ALJ/UNC/jt2/avs Date of Issuance 7/1/2011

Decision 11-06-032 June 23, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application of Mountain Utilities, LLC (U906E) and Kirkwood Meadows Public Utility District for Transfer of Control of Assets and Additional Requests Relating to Proposed Transaction.

Application 11-02-020
(Filed February 25, 2011)

(See Appendix A for Appearances)

DECISION APPROVING SALE AND TRANSFER OF CONTROL OF ASSETS AND RELIEVING MOUNTAIN UTILITIES OF ITS OBLIGATION TO PROVIDE PUBLIC UTILITY ELECTRICITY SERVICE

Table of Contents

Title Page

DECISION APPROVING SALE AND TRANSFER OF CONTROL OF ASSETS AND RELIEVING MOUNTAIN UTILITIES OF ITS OBLIGATION TO PROVIDE PUBLIC UTILITY ELECTRICITY SERVICE 2 2

1. Summary 2 2

2. Background 2 2

3. Identification of Parties 4 4

3.1. Mountain Utilities, LLC 4 4

3.2. Kirkwood Meadows Public Utilities District 5 5

3.3. Division of Ratepayer Advocates 6 6

4. Summary of Authority Sought 6 6

4.1. Reason for the Sale and Transfer 9 9

5. Standard of Review 11 11

5.1.1. Public Utilities Code § 851 12 12

5.1.2. Public Utilities Code § 854 13 13

6. The Transfer Application: Discussion 15 15

6.1. Impact on Rates 15 15

6.1.1. Sale Price 17 17

6.1.2. Reconstruction of the Powerhouse 18 18

6.1.2.1. Viability of KMPUD Financing 19 19

6.1.3. The Out-Valley Project 20 20

6.2. Impact on Quality of Service 21 21

6.3. Impact on Quality of Management 22 22

6.4. Impact on Mountain Utilities' Employees 22 22

6.5. Impact on Commission Jurisdiction 23 23

6.6. Conclusion 23 23

7. Allocation of Gains/Losses 24 24

8. Compliance with the California Environmental Quality Act (CEQA) 26 26

9. Categorization and Need for Hearing 27 27

10. Comments on Proposed Decision 28 28

11. Assignment of Proceeding 28 28

Findings of Fact 28 28

Conclusions of Law 32 32

ORDER 34 34

Appendix A - Service List

DECISION APPROVING SALE AND TRANSFER OF CONTROL OF ASSETS AND RELIEVING MOUNTAIN UTILITIES OF ITS OBLIGATION TO PROVIDE PUBLIC UTILITY ELECTRICITY SERVICE

1. Summary

This decision approves the transfer and sale of Mountain Utilities, LLC's electric generation and distribution assets to Kirkwood Meadows Public Utility District. Mountain Utilities and Kirkwood Meadows Public Utility District have established that the sale and transfer is not adverse to the interests of ratepayers; in fact, certain service efficiencies are likely in both the near and long term. Although construction of the replacement powerhouse will result in rate increases, the increase is likely to be small, and Kirkwood Meadows Public Utility District is better positioned to mitigate the increase than Mountain Utilities.

Upon final closing of the transfer and sale to Kirkwood Meadows Public Utility District pursuant to the Asset Purchase Agreement, Mountain Utilities is relieved of its obligation to provide public utility electric service to customers within its service territory. This proceeding is closed.