containing the following information:
(i) The capacity of the Gill Ranch Storage Project storage facilities, i.e., total inventory, injection and withdrawal rights for the Pacific Gas and Electric Company's percentage of undivided ownership interest in the project;
(ii) A summary showing average monthly storage inventory, injections and withdrawals for the Pacific Gas and Electric Company's percentage of undivided ownership interest in the Gill Ranch Storage Project, which summary shall be based on the Energy Information Reports that are submitted to the United States Department of Energy; and
(iii) Daily operating records, aggregated on a weekly basis, for the Pacific Gas and Electric Company's percentage of undivided ownership interest in the Gill Ranch Storage Project, based on the Energy Information Reports that are submitted to the United States Department of Energy.
(b) On an annual basis, provide a report to the Division of Ratepayer Advocates of the Pacific Gas and Electric Company's aggregate firm storage capacity under contract (containing monthly and annual data) and aggregate interruptible storage capacity sold (also containing monthly and annual data).
24. Gill Ranch Storage, LLC and the Pacific Gas and Electric Company shall ensure that the operator of the Gill Ranch Storage Project provides an annual report to the Division of Ratepayer Advocates containing the following information for the Gill Ranch Storage Project:
(a) The capacity of the Gill Ranch Storage Project storage facilities, i.e., total inventory, injection and withdrawal rights;
(b) A summary showing average monthly storage inventory, injections and withdrawals for the Gill Ranch Storage Project, which summary shall be based on the Energy Information Reports the operator submits to the United States Department of Energy;
(c) Daily operating records, aggregated on a weekly basis, based on the Energy Information Reports the operator submits to the United States Department of Energy;
(d) A copy of the annual safety report, including a description of all safety-related incidents that is submitted to the United States Department of Transportation.
25. Competitively sensitive, confidential information submitted pursuant to Ordering Paragraphs 22, 23, and 24, including short-term and long-term service agreements, may be submitted under seal in accordance with General Order 66-C and Pub. Util. Code § 583. Competitively sensitive, confidential information shall be identified by Gill Ranch Storage, LLC and/or the Pacific Gas and Electric Company and treated by the Division of Ratepayer Advocates as confidential pursuant to General Order 66-C and Pub. Util. Code § 583. This confidentiality agreement is made between the Settling Parties. The Commission has the authority to determine whether such information is subject to confidential treatment.
26. The Final Mitigated Negative Declaration (which incorporates the Draft Initial Study/Mitigated Negative Declaration) is adopted pursuant to the requirements of the California Environmental Quality Act, Public Resources Code §§ 21000, et seq.
27. The Mitigation Monitoring and Reporting Program, included as part of the Final Mitigated Negative Declaration and further clarified in this decision, is adopted.
28. The Electromagnetic Field Management Plan, included as Appendix B to this Decision, is adopted.
29. The Gill Ranch Storage, LLC certificate of public convenience and necessity to construct and operate the Gill Ranch Storage Project, the Pacific Gas and Electric Company certificate of public convenience and necessity to construct the Gill Ranch Storage Project, and the Pacific Gas and Electric Company Permit to Construct an electric substation and a 115 kilovolt electric power line to provide electric service to the Gill Ranch Storage Project are subject to the Electromagnetic Field Management Plan included in Appendix B to this Decision and the mitigation measures set forth in the Final Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program, and Applicants shall fully implement these measures.
30. Applicants shall have in place, prior to commencing construction, all of the necessary easements rights, or other legal authority, to the Proposed Project sites.
31. Applicants shall provide the Commission, in a supplemental filing to the Energy Division, a copy of the executed Special Facilities Agreement between Applicants and the Pacific Gas and Electric Company containing the final total cost of the interconnection including the cost paid by each entity.
32. Application 08-07-032 and Application 08-07-033 are closed.
This order is effective today.
Dated October 29, 2009, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
