Findings of Fact

1. It is reasonable to consider certain threshold issues before devoting additional resources to this proceeding.

2. In Phase 2 of this proceeding, if a CPCN is issued for the proposed Talega-Escondido/Valley-Serrano transmission line, Nevada Hydro will build a transmission line, proposed to transmit power from the Talega-Escondido line to the Valley-Serrano line, and vice versa.

3. Based on Commission precedent, entities that are granted CPCNs then become public utilities, consistent with the requirements of the Pub. Util. Code.

4. Substantive issues related to the financial viability of Nevada Hydro, the need for the proposed project, and environmental review will be considered in Phase 2.

5. In Phase 2, the proposed transmission line will be evaluated on a stand-alone basis with regard to the need for the project and the economics of constructing this project.

6. We need not determine whether or not Nevada Hydro must seek a CPCN for the LEAPS project at this Commission at this time; instead, we will make this determination if LEAPS is certificated by FERC.

7. It would have a chilling effect on effective intervenor participation, if there is not some guarantee that funding will be available to compensate those intervenors who are determined to have made a substantial contribution to this proceeding, whether or not a CPCN is issued for the proposed transmission line.

8. In D.00-05-048, the Commission ordered Lodi Gas Storage to post a surety or performance bond in the amount of $20 million to cover its obligations under the CPCN issued in that decision.

9. Intervenors currently estimate their budgets at approximately $400,000; requiring a surety or performance bond of $550,000 (approximately 1.5 times the current budgets estimated for intervenor compensation) is likely a sufficient amount to ensure compensation in this matter, including the costs of judicial review, if any.

10. DRA currently estimates that it must hire expert witness services that cost approximately $450,000.

Conclusions of Law

1. Nevada Hydro will become a public utility, as set forth in §§ 216 and 218, if a CPCN is issued in Phase 2 of this proceeding.

2. While we agree that the Federal Power Act reserves jurisdiction over hydroelectric projects to FERC, states are not precluded from requesting that the applicant voluntarily seek a CPCN at this Commission, after such certification is granted by FERC.

3. Given that Nevada Hydro will become a public utility if a CPCN is issued for the Talega-Escondido/Valley-Serrano transmission line in Phase 2, the requirements of the Pub. Util. Code will apply during the pendency of this proceeding.

4. We must read the applicable law in a manner that harmonizes the various statutory requirements of the Pub. Util. Code and must ensure that the intervenor compensation statutes are given full effect.

5. Section 631 requires electrical corporations that propose to construct plant costing more than $100 million to reimburse the Commission for consultants and advisory services for processing an application for certification of the plant.

6. It is reasonable to require Nevada Hydro to provide a performance or surety bond in the amount of $550,000 and to require the bond to remain in effect until Nevada Hydro has fully compensated all intervenors that the Commission determines have made a substantial contribution to this matter.

7. It is reasonable to require Nevada Hydro to enter into a progressive invoicing and reimbursement arrangement with DRA to fund DRA's consultants in this proceeding.

8. Requiring Nevada Hydro to ensure that funds are available to compensate eligible intervenors and DRA's consultants treats all CPCN applicants similarly and does not impose greater restrictions on utility CPCN applicants than non-utility applicants.

9. It is reasonable to require Nevada Hydro to incur both the costs of providing a bond and the costs required under § 631, because these are reasonable costs of doing business for an entity proposing to be certified as a public utility and proposing to build a project estimated to cost $353 million in 2007 dollars).

10. No party requested evidentiary hearings in Phase 1 and we determine that hearings are not necessary for this phase of the proceeding.

11. This decision should be effective today, to provide certainty to intervenors and DRA.

ORDER

IT IS ORDERED that:

1. Pursuant to Pub. Util. Code §§ 216 and 218, The Nevada Hydro Company shall become a public utility, if a certificate of public convenience and necessity for the Talega-Escondido/Valley-Serrano transmission line is issued in Phase 2 of this proceeding.

2. The Nevada Hydro Company shall provide a surety or performance bond in the amount of $550,000 that shall remain in effect until it has fully compensated all eligible intervenors determined to have made a substantial contribution to this proceeding.

3. No later than 30 days after the effective date of this decision, The Nevada Hydro Company shall file and serve proof of the bond in this proceeding and shall send a copy of the bond to the Commission's Fiscal Office.

4. The Nevada Hydro Company shall enter into a progressive invoicing and reimbursable contract arrangement with the Division of Ratepayer Advocates (DRA) to fund the expert witnesses and consultants DRA engages under Pub. Util. Code § 631. The Nevada Hydro Company shall file and serve proof of this arrangement when DRA engages its consultant.

5. This proceeding remains open to address Phase 2; however, to the extent that The Nevada Hydro Company does not comply with Ordering Paragraphs 2 and 3, the Commission, on its own motion, shall dismiss this application with prejudice.

This order is effective today.

Dated July 28, 2011, at San Francisco, California.

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