10. Assignment of the Proceeding
Dian M. Grueneich is the assigned Commissioner for A.09-08-008 and Timothy Kenney is the assigned ALJ.
1. CVGS requests a CPCN to construct and operate the CVGS Project that includes: (i) an 11 Bcf underground natural gas storage field and associated injection/withdrawal, observation, and salt water disposal wells; (ii) a compressor station with three 3,550 hp gas-fired compressors; (iii) a 14.7-mile, 24-inch pipeline to transport gas to and from the storage field and PG&E's Line 400/401; (iv) a metering station near PG&E's Line 400/401; and (v) a 300-foot, 12-inch gas pipeline, meter skid, and compressor to temporarily transport gas one way from PG&E's Line 172 to the gas storage field to inject base gas and the initial fill prior to connecting to PG&E's Line 400/401.
2. The purpose of the CVGS Project is to provide gas storage services to the public for compensation. CVGS will not have captive customers, and agrees to bear all risks for the CVGS Project.
3. The CVGS Project will improve the reliability of natural gas supplies in California and reduce volatility in natural gas prices.
4. There is strong market demand for the CVGS Project.
5. CVGS has the necessary financial resources and technical expertise to develop and operate the CVGS Project.
6. The CVGS Project will be designed, constructed, and operated in a way that provides a high degree of safety to employees and the public.
7. With respect to the four factors the Commission must consider pursuant to § 1002(a), the CVGS Project (i) is consistent with community values; (ii) will not adversely affect recreational and park areas; (iii) is consistent with historical uses of the Project site and community aesthetic values; and (iv) will not have a significant adverse influence on the environment.
8. There is no regulatory need to specify a maximum reasonable cost for the CVGS Project or for CVGS to provide the cost data to set cost-based rates.
9. There is no regulatory need at this time for CVGS to comply with the information posting requirements that apply to SoCalGas.
10. The Settlement Agreement will help ensure that CVGS will bear all costs to interconnect with PG&E's Line 400/401 and Line 172; will operate in a manner that does not adversely affect PG&E's system or end-use customers; and will provide the Commission with information needed to monitor CVGS's operations, market activities, and affiliate transactions and relationships.
11. The proposed reporting requirements in the Settlement Agreement would, if adopted, replace the reporting requirements contained in Commission's affiliate transaction rules, GO 65-A, GO 77-M, and GO 104-A.
12. There is no objection to CVGS's motion to waive Rule 12.1(b), and there is no need to hold a settlement conference pursuant to Rule 12.1(b).
13. The Final MND demonstrates that the safety hazards associated with the CVGS Project will be mitigated to a non-significant level.
14. The Final MND for the CVGS Project identified no significant environmental impacts that could not be avoided or reduced to non-significant levels with the mitigation measures described therein. The MMCRP that is incorporated in the Final MND describes the mitigation measures to be taken.
15. CVGS agrees to comply with the mitigation measures in the Final MND.
16. The Commission considered the Final MND in deciding to approve the CVGS Project. The Final MND reflects the Commission's independent judgment.
17. Based on the mitigation measures included in the Final MND, the CVGS Project will not have a significant impact upon the environment.
18. In Resolution ALJ 176-3240, dated September 10, 2009, the Commission preliminarily determined that there was a need for evidentiary hearings in this proceeding. However, the parties agreed at the PHC that hearings were not needed. The Scoping Memo affirmed that hearings were not needed.
19. CVGS should be deemed a public utility gas corporation pursuant to § 216(a) and § 222.
20. Public convenience and necessity require the construction of the proposed CVGS Project.
21. CVGS should be granted a CPCN pursuant to § 1001 et seq., to construct and operate the CVGS Project.
22. Pursuant to GO 112-E, at least 30 days prior to the start of construction of its pipeline, CVGS should file a report with the Commission's Consumer Protection and Safety Division, Utilities Safety and Reliability Branch containing the information specified in GO 112-E, Section 125.1.
23. Pursuant to GO 112-E, Section 125.2, CVGS should file with USRB a report of any failures that occur during the strength testing of pipeline to be operated at hoop stresses of 20 percent or more of the specified minimum yield strength of the pipe used.
24. CVGS should bear all risks associated with the CVGS Project.
25. CVGS's request to waive the requirement in § 1005.5(a) to specify a maximum reasonable cost for the CVGS Project should be granted.
26. CVGS's request to waive the requirement in Rule 3.1(f) to provide cost data for the CVGS Project should be granted.
27. CVGS's request to charge market-based rates should be granted. The market-based rates should be limited to the minimum and maximum rates set forth in CVGS's tariff.
28. CVGS should file its initial tariff using the Tier 1 advice letter process. The initial tariff should be similar in all substantial respects to the proposed tariff contained in Exhibit E of A.09-08-008.
29. CVGS should be authorized to file its initial tariffs, and any future revisions to its tariffs, without cost justification.
30. CVGS's request for an exemption from § 818, § 851, and the Commission's Competitive Bidding Rule set forth in Resolution F-616 should be granted with respect to the issuance of debt and equity used to finance utility-related investments and operations.
31. Consistent with Commission precedent, CVGS should be required to maintain general liability insurance of $50 million. The liability insurance should increase over time to reflect inflation.
32. CVGS should be required to indemnify other parties for any losses they incur due to accidents associated with the construction and/or operation of the CVGS Project where CVGS is found to be liable.
33. The Settlement Agreement is reasonable in light of the record, consistent with the law, and in the public interest, and should be adopted.
34. The Commission under § 1708 may modify or rescind the Settlement Agreement adopted by today's decision after providing notice to the parties.
