Assignment of Proceeding

Mark J. Ferron is the assigned Commissioner and Myra J. Prestidge is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. PacifiCorp is a multi-state jurisdictional utility that provides electric service to customers in Del Norte, Modoc, Shasta, and Siskiyou counties in California.

2. PacifiCorp owns 10 percent of units 3 and 4 of the Colstrip generation plant located in Montana.

3. The remainder of the Colstrip generation plant is owned by PPL-Montana, Puget Sound Energy, Avista, Northwestern Energy, and Portland General.

4. The Colstrip Township was developed because of a lack of housing in the area for employees of the Colstrip generation plant.

5. PacifiCorp and the other owners of the Colstrip generation plant own many parcels of land in the Colstrip Township.

6. Most of the parcels of land in the Colstrip Township are zoned for residential use, but a few parcels are zoned for commercial use, and one parcel is zoned for a light industrial use.

7. In the past, a number of properties in the Colstrip Township have been sold.

8. According to the application, at present, approximately 85 residential lots, three commercial lots, and one light industrial lot are currently available for sale in the Colstrip Township.

9. According to the application, the value of the sale of individual lots ranges from approximately $5,000 to $100,000, with most transactions valued below $20,000.

10. As a minority shareholder, PacifiCorp's share of the proceeds from these sales is approximately ten percent.

11. According to the application, unless an exemption from Section 851 is granted, PacifiCorp would need to file approximately 89 individual advice letters pursuant to Resolution ALJ-244 (as extended by Resolution ALJ-272) to request advance Commission approval of these sales pursuant to Section 851 as the transactions arise.

12. Upon review of its past records, PacifiCorp found that between 1981 and the present, a number of parcels in the Colstrip Township were sold without prior Commission approval pursuant to Section 851.

13. The past sales of properties in the Colstrip Township without Commission authorization pursuant to Section 851 occurred through a real estate broker, and PacifiCorp did not become aware of the sales until the closing process when, as an owner, PacifiCorp was required to sign the deeds.

14. As a minority owner of Colstrip units three and four, PacifiCorp does not actively negotiate the sales of these properties and usually is only notified of a sale after the transaction closes, when Pacificorp's signature on the deed is required to transfer title.

15. PacifiCorp does not control the sale of properties in the Colstrip Township.

16. The sale of properties in the Colstrip Township can be approved by the other owners of the Colstrip plant without PacifiCorp's consent.

17. Since PacifiCorp does not control the sales of Colstrip Township properties and often does not learn of the sales until the closing of the transactions, it is difficult for PacifiCorp to apply for advance Commission approval of these sales as required by Section 851.

18. None of the properties in the Colstrip Township that may be sold house PacifiCorp facilities used for the generation, transmission, or distribution of electric services.

19. None of the properties in the Colstrip Township that may be sold are necessary for PacifiCorp to provide reliable utility service at reasonable rates to the public.

20. All of these properties that may be sold are located within the Colstrip Township and are intended to be used for Township development purposes.

21. Since PacifiCorp owns only a 10 percent interest in the Colstrip Township properties, and the value of the sales of individual lots is relatively low, the sale of these properties will have a minimal impact on PacifiCorp's ratebase.

22. Requiring PacifiCorp to file approximately 89 advice letters pursuant to Resolution ALJ-244 (as extended by Resolution ALJ-272) or formal applications in order to obtain Section 851 approval of each sale as the transaction arises would cause PacifiCorp and its ratepayers unnecessary expense and would consume valuable Commission time and resources.

23. Under the circumstances of this case, Commission review and approval of the sale of the Colstrip Township properties is not necessary to protect the public interest.

24. The Commission does not generally grant exemptions from the requirements of Section 851 for transfers of utility property that occurred in the past.

25. Since the Commission is granting PacifiCorp an exemption from Section 851 pursuant to Section 853(b), we will not be reviewing or approving the sales of the Colstrip Township Properties and therefore will not be making a discretionary decision on a project that may trigger CEQA review.

Conclusions of Law

1. Section 851 requires advance Commission approval of transfers of utility property that is necessary or useful in providing service to the public.

2. The purpose of Section 851 review is to ensure that the transfer of utility property will not be adverse to the public interest.

3. In some circumstances, the Commission may grant an exemption pursuant to Section 853(b) for a particular transaction or class of transactions when applying the requirements of Section 851 to the transaction(s) is not necessary to protect the public interest.

4. Under the unique circumstances of this case, it is appropriate to grant PacifiCorp's application for an exemption from Section 851 pursuant to Section 853(b) for both past and future sales of properties in the Colstrip Township.

5. This decision shall not be used as precedent in any other proceeding in which a utility applies for an exemption from the requirements of Section 851 for a transfer of utility property that occurred in the past pursuant to Section 853(b).

6. Except as otherwise permitted by law or Commission order, public utilities are required to comply with Section 851.

7. Except as provided in this decision, PacifiCorp is required to either seek prior Commission approval pursuant to Section 851 or apply for an exemption pursuant to Section 853(b) before transferring property that is necessary or useful in providing utility service to the public.

8. Since the Commission has found that the sales of the Colstrip Township properties are exempt from Section 851 review, environmental review of the transactions pursuant to CEQA is not required.

ORDER

IT IS ORDERED that:

1. The application of PacifiCorp, pursuant to Public Utilities Code (Pub. Util. Code) Section 853(b), for an exemption from the requirements of Pub. Util. Code Section 851, for the past and future sales of properties located in the Colstrip Township in Montana, as described in the application, is granted.

2. PacifiCorp is authorized, without seeking Commission approval under Public Utilities Code Section 851, to implement the sales of properties in the Colstrip Township, Montana, as described in the application.

3. The exemption granted in this order is limited to the sale of PacifiCorp's minority interest in properties located in the Colstrip Township in Montana, as described in the application.

4. Except as otherwise permitted by law or Commission order, PacifiCorp shall either comply with Public Utilities Code (Pub. Util. Code) Section 851 or apply for an exemption pursuant to Pub. Util. Code Section 853(b) before engaging in any other transfers of utility property that is necessary or useful in the provision of service to the public.

5. This order shall not be precedent in other cases in which a public utility applies for an exemption from the requirements of Public Utilities Code Section 851 for a transfer of utility property that occurred in the past.

6. Application 11-10-022 is closed.

This order is effective today.

Dated May 24, 2012, at San Francisco, California.

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