V. Assignment of Proceeding
Geoffrey Brown is the Assigned Commissioner and Myra J. Prestidge is the assigned Administrative Law Judge in this proceeding.
Findings of Fact
1. PG&E's sale of Property A to BP1, and Property B to BP1 and Bigge Crane, respectively, will not interfere with PG&E's utility operations or with service to PG&E's customers and the public.
2. PG&E previously entered into an agreement to sell Property B to Bigge Crane in 2001 without prior Commission approval as required by Section 851.
3. In 2002, Bigge Crane and PG&E entered into an agreement in which Bigge Crane assigned its interest in Property B to BP1.
4. PG&E conveyed Property B to BP1 without prior Commission approval in 2002 in violation of Section 851.
5. PG&E acquired Property A and Property B in 1974 and 1979, respectively, for the expansion of the western boundary of PG&E's Pittsburg Power Plant.
6. The original cost and net book value for Property A was $6,303.
7. Based on the sale of Property A, PG&E expects to receive $43,697 as the pre-tax gain on sale and $25,892 as the after-tax gain on sale.
8. The original cost and net book value for Property B was $782,043.
9. Based on the sale of Property B, PG&E received $1,148,402 as the pre-tax gain on sale and $680,474 as the after-tax gain on sale.
10. PG&E removed Property A and Property B from ratebase and transferred the properties to non-utility accounts in 1986 and 1985, respectively.
11. Property A was in ratebase from 1974 until 1986.
12. Property B was in ratebase from 1979 until 1985.
13. Ratepayers did not contribute to PG&E's original acquisition of Property A and Property B.
14. Ratepayers paid all operating, maintenance, and property tax costs while Property A and Property B were in ratebase.
15. PG&E states that it does not have separate records of expenses associated with specific parcels of land owned by PG&E, except for property tax expenses that are linked to individual parcels of land.
16. PG&E states that information on the annual property taxes for Property A from 1974 to 1985 was not available.
17. The parties have stipulated that, according to data provided by PG&E, the property taxes for Property A in 2003 and 2004 were $1,535 and $1,592, respectively.
18. The parties have stipulated that the annual property taxes for Property B from 1994 to 2003 were as follows:
1994 - $20,448 1995 - $20,418 1996 - $25,331 1997 - $25,449 1998 - $25,578 |
1999 - $25,704 2000 - $25,121 2001 - $31,398 2002 - $32,009 2003 - sold |
19. PG&E's current rate of return is 8.77%.
20. PG&E's current net to gross multiplier for electric utility is 1.797725.
21. It is appropriate to defer our decision regarding the allocation of PG&E's gain on sale resulting from the sale of Property A and Property B until after the Commission has issued a final decision in the gain on sale rulemaking (R. 04-09-003), so that we may consider these issues on a broad, policy basis with participation from a greater number of affected parties.
22. It is appropriate to defer our consideration of the disputed factual issues regarding PG&E's revenue requirements for Property A and Property B and annual expenses for Property A until after the Commission has issued a final decision in the gain on sale rulemaking (R. 04-09-003), because it is uncertain whether these issues will be relevant to our decision regarding allocation of PG&E's gain on sale from the sale of Property A and Property B, and PG&E claims that it does not have records related to these issues for individual properties that have been removed from ratebase many years ago.
23. Under Section 853(b), exemption of PG&E's sale of Property B to Bigge Crane/BP1 from Section 851's requirement for advance Commission approval is appropriate based on the unique circumstances of this case.
24. PG&E's sale of Property B to Bigge Crane/BP1 did not harm ratepayers or the public.
25. PG&E's sale of Property B to Bigge Crane/BP1 was reasonable and in the public interest.
26. It is not necessary to deem PG&E's sale of Property B to Bigge Crane/BP1 void in order to protect the public interest.
27. Bigge Crane/BP1 purchased Property B in good faith and for a fair consideration.
28. Since BP1 has expended considerable time and resources developing a plan for a light industrial/business park to be located on Properties A and B, and the County of Contra Costa has approved this use of the site, it would be unreasonable and unfair to BP1 to void PG&E's sale of Property B based on PG&E's failure to comply with Section 851.
