5. Final Categorization and Waiver of Review Period

Based on our review of this application, we conclude that there is no need to alter the preliminary determinations as to categorization and need for a hearing made in Resolution ALJ 176-3079 (January 9, 2002).

The parties have stipulated to a shortened time for review and comment of this decision pursuant to Rule 77.6(g).30 The proposed decision was mailed and transmitted to the parties by facsimile on July 10, 2002, and the parties agreed to submit any comments to the Commission by no later than July 15, 2002.

Comments were received from both parties. We have incorporated ORA's suggestions for clarification of this decision, and have added footnote 20 to reflect the pending Petition for Rulemaking filed by PG&E and other parties (P.02-02-003).

Findings of Fact

1. IP Net's use of the affected PG&E property and facilities under the agreements will not interfere with PG&E's utility operations or service to PG&E customers.

2. The proposed agreements are structured as revocable licenses that will convert into master licenses and irrevocable rights to use (IRUs) PG&E property and facilities upon our approval of this application.

3. The Commission is the Lead Agency for this project under CEQA.

4. The preliminary work performed by PG&E on the site before our approval of this application was either temporary or was undertaken to allow the interconnection of existing