13. Jurisdiction Over Costs

ORA seeks imposition of a cost cap on the project at a level of $74.4 million. ORA also asks the Commission to revoke the CPCN if PG&E seeks recovery through FERC-approved transmission rates of any costs that might exceed the adopted cost estimate. ORA claims the Commission has jurisdiction to impose such a cap pursuant to Cal. Pub. Util. Code § 1005.5, which provides:

Whenever the commission issues to an electrical . . . corporation a certificate authorizing the new construction of any addition to or extension of the corporation's plant estimated to cost greater than fifty million dollars ($50,000,000), the commission shall specify in the certificate a maximum cost determined to be reasonable and prudent for the facility. (Emphasis added.)

PG&E claims this Commission "has no jurisdiction to set a cost cap over transmission components of the project, and that any such cap would be inconsistent with applicable law and legislative intent." (PG&E Opening Brief, p. 77.)

PG&E's jurisdictional argument is based on AB 1890. It claims that when the Commission lost jurisdiction over transmission rates and jurisdiction transferred to the FERC, we lost the ability to impose cost caps. Thus, PG&E asserts, "FERC's authority over this question [the amount of transmission project costs that may be recovered through rates] completely occupies the field, preempting all state regulation that intrudes even indirectly into this sphere." (PG&E Opening Brief, p. 78, citing Pub. Util. Comm'n v. FERC, 900 F.2d 269, 274 (D.C. Cir. 1990); Florida Power & Light Co., 40 FERC P61, 045 (1987); Calif. Power Exchange Corp., 85 FERC P61, 263 (1998).

PG&E's argument is not based on the language of AB 1890 or the CPCN statutes. Rather, PG&E asserts the following:

In 1985, when these cost cap provisions were enacted, the CPUC had jurisdiction over distribution and transmission rates. By enacting AB 1890, however, the legislature made clear its intent to limit the CPUC's ratemaking jurisdiction to distribution rates, rendering the imposition of section 1005.5's cost capping and rate adjusting mechanisms irrelevant to transmission projects for which CPUC no longer bears ratemaking responsibility. (See D.97-08-056, 74 CPUC 2d 1 (Dec. 2, 1997) (CPUC implementation (AB 1890 by unbundling of transmission rates).) Because the CPUC has no jurisdiction over transmission rates, it may not legally attempt to "cap" or otherwise prejudice FERC's ratemaking decisions. (PG&E Opening Brief, pp. 77-78.)

The Commission has jurisdiction pursuant to Pub. Util. Code § 1005.5 to cap the project's costs. We do not agree that the Legislature stripped this Commission of all authority under Pub. Util. Code § 1001 et seq. when it promulgated AB 1890. Thus, while the FERC ultimately will decide how much of the costs for this project PG&E may recoup in transmission rates, we believe our cost cap has bearing on the amount PG&E may seek from the FERC.