STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 6, 2001

TO: PARTIES OF RECORD IN INVESTIGATION 01-04-002 ET AL.

This is the draft decision of Administrative Law Judge (ALJ) Thomas. It will be on the Commission's agenda at the meeting on June 14, 2001. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Pursuant to Rule 77.7(f)(9), comments on the draft decision shall be filed and received by June 12, 2001 and no reply comments will be accepted.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Thomas at srt@cpuc.ca.gov. Finally, comments must be served separately on the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

/s/ LYNN T. CAREW by KH

Lynn T. Carew, Chief

Administrative Law Judge

LTC:eap

Attachments

ALJ/SRT/eap DRAFT Item 11

6/14/2001

Decision DRAFT DECISION OF ALJ THOMAS (Mailed 6/6/01)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation whether Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, and their respective holding companies, PG&E Corporation, Edison International, and Sempra Energy, respondents, have violated relevant statutes and Commission decisions, and whether changes should be made to rules, orders, and conditions pertaining to respondents' holding company systems.

Investigation 01-04-002

(Filed April 3, 2001)

In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for authorization to implement a plan of reorganization which will result in a holding company structure.

Application 87-05-007

(Filed May 6, 1987)

In the Matter of the Application of San Diego Gas & Electric Company (U 902-M) for Authorization to Implement a Plan of Reorganization Which Will Result in a Holding Company Structure.

Application 94-11-013

(Filed November 7, 1994)

In the Matter of the Application of Pacific Gas and Electric Company (U 39 M) for Authorization to Implement a Plan of Reorganization Which Will Result in a Holding Company Structure.

Application 95-10-024

(Filed October 20, 1995)

Joint Application of Pacific Enterprises, Enova Corporation, Mineral Energy Company, B Mineral Energy Sub and G Mineral Energy Sub for Approval of a Plan of Merger of Pacific Enterprises and Enova Corporation With and Into B Mineral Energy Sub ("Newco Pacific Sub") and G Mineral Energy Sub ("Newco Enova Sub"), the Wholly Owned Subsidiaries of a Newly Created Holding Company, Mineral Energy Company.

Application 96-10-038

(Filed October 30, 1996)

DECISION ON MOTIONS TO DISMISS
FOR LACK OF JURISDICTION

I. Summary

Respondents PG&E Corporation (PG&E Corp.), Edison International (EIX), and Sempra Energy (Sempra) (collectively, the holding companies), each have moved to dismiss this proceeding as it pertains to them for lack of jurisdiction. Specifically, the holding companies contend the Commission lacks jurisdiction over them because they are not "public utilities" subject to Commission regulation. They claim that even though they agreed to certain conditions in connection with Commission proceedings establishing their holding company systems, the Commission lacks authority to enforce those conditions now. Reduced to its essence, the holding companies' claim is that the Commission never had jurisdiction to impose conditions on them - a claim they make after they have enjoyed years of benefits from the holding company system they themselves desired.

The holding companies cannot have it both ways. Either they must live with enforcement of the conditions we imposed years ago when we allowed them to set up holding company systems, or they must concede that the holding company systems were void at their initiation and that they misled the Commission by acquiescing at the time to the very conditions we now seek to enforce. If they concede that we had authority to establish their holding companies, they may not now challenge our decisions or their conditions. The question is not one of subject matter jurisdiction, as the holding companies erroneously contend. We had jurisdiction to create the holding company systems and now retain jurisdiction to enforce conditions to which the holding companies agreed in order to enjoy the benefits our decisions conferred. We deny the motions.

Order Instituting Investigation whether Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, and their respective holding companies, PG&E Corporation, Edison International, and Sempra Energy, respondents, have violated relevant statutes and Commission decisions, and whether changes should be made to rules, orders, and conditions pertaining to respondents' holding company systems.	Investigation 01-04-002 (Filed April 3, 2001)
In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for authorization to implement a plan of reorganization which will result in a holding company structure.	Application 87-05-007 (Filed May 6, 1987)
In the Matter of the Application of San Diego Gas & Electric Company (U 902-M) for Authorization to Implement a Plan of Reorganization Which Will Result in a Holding Company Structure.	Application 94-11-013 (Filed November 7, 1994)
In the Matter of the Application of Pacific Gas and Electric Company (U 39 M) for Authorization to Implement a Plan of Reorganization Which Will Result in a Holding Company Structure.	Application 95-10-024 (Filed October 20, 1995)
Joint Application of Pacific Enterprises, Enova Corporation, Mineral Energy Company, B Mineral Energy Sub and G Mineral Energy Sub for Approval of a Plan of Merger of Pacific Enterprises and Enova Corporation With and Into B Mineral Energy Sub ("Newco Pacific Sub") and G Mineral Energy Sub ("Newco Enova Sub"), the Wholly Owned Subsidiaries of a Newly Created Holding Company, Mineral Energy Company.	Application 96-10-038 (Filed October 30, 1996)