2. Scope of the Proceeding
The issues to be decided in this proceeding are:
A. Public Interest Standard - Would the sale of PG&E facilities to TID, approval of the proposed agreement between PG&E and TID, and the other related transactions for which PG&E requests Commission approval (jointly, "the proposed transactions") be adverse to or serve the public interest? This issue includes, but is not limited to, the following subissues:
1) Do the proposed transactions comply with the applicable law?
2) Does Section 9607 or Section 9608 apply to the proposed transactions? If Section 9607 applies, have the parties followed the correct procedure in this application and is there a sufficient basis for the Commission to make the required findings? 6
3) How would the proposed transactions affect ratepayers, including ratepayers to be served by TID/WPA under the proposed agreement and remaining ratepayers of PG&E?
i. Will these transactions result in increased rates or costs to ratepayers (as defined above)?
ii. How will these transactions affect service to customers, including reliability and efficiency of service?
iii. Will TID/WPA provide universal service to all customers within the area to be served by TID/WPA under the proposed agreement at published rates and on a reasonable, just and non-discriminatory basis?
iv. What is the impact of the proposed transactions on public benefit and low-income programs pursuant to Sections 385 and 386 in the areas that TID/WPA would serve under the proposed agreement?
v. Will the proposed transactions avoid the economic waste, inefficiency, and increased costs associated with duplicative facilities?
vi. Does the proposed agreement between PG&E and TID limit or prohibit mutual aid or other collaborative or joint activities between TID and other irrigation districts? If yes, is this restriction adverse to the public interest?
vii. Should the Commission require a true-up or other more specific determination of the NBC's to be paid in full by TID to PG&E on behalf on customers in the Westside Zone if this application is approved?
viii. Should PG&E's shareholders be shielded from liability related to any NBC obligation for customers in the Westside Zone?
ix. Is the proposed agreement between PG&E and TID in the best interest of the State of California, PG&E and TID?
B. Commission Oversight of Service Area Agreement Disputes -Is it in the public interest for the Commission to exercise continuing oversight over the proposed agreement between PG&E and TID by adjudicating disputes which arise under the agreement?
C. MOD Protest Issues - This issue includes the following subissues:
1) Does the Commission have jurisdiction to adjudicate issues raised by MOD regarding the effect of the proposed agreement between TID and PG&E on MOD's service area?
2) If yes, does the proposed agreement between PG&E and TID authorize TID to provide electric service in Modesto's service area as designated in the l933 agreement between MOD and TID?
3) Can PG&E enter into a service agreement that would permit TID to provide electric service in territory that was in the service area of both PG&E and another irrigation district, pursuant to Sections 8101-8104, 9607, 9608, and 9610?
4) Does the definition of MOD's service area as stated in Public Utilities Code Section 9610 apply to this case? If yes, would approval of the proposed new service area agreement between PG&E and TID violate Public Utilities Code Section 9610 by permitting TID to provide electric service within MOD's service area?
D. Environmental (CEQA) Issues - Is there a basis for the lead agency's (TID's) conclusion in the negative declaration that granting this application will not result in significant environmental effects or that any significant environmental impacts can be mitigated to a level of non-significance? Does the Commission as a responsible agency, wish to impose additional mitigation measures on matters within its jurisdiction, in approving the negative declaration?
E. Ratemaking Issues - This issue includes the following subissues:
1) Has PG&E used proper methodology in determining the value of the facilities to be sold to TID?
2) Should the allocation of any gain on sale by PG&E between shareholders and ratepayers be determined in this proceeding or in another broader proceeding?
3) If allocation of PG&E's gain on sale is to be decided in this proceeding, does Redding II (D.89-07-016) apply to this case? If yes, should the Commission follow Redding II?
4) How should the Commission allocate PG&E's gain on sale in this case?
6 PG&E's application states that the proposed transactions are covered by Section 9608, rather than Section 9607. Section 9607 requires Commission approval and sets forth standards and related findings applicable when an irrigation district that was providing electric service as of January 1, 1999 acquires or operates facilities for the distribution or transmission of electric service to retail customers with the service area of a utility corporation that is providing electric distribution services. Section 9608 exempts irrigation districts from Section 9607 under certain circumstances, including if "the irrigation district acquires substantially all of the electric distribution facilities and related subtransmission facilities of any electrical corporation that has an obligation to provide electric distribution service within the area to be served by the irrigation district." (Emphasis added.) However, here, PG&E's application states that PG&E wishes to sell all of its distribution facilities in the applicable area, but only "a few related" transmission facilities to TID.
