3. Discussion

Section 851 provides that no public utility "shall . . . encumber the whole or any part of . . . property necessary or useful in the performance of its duties to the public, . . . without first having secured from the Commission an order authorizing it to do so." Since the two irrevocable licenses proposed to be conveyed to IP Net would encumber PG&E property, we apply Section 851 in considering this application.²³

The primary question for the Commission in § 851 proceedings is whether the proposed transaction is adverse to the public interest. In reviewing a § 851 application, the Commission may "take such action, as a condition to the transfer, as the public interest may require."²⁴ The public interest is served when utility property is used for other productive purposes without interfering with the utility's operation or affecting service to utility customers.²⁵

We find that our approval of the two agreements and PG&E's conveyance of the irrevocable licenses to IP Net would serve the public interest. IP Net's activities will not interfere with PG&E's use of its property for utility purposes or with service to PG&E customers, and IP Net will use PG&E property and facilities in a manner consistent with legal requirements. PG&E's grant of the irrevocable licenses to IP Net will also serve the public interest by enabling PG&E to improve its internal utility communications and control systems and to thereby provide enhanced service to the public. IP Net's use of the PG&E property and facilities will also increase the availability of telecommunications services to the public. In addition, in appropriate cases, the shared use of utility property by energy utilities and telecommunications providers results in both economic and environmental benefits, by encouraging energy utilities to use their property productively and reducing the need for construction of new telecommunications project sites.²⁶

However, we are troubled by the emerging pattern of a utility licensing property under G.O. 69-C as a precursor to a planned application for a lease or other longer-term property transaction. Section 851 requires advance Commission approval of sales, leases, and other long-term transactions involving utility property.²⁷ Advance approval is the mechanism by which the Public Utilities Code ensures that financial and other transactions do not occur until the Commission has reviewed and, if necessary, placed conditions on them.²⁸

Here, we are not faced with a situation in which the parties have performed construction pursuant to a revocable license and then requested our approval of a "done deal" under Section 851. Moreover, since the work performed by PG&E at the site prior to this decision required no environmental review, the parties have not used the revocable license as a means of avoiding CEQA requirements. Under these specific facts, we do not find that the parties violated Section 851 by entering into the revocable license pending our decision on this application. Our decision today is limited to the particular circumstances of this case.

As stated in our previous decisions,²⁹ we caution utilities that we will deny agreements which convert G.O. 69-C licenses to leases or other longer-term transactions in the future, when the structure of these transactions is designed to circumvent the advance approval requirements of Section 851 and CEQA.