COM/MP1/jyc/oma Date of Issuance 5/31/11

Decision 11-05-048 May 26, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of San Diego Gas & Electric Company (U902E) for Approval Pursuant to Public Utilities Code Section 851 to Lease Transfer Capability Rights to Citizens Energy Corporation.

Application 09-10-010 (Filed October 9, 2009)

DECISION GRANTING APPROVAL OF
LEASE OF TRANSFER CAPABILITY RIGHTS FROM SAN DIEGO GAS & ELECTRIC COMPANY TO CITIZENS ENERGY CORPORATION

1. Summary

San Diego Gas & Electric Company (SDG&E) seeks Commission approval of an agreement it has reached with Citizens Energy Corporation (Citizens) under which Citizens would have the option to lease transfer capability rights, for a 30-year term, along the Imperial Valley segment of SDG&E's Sunrise Powerlink Transmission Project. If the authority is granted and Citizens exercises the lease option, Citizens will pay SDG&E an estimated $83 million in prepaid rent for the lease and at the expiration of the 30-year lease term, the facility reverts to SDG&E. Citizens will also spend 50% of its profits, after taxes, to programs serving low income families in Imperial County.

This decision finds in consideration of public interest benefits that would be realized, this proposed transaction is approved. The public interest benefits are: the involvement by Citizens spurs the development of a line by an independent transmission provider; the development of this line alleviates a transmission bottleneck and facilitates delivery of renewable energy to Southern California─allowing the California regulated utilities to reach their mandated renewable targets easier; consumer protections are built into the rate Citizens can charge; the 30-year locked-in nature of Citizens' rate shields ratepayers from market fluctuations; Citizens will provide direct financial benefits to lower income electric consumers in the Imperial Valley; and the project will contribute to employment opportunities and the tax base in Imperial County. While all California CAISO electric ratepayers could pay more for transmission service than they would pay if SDG&E retained control of the line segment, any projected higher costs are outweighed by the benefits all SDG&E ratepayers, and the citizens of Imperial Valley, will receive from this lease agreement with Citizens. Accordingly, the requested authority is granted. Application 09-10-010 is closed.