9. Assignment of Proceeding
Geoffrey Brown is the assigned Commissioner, and Myra J. Prestidge is the assigned Administrative Law Judge in this proceeding.
1. TID is an irrigation district organized under California law that owns and operates an electric distribution and transmission system and provides electric service to customers in parts of Merced, Stanislaus and Tuolumne Counties.
2. The service area agreement transfers the Westside Zone and the Don Pedro South Shore Zone from PG&E's service area to TID's service area.
3. During the 25 year period of the new service area agreement, with certain exceptions, PG&E, TID, and their affiliates cannot serve retail electric customers in each others' service areas or build, own, lease, operate, control, acquire, extend or connect any substation, transmission, or distribution facilities in each others' service areas for the purpose of serving retail customers.
4. The service area agreement will prevent the duplication of electric distribution facilities, the waste of manpower and materials, and the resulting economic loss that could otherwise result if PG&E, TID, PID and WPA could all potentially serve customers in the Westside Zone, and will promote the more efficient and economical provision of electric distribution service in the area by allocating certain service areas to PG&E and TID.
5. The service area agreement limits the right of PG&E and TID to provide certain "core distribution services" to other persons or entities serving retail electric customers in each others' service areas, but permits PG&E and TID to provide other types of services, such as those often performed by consultants, without limitation.
6. The service area agreement permits PG&E and TID to perform materials management and recordkeeping and two of the following four "core distribution services" to an established local utility within its boundaries or outside of its boundaries if that utility has a defined expansion area in PG&E's or TID's service area: (a) engineering and estimating, (b) operations and maintenance, (c) planning and engineering, and (d) construction.
7. The service area agreement does not restrict the provision of mutual aid by PG&E or TID.
8. The Commission previously suspended the right to enter into new direct access contracts or to verify new agreements for direct access, effective September 20, 2001.
9. In D.02-03-055, the Commission adopted standards to implement the suspension of direct access, which allowed limited exceptions for customers who have entered into direct access contracts before September 20, 2001.
10. D.02-03-055 permits customers who had entered into direct access contracts before September 20, 2001 to change from one E&P to another and allows the assignment of direct access contracts under certain circumstances.
11. The provisions of the asset sale agreement regarding final meter reads by PG&E, PG&E's sale of replacement parts to TID, special facilities contracts, and PG&E's refund of line extension deposits are reasonable.
12. Lease revenues from the Patterson and Salado substation leases fall within an existing non-tariffed products and services (NTP&S) category under PG&E Advice Letter 2603-G/1741-E, Category T.C. 4.
13. The asset sale agreement, the installment sales agreement, the electrical lines assignment and assumption agreement, and the Patterson and Salado substation leases will not interfere with PG&E's ability to serve its remaining customers at reasonable rates.
14. Bifurcation of this proceeding to address ratemaking issues in a subsequent decision, will allow PG&E and TID to move forward with this transaction, while creating an additional opportunity for public review and comment on the ratemaking issues.
15. TID has a strong record of providing good service to customers and will be able to provide adequate electric distribution service to customers in the Westside Zone and the Don Pedro South Shore Zone at reasonable rates.
16. The price for the assets sold by PG&E to TID based on RCNLD is reasonable.
17. The provisions of the tolling and mutual release agreement are reasonable and will eliminate potential claims between PG&E and TID under the 1953 Agreement.
18. The provisions of the closing agreement are reasonable and provide an adequate means for PG&E and TID to resolve any disputes under the asset transfer agreements without costly litigation.
19. TID is the Lead Agency for the project under CEQA.
20. On July 31, 2001, TID approved a mitigated negative declaration and a mitigation monitoring plan for the project pursuant to Resolution 2000-61.
21. The Commission is a Responsible Agency for the project under CEQA.
22. As a Responsible Agency, the Commission finds that TID reasonably concluded that the project, as mitigated, will have no significant environmental effects and that no additional mitigation measures or consideration of alternatives are required.
1. The service area agreement between PG&E and TID is in the best interests of PG&E and the State of California and serves the public interest.
2. Under California law, there is a strong legislative policy in favor of service area agreements between electric corporations and districts to avoid duplication of electric distribution facilities and services, waste of materials, waste of manpower, and the resulting economic loss and to promote more efficient and economic methods of distributing electric power and energy.