29. Since over three years have passed since PG&E's sale of Property B to Bigge Crane/BP1, and Bigge Crane has transferred its interest in Property B to BP1, which is developing the site, practical difficulties could arise if the Commission voided the sale of Property B based on PG&E's prior violation of Section 851 at this time.
30. PG&E states that its failure to obtain prior Commission approval of its sale of Property B to Bigge Crane/BP1 was the result of an oversight, rather than an intentional violation of Section 851.
31. Based on prior Commission decisions and orders regarding transfers of PG&E property, PG&E should have been well aware of the requirement to obtain prior Commission approval pursuant to Section 851 before transferring Property B to Bigge Crane/BP1.
32. The County of Contra Costa is the Lead Agency for this project under CEQA.
33. The Commission is a Responsible Agency for this project under CEQA.
34. BP1 proposes to develop a light industrial/business park on the property.
35. The County of Contra Costa has adopted a mitigated negative declaration, for the project, which found that with appropriate mitigation measures, the project would not have a significant adverse impact on the environment.
36. The County's environmental documents are adequate for our decision-making purposes under CEQA.
37. We concur with the County's findings in the mitigated negative declaration that the project, as mitigated, will not have a significant adverse impact on the environment.
Conclusions of Law
1. Consistent with Section 851, PG&E's sale of Property A to BP 1 is in the public interest and should be authorized.
2. Section 851 requires prior Commission approval of any transfer of utility property that is used or useful in the provision of utility services.
3. Section 851 does not authorize the Commission to retroactively approve a transfer of utility property.
4. Section 853(b) provides that the Commission may exempt any utility or class of utility from the requirements of Section 851 if the application of these requirements is not necessary in the public interest.
5. Under Section 853(b), the Commission may exempt certain transfers of utility property from the requirements of Section 851 and approve such transfers only in exceptional circumstances.
6. Under Section 2107, the Commission may impose monetary sanctions which range from a minimum of $500 to a maximum of $20,000 per offense based on a utility's failure to comply with Section 851, as well as certain other legal and Commission requirements.
7. This decision approving the sale of Property A to BP1 and approving the sale of Property B to Bigge Crane/BP1 pursuant to Section 853(b) should be effective today in order to allow these transactions and the project to proceed expeditiously.
ORDER
IT IS ORDERED that:
1. Pacific Gas and Electric Company (PG&E) is authorized to sell 2.01 acres of property located in Contra Costa County, identified as Contra Costa County Assessor's Parcel Number 098-240-003 (Property A), to Bay Point Venture One (BP1) pursuant to Pub. Util. Code § 851 (Section 851).
2. PG&E's request for retroactive approval pursuant to Section 851 of its agreement to sell 42.93 acres of property located in Contra Costa County, identified as Contra Costa County Assessor's Parcel Numbers 098-250-015 and 098-250-016 (Property B), to Bigge Crane & Rigging Company (Bigge Crane) in 2001 and the conveyance of Property B to BP1 in 2002 pursuant to Bigge Crane's assignment of the property to BP1 is denied.
3. PG&E's request for exemption pursuant to Pub. Util. Code Section 853(b) of its agreement to sell Property B to Bigge Crane in 2001 and its subsequent conveyance of the property to BP1 in 2002 from Section 851's requirement for prior Commission approval is granted, based on the unique circumstances of this case.
4. PG&E's agreement to sell Property B to Bigge Crane in 2001 and subsequent conveyance of Property B to BP1 in 2002 is approved, on a prospective basis only.
5. PG&E shall record and track the revenue received from the sale of Property A and Property B in its Real Property Gain/Loss on Sale Memorandum Account, pending our resolution of issues related to the allocation of PG&E's gain resulting from the sale of Property A and Property B after the Commission has issued a final decision in the gain on sale rulemaking (R. 04-09-003).
6. Since PG&E previously sold Property B without our prior approval in violation of Section 851, PG&E shall place, retain, and track an amount equivalent to its revenues from the sale of Property B in its Real Property Gain/Loss on Sale Memorandum Account, pending our resolution of the issues related to the allocation of PG&E's gain on sale resulting from the sale of Property B, pending our final decision in R. 04-09-003.
7. PG&E shall promptly apply for advance Commission approval of transfers of any property interests that are used or useful in the provision of utility services pursuant to Section 851, in order to avoid potential monetary sanctions for violation of Section 851.
8. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
Prestidge Notice of Availability
