12. Assignment of Proceeding

Susan P. Kennedy is the Assigned Commissioner and Bertram D. Patrick is the assigned Administrative Law Judge in these proceedings.

Findings of Fact

1. Pursuant to § 851, PG&E seeks authorization to sell its Pipeline Assets and Pump Station Assets.

2. Applicants seek Commission approval of a series of transactions described in the amended application, and agreed to by Applicants, as follows: (a) SPBPC will purchase the Pipeline Assets and Pump Station Assets from PG&E; (b) SPBPC will become the owner and operator of the Pipeline Assets pursuant to §§ 216 and 228; (c) SPBPC will abandon the pump station from utility service; (d) SCVHG will acquire ownership of the Pump Station Assets from SPBPC; and, (e) Shell will acquire ownership of SPBPC.

3. Upon acquiring ownership of the pipeline, SPBPC proposes to transport crude oil, black oils, and refined petroleum products.

4. The Pipeline Assets and Pump Station Assets are no longer necessary or useful for PG&E's utility operations.

5. For purposes of CEQA, the Project is the transfer of ownership of the Richmond-to-Pittsburg Pipeline, along with the right to construct a 5,500 foot replacement pipeline segment, and operation of the pipeline by SPBPC. The Project, and the required environmental analysis, does not extend beyond what is contemplated by, or a reasonably foreseeable result of, this proposed transaction.

6. SPBPC and SCVHG have not requested authority to construct new tie-ins or pumping stations or to remediate and redevelop the pump station property. To the extent that SPBPC or SCVHG seek authority in the future to undertake these activities, further governmental approvals of the actual plans, with the necessary environmental compliance, will be required.

7. The Final MND states and analyzes the potential impacts to the environment that would result from the sale of the assets, construction of the 5,500 foot replacement pipeline segment in Martinez, and the operation of the pipeline by SPBPC, and proposes mitigation measures as appropriate. The mitigation measures in the Final MND have been agreed to by PG&E and SPBPC.

8. PG&E previously used the Pipeline Assets and the Pump Station Assets to deliver fuel oil from Chevron's Richmond oil refinery to PG&E's Pittsburg and Contra Costa Power Plants.

9. Although the pipeline was used periodically until May 1998, shipments for the purpose of supplying oil to PG&E's Pittsburg and Contra Costa Power Plants were discontinued in the 1980's.

10. PG&E has sold the Pittsburg and Contra Costa Power Plants, and PG&E has no intention to use the Pipeline or Pump Station Assets, directly or indirectly, for electric generation purposes.

11. PG&E's customers will benefit from this sale by avoiding the decommissioning costs associated with the Pipeline and Pump Station Assets.

Conclusions of Law

1. PG&E's request for authorization to sell its Pipeline Assets and Pump Station Assets is in the public interest, and should be approved.

2. The scope of the environmental analysis used by the Commission in the Final MND is appropriate. Any effort by the Commission to evaluate the potential environmental impacts associated with future pipeline tie-ins, and remediating and redeveloping the pumping station without any information concerning the proposed use and required remediation, would require the Commission to engage in speculation. This is not required by CEQA.

3. The Final MND dated March 11, 2005, should be adopted.

4. Applications A.00-05-035 and A.00-12-008, as amended May 6, 2004 and September 9, 2004, should be granted.

5. PG&E should allocate the entire the gain on sale to ratepayers through a credit to the depreciation reserve.

6. Section 377 does not apply to the Pipeline or Pump Station Assets.

7. Section 454.5(j) does not apply to the Pipeline or Pump Station Assets.

ORDER

Therefore, IT IS ORDERED that:

1. The Final Mitigated Negative Declaration dated March 11, 2005, is adopted.

2. Pacific Gas and Electric Company (PG&E), pursuant to § 851, is authorized to sell its Richmond-to-Pittsburg Fuel Oil Pipeline (Pipeline Assets) and Hercules Pump Station with its 44.2 acres of land (Pump Station Assets).

3. San Pablo Bay Pipeline Company, LLC (SPBPC), is authorized to own the Pipeline Assets and the Pump Station Assets.

4. Upon the transfer of the Pipeline Assets and the Pump Station Assets to SPBPC, SPBPC is a pipeline corporation under § 228 and a public utility subject to the Commission's jurisdiction pursuant to the provisions of § 216.

5. SPBPC is authorized to use the Pipeline Assets to transport "oil, petroleum, and products thereof," which are limited for purposes of this application to crude oil and other black oils as well as refined petroleum products. SPBPC shall not use the Pipeline Assets to transport products other than crude oil, black oil, and refined petroleum products without seeking further authority and environmental review, if necessary, from the Commission and any other relevant agencies.

6. The Pump Station Assets, upon their transfer from PG&E to SPBPC, shall be abandoned and removed from public utility service, and can be transferred by SPBPC without further Commission approval.

7. The transfer of Santa Clara Valley Housing Group's (SCVHG) ownership interest in SPBPC and corresponding ownership and control of the Pipeline Assets to Shell Pipeline Company, LP (Shell) is approved pursuant to § 854.

8. Following the transfer of SCVHG's ownership interest in SPBPC to Shell, SPBPC is authorized to own, control, operate and manage the Pipeline Assets.

9. PG&E shall record the entire gain on sale proceeds as a credit to the depreciation reserve.

10. PG&E's proposal for decommissioning accrual in excess of the recorded decommissioning cost, is adopted.

11. Applications (A.) 00-05-035 and A.00-12-008, are closed.

This order is effective today.

Dated July 21, 2005, at San Francisco, California.

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