3. The service area agreement's restrictions on PG&E's and TID's provisions of "core distribution services" to other persons or entities providing electric service in each other's service areas do not prevent the formation of new local utilities or violate any legal duty of PG&E or TID to provide these services.
4. Before deleting territory from its service area, PG&E must obtain relief from its obligation to serve customers in the area from the Commission.
5. PG&E must obtain advance Commission approval of any amendments to the service area agreement, including changes to its service area, or any superseding agreements.
6. The service area agreement is a contract between PG&E and TID, which may properly be interpreted and enforced by the California courts.
7. The Commission has only limited jurisdiction to adjudicate complaints brought against TID.
8. PG&E, TID, PID, and WPA may provide direct access to customers only as permitted by state law and Commission decisions.
9. The asset sale agreement, the installment sales agreement, the private line assumption agreement, and the Patterson and Salado substation leases, the closing agreement and the tolling and mutual release agreement serve the public interest.
10. The mitigated negative declaration and mitigation monitoring plan adopted by TID are adequate for the Commission's decision-making purposes as a Responsible Agency under CEQA.
11. PG&E should treat revenues received from the Patterson and Salado substation leases as OOR, pursuant to PG&E Advice Letter 2603-G/1741-E, Category T.C. 4.
IT IS ORDERED that:
1. The proposed service area agreement between Pacific Gas and Electric Company (PG&E) and the Turlock Irrigation District (TID), attached as Exhibit B to the application, is approved, subject to the paragraphs below.
2. PG&E shall amend the service area agreement to require advance Commission approval of any amendments, including changes to its service territory, and any superseding agreements; to delete the provisions regarding Commission adjudication of future disputes; to provide that PG&E, TID, the Patterson Irrigation District, and the Westside Power Authority may provide direct access only as permitted by state law and Commission decisions to clarify TID's responsibility for payment of nonbypassable charges; and to clarify language related to PG&E's provision of direct access because non-utility electric service providers (E&Ps) generally provide direct access. PG&E shall file a copy of the amended service area agreement by advice letter within 60 days of this order.
3. PG&E is relieved of its obligation to serve electric distribution customers in the Westside Zone and the Don Pedro South Shore Zone, effective on the closing date of the asset sale agreement.
4. The asset sale agreement, attached as Exhibit A to the application, including its provisions regarding special facility agreements, the refunding of line extension deposits, the sale of replacement parts by PG&E and TID, and the method for PG&E's final customer meter reads in the Westside Zone, is approved, subject to paragraph 5 below.
5. PG&E and TID shall amend Section 4.4 of the asset sale agreement to provide that PG&E and TID may provide direct access to customers only as authorized by Commission decisions and state law, and to clarify language in Section 4.4 which refers to the provision of direct access by PG&E.
6. This proceeding is bifurcated, so that the Commission may issue a subsequent decision on the ratemaking issues, including allocation of PG&E's gain on sale, the mitigation measures proposed by the Commission's Office of Ratepayer Advocates (ORA), and PG&E's waiver of the amounts otherwise owed by customers being transferred into TID's service area under energy efficiency program contracts, in this proceeding.
7. The installment sales agreement (attached as Exhibit G to the application), the private electrical lines assignment and assumption agreement (attached as Exhibit H to the application), the Patterson and Salado substation leases (attached as Exhibits D and E to the application, respectively), the tolling and mutual release agreement (attached as Exhibit F to the application) and the closing agreement (attached as Exhibit C to the application) are approved.
8. PG&E shall track the revenues received from the sale of assets to TID in its Real Property Gain/Loss on Sale Memorandum Account, and/or other applicable memorandum accounts pending a subsequent Commission decision on ratemaking issues in this proceeding.
9. PG&E shall treat revenues received from the Patterson and Salado Substation leases as Other Operating Revenue and track this revenue in an appropriate memorandum account.
10. This order shall take effect immediately so that PG&E may expeditiously transfer its facilities in the Westside Zone to TID and TID may begin serving customers in the Westside Zone and the Don Pedro South Shore Zone.
11. Application 02-01-012 is closed.
This order is effective today.
Dated , at San Francisco, California.
