COM/LYN/gig/epg* ALTERNATE DRAFT Agenda ID # 1973
Ratesetting
H-7a 4/3/2003
Decision ALTERNATE DRAFT DECISION OF COMMISSIONER LYNCH
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for Authorization to Sell Electric Distribution and Certain Transmission Facilities Serving the City of Patterson, the Community of Crows Landing and Certain Adjacent Rural Areas to the Turlock Irrigation District Pursuant to Public Utilities Code Section 851 and for Approval of Service Area Agreement Under Public Utilities Code Section 8101. (U 39 M) |
Application 02-01-012 (Filed January 4, 2002) |
DECISION GRANTING APPROVAL FOR CONVEYANCE OF FACILITIES BY PACIFIC GAS AND ELECTRIC COMPANY (PG&E) TO TURLOCK IRRIGATION DISTRICT (TID), NEW SERVICE AREA AGREEMENT BETWEEN PG&E AND TID, AND RELATED TRANSACTIONS
TABLE OF CONTENTS
Title Page
DECISION GRANTING APPROVAL FOR CONVEYANCE OF FACILITIES BY PACIFIC GAS AND ELECTRIC COMPANY (PG&E) TO TURLOCK IRRIGATION DISTRICT (TID), NEW SERVICE AREA AGREEMENT BETWEEN PG&E AND TID, AND RELATED TRANSACTIONS 1
1. Summary 2
2. Background 4
3. The Proposed Agreements 6
A. New Service Area Agreement 6
B. The Tolling and Mutual Release Agreement 9
C. The Asset Sale Agreement 9
D. The Installment Sales Agreement 13
E. The Private Electrical Lines Assignment and Assumption Agreement 15
F. The Patterson and Salado Substation Leases 15
G. The Closing Agreement 17
4. Environmental Review 18
5. Ratemaking Considerations 20
A. Gain on Sale 20
B. Payment of NBCs or Cost Responsibility Surcharges
Established After Closing Date 23
C. PG&E's Methodology for Calculating the Amounts
Owed for NBCs 24
6. Discussion 25
A. The Service Area Agreement and Tolling and Mutual Release Agreement 25
B. Approval of Asset Sale Agreement, Leases, and
Related Agreements 34
7. Conclusion 38
8. Final Categorization and Review and Comment Period 38
9. Assignment of Proceeding 42
Findings of Fact 42
Conclusions of Law 44
ORDER 46
DECISION GRANTING APPROVAL FOR CONVEYANCE OF FACILITIES BY PACIFIC GAS AND ELECTRIC COMPANY (PG&E) TO TURLOCK IRRIGATION DISTRICT (TID), NEW SERVICE AREA AGREEMENT BETWEEN PG&E AND TID, AND RELATED TRANSACTIONS
1. Summary
This decision grants the application1 of Pacific Gas and Electric Company (PG&E) for Commission authorization pursuant to Pub. Util. Code § 8512 to sell certain electric distribution and a few related transmission facilities in a portion of western Stanislaus County, including the City of Patterson, the Community of Crows Landing, and adjacent rural areas (the Westside Zone) to Turlock Irrigation District (TID), and approves other related transactions, including leases of PG&E property at the Patterson and Salado substations, an installment sales agreement for the sale of a 60 kV tap line to Patterson Frozen Foods and related easements to TID, a private electric lines assignment and assumption agreement, and a closing agreement.
In addition, we find that there is a strong legislative policy in California in favor of service area agreements and against duplication of electric distribution facilities and services and the resulting economic waste. We therefore approve a new service area agreement between PG&E and TID, and require PG&E to obtain our advance approval of any amendments, including changes to its service area, and of any superseding agreements. We decline to adjudicate future disputes between PG&E and TID under the service area agreement, because the California courts may properly resolve contractual disputes between the parties.
We also require PG&E and TID to amend language in the service area agreement and asset sale agreement related to direct access to conform to Assembly Bill IX, as codified at Water Code Section 80110, and recent Commission decisions regarding suspension of the right to enter into new direct access contracts, effective September 20, 2001.
As a result of this decision, PG&E will no longer provide electric distribution service to customers in the Westside Zone and the Don Pedro South Shore Zone.3 TID will operate the electric distribution system for the Westside Zone, and the Westside Power Authority (WPA), a joint powers authority consisting of TID and Patterson Irrigation District (PID), will serve customers in this area. TID will also serve the Don Pedro South Shore Zone.
We defer ratemaking issues related to the allocation of PG&E's gain on the sale, ORA's proposed mitigation measures, and PG&E's request for authorization to waive amounts otherwise owed by customers being transferred into TID's service area under PG&E energy efficiency program contracts to a subsequent Commission decision in this proceeding to allow for additional public review and comment.
1 The Commission Office of Ratepayer Advocates (ORA), the Merced Irrigation District (MEID) and the Modesto Irrigation District (MOD) filed protests. The Latino Issues Forum, the Planning and Conservation League, and the Laguna Irrigation District (LID) also intervened in this proceeding. PG&E and Turlock Irrigation District (TID) have previously reached informal agreement with all of the parties except for ORA and LID. 2 All statutory citations refer to the Public Utilities Code, unless otherwise noted. 3 The Don Pedro South Shore Zone is an undeveloped area south of the Don Pedro Reservoir, which is currently part of PG&E's service area. However, PG&E presently serves no customers in the Don Pedro South Shore Zone.
