14. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner and Douglas Long is the assigned ALJ and presiding officer in these consolidated proceedings.
1. SFPP operates a network of pipelines for the transportation of refined petroleum products, such as gasoline, diesel, and jet fuel. This network provides public utility service and is regulated by this Commission.
2. By allowing customers the use of the facility, SFPP has dedicated to public service the Sepulveda Line as part of its public utility pipeline system.
3. The ownership of SFPP in place prior to the transfer of control authorized in D.07-05-061 is the ownership structure relevant to determining any reasonable income tax allowance in rates.
4. SFPP has not demonstrated that the utility has an actual or potential income tax obligation on the entity's public utility income. There is no evidentiary record to credibly support a ratemaking allowance.
5. SFPP has not shown that its environmental costs are equitably or accurately allocated between California, terminal, and non-California operations. Absent any other allocation the Commission uses a proportional allocation method.
6. SFPP's rates are over-stated by including an income tax allowance and misallocating environmental costs.
7. The record in A.00-03-044 for market-based rates is over seven years old and is therefore hopelessly stale.
8. A capital structure of 60% equity and 40% debt is consistent with the capital sources provided by SFPP's affiliate, KMEP.
9. KMEP's weighted cost of debt is 7.08% and reflects the cost at which SFPP could attract lenders.
10. A return of 12.61% on equity will yield a reasonable overall cost of capital of 10.40% for test year 2003 base rates.
11. The North Line Expansion entered service in 2004 after the test year 2003.
12. Adjusting 2004 rates for the North Line Expansion will avoid an additional rate filing and allow SFPP a reasonable opportunity to recover its costs.
13. SFPP has not shown that there is effective competition for Watson Station and Sepulveda.
14. Without competition, rates for Watson Station and Sepulveda should be on a cost-of-service basis.
1. SFPP bears the burden of proof to show by a preponderance of the evidence that its costs were reasonable and recoverable at the last adopted rates. In a Complaint, the burden of proof is on the moving party.
2. Complainants have shown by a preponderance of the evidence that SFPP's actions had dedicated the Sepulveda Line to public utility service.
3. SFPP has not justified by a preponderance of the evidence that an income tax allowance should be included in rates as an expense the utility is likely to pay.
4. It is reasonable to dismiss A.00-03-044 without prejudice due to a hopelessly stale record.
5. The Commission has broad discretion in adopting a capital structure and cost of capital.
6. The Commission has the discretion to adopt an attrition ratesetting adjustment effective in 2004 for the North Line Expansion, a major capital addition expected after test year 2003. This adjustment will allow SFPP to recover its reasonable costs.
7. SFPP has not met its burden of proof to justify its allocation of environmental costs.
8. The rates for Watson Station and Sepulveda should be on a cost-of-service basis.
9. Errors in SFPP's rates are refundable to customers pursuant to Pub. Util. Code § 455.3(b)(4).
10. It is reasonable to close C.97-04-025, C.00-04-013, and A.00-03-044.
11. Settlement is a reasonable means to resolve the remaining issues and it is within the Commission's discretion to direct the parties to diligently pursue settlement in lieu of litigation.
IT IS ORDERED that:
1. SFPP, L.P.'s Sepulveda Line is a public utility dedicated to utility service.
2. SFPP, L.P. must refund to all customers, within 90 days, the excess component in rates. SFPP, L.P. shall file a Tier 1 advice letter insert following within 30 days of the effective date of this decision.
3. SFPP, L.P. and all active parties must meet in a good faith effort to settle the remaining consolidated issues.
4. Application 00-03-044 is dismissed without prejudice.
5. The consolidated Case (C.) 97-04-025, C.00-04-013, and Application 00-03-044 are closed.
6. The consolidated proceedings remain open to resolve the pending issues in Application (A.) 03-02-027, A.04-11-017, A.06-01-015, A.06-08-028, and Case 06-12-031, and remain consolidated.
This order is effective today.
Dated May 26, 2011, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
Commissioners
APPENDIX A
APPENDIX A
SFPP Consolidated Proceedings Procedural History | |||
Number & Date Filed |
Caption |
ALJ Resolution |
Calendar |
C.97-04-025 April 10, 2000 |
ARCO Products Company, Mobil Oil Corporation, Texaco Refining and Marketing, Inc., and Equilon Enterprises, LLC, Complainants, vs. Santa Fe Pacific Pipeline, L.P. (SFPP, L.P.), Defendant. |
N.A. |
April 14, 1997 |
C.00-04-013 April 10, 2000 |
ARCO Products Company, A Division of Atlantic Richfield Company (ARCO) and Mobil Oil Corporation (MOBIL), Complainants, vs. SFPP, L.P., Defendant. |
Instruction to Answer April 24, 2000 |
April 14, 2000 |
A.00-03-044 March 16, 2000 |
In the Matter of the Application of SFPP, L.P. for Authority to Justify its Rates for Intrastate Transportation of Refined Petroleum Products on the Basis of Market Factors. |
ALJ 176-3036 April 6, 2000 |
March 31, 2000 |
A.03-02-027 February 21, 2003 |
Application of SFPP, LP pursuant to Commission Resolution No. 0-0043 issued October 24, 2002. |
ALJ 176-3108 February 27, 2003 |
February 27, 2003 |
A.04-11-017 November 16, 2004 |
Application of SFPP, L.P. for authority, pursuant to Pub. Util. Code § 455.3, to increase its rates for pipeline transportation services within California. |
ALJ 176-3143 December 2, 2004 |
November 22, 2004 |
A.06-01-015 January 26, 2006 |
Application of SFPP, L.P. for authority, pursuant to Pub. Util. Code § 455.3, to increase its rates for pipeline transportation services within California. |
ALJ 176-3167 February 16, 2006 |
January 30, 2006 |
A.06-08-028 August 25, 2006 |
Application of SFPP for authority, pursuant to Pub. Util. Code § 455.4 to increase rates for pipeline transportation services within California through implementation of an Ultra Low Sulfur Diesel Surcharge. |
ALJ 176-3178 September 7, 2006 |
September 6, 2006 |
C.06-12-031 December 27, 2006 |
Tesoro Refining and Marketing Co., v. SFPP L.P. - For a refund due to unjust rates and overcharges. |
Instruction to Answer January 5, 2007 |
December 29, 2006 |
(END OF APPENDIX A)
APPENDIX B
************** PARTIES ************** |
James D. Squeri |
Geroge L. Weber |
********* INFORMATION ONLY ********** |
Doug Garrett |
Barbara Hickel |
APPENDIX C