35. CVGS's motion for a waiver of Rule 12.1(b) should be granted.
36. The Commission is the Lead Agency under CEQA for the CVGS Project.
37. A Draft IS/MND analyzing the environmental impacts of the proposed CVGS Project was prepared in compliance with CEQA. The Final MND for the Project was processed and completed in compliance with CEQA and conforms to the requirements of CEQA.
38. The Final MND, which incorporates the Draft IS/MND and the MMCRP, should be adopted in its entirety.
39. The CPCN granted by today's decision should be subject to the mitigation measures set forth in the Final MND.
40. CVGS should be required to obtain all necessary permits, easement rights, and other legal authorization to develop the CVGS Project prior to the start of construction.
41. There is no need for evidentiary hearings. The changed determination on the need for hearings should be approved.
42. A.09-08-008 should be closed.
43. The following Order should be effective immediately so the construction of the CVGS Project can begin.
IT IS ORDERED that:
44. Central Valley Gas Storage, LLC (CVGS) is a public utility gas corporation as defined by Pub. Util. Code § 216(a) and § 222. As such, CVGS is subject to the Commission's jurisdiction, control, and regulation, and has all the rights and obligations of a public utility.
45. Central Valley Gas Storage, LLC (CVGS) is assigned utility identification number U915G, which CVGS must include in the caption of all future filings at the Commission.
46. Central Valley Gas Storage, LLC (CVGS) is granted a Certificate of Public Convenience and Necessity (CPCN) to construct and operate the CVGS Project that is described in Application 09-08-008. The CPCN is subject to the requirements contained in the following Ordering Paragraphs 4 through 15.
47. At least 30 days prior to the start of construction of its pipeline, Central Valley Gas Storage, LLC (CVGS) must file a report with the Commission's Consumer Protection and Safety Division, Utilities Safety and Reliability Branch (USRB) containing the information specified in General Order (GO) 112-E, Section 125.1. Pursuant to GO 112-E, Section 125.2, CVGS must also file with USRB a report of any failures that occur during the strength testing of pipeline to be operated at hoop stresses of 20%t or more of the specified minimum yield strength of the pipe used.
48. Central Valley Gas Storage, LLC (CVGS) must bear all risks related to the construction and operation of the CVGS Project.
49. Public Utilities Code Section 1005.5(a) is waived with respect to the provision therein to specify the maximum reasonable cost for the Central Valley Gas Storage Project.
50. Rule 3.1(f) of the Commission's Rules of Practice and Procedure is waived with respect the provision therein for Central Valley Gas Storage, LLC, to provide cost data.
51. Central Valley Gas Storage, LLC (CVGS) is authorized to charge market-based rates for gas storage services. CVGS must file its initial tariffs using the Tier 1 advice letter process at least 30 days before commencing service. The initial tariff must be substantially similar to the draft tariff contained in Exhibit E of Application 09-08-008. The initial tariff and all future tariff revisions may be filed without cost support.
52. Central Valley Gas Storage, LLC, is exempt from Public Utilities Code Sections 818 and 851, and from the Commission's Competitive Bidding Rule set forth in Resolution F-616, for the limited purpose of issuing debt and equity to finance utility-related investments and operations.
53. Central Valley Gas Storage, LLC (CVGS) must maintain $50 million of general liability insurance per occurrence and in aggregate. The required amount of insurance must increase every five calendar years by an amount equal to inflation during the previous five years, rounded to the nearest million. The first five-year period must start on January 1, 2011. The measurement of inflation must be the gross domestic product deflator. CVGS may obtain the required general liability insurance directly or through Nicor, Inc. If the former, the deductible or self insured retention must be not exceed $250,000. If the latter, the insurance policy must always provide $50 million of coverage to CVGS, escalated by inflation as described previously, regardless of any claims paid to other affiliates under the policy.
54. Central Valley Gas Storage, LLC (CVGS) must indemnify other parties for any losses they incur due to accidents associated with the construction and/or operation of the CVGS Project where CVGS is found to be liable.
55. The March 24, 2010, Joint Motion of Central Valley Gas Storage, LLC, the Division of Ratepayer Advocates, Lodi Gas Storage, L.L.C., and Pacific Gas and Electric Company for Approval of Settlement Agreement is granted. The Settlement Agreement attached to this decision as Appendix A is adopted without modification. Central Valley Gas Storage, LLC, must comply with Conditions 1, 2, and 3 that are listed in the adopted Settlement Agreement, as well as all other aspects of the Settlement Agreement.
56. The Final Mitigated Negative Declaration (which incorporates the Draft Initial Study/ Mitigated Negative Declaration and the Final Mitigation Monitoring Plan) for the Central Valley Gas Storage Project is adopted pursuant to the California Environmental Quality Act, Public Resources Code Section 21000 et seq.
57. The Certificate of Public Convenience and Necessity to construct and operate the Central Valley Gas Storage Project is subject to the mitigation measures set forth in the Final Mitigated Negative Declaration, including the Final Mitigation Monitoring Plan.
58. Central Valley Gas Storage, LLC, must have in place, prior to commencing construction, all of the necessary permits, easement rights, and any other legal authority, to develop the Central Valley Gas Storage Project.
59. Central Valley Gas Storage, LLC's motion for a waiver of Rule 12.1(b) of the Commission's Rules of Practice and Procedure is granted.
60. There is no need for evidentiary hearings in this proceeding.
61. Application 09-08-008 is closed.
62. This Order is effective today.
Dated October 14, 2010, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
TIMOTHY ALAN SIMON
NANCY E. RYAN
Commissioners
APPENDIX A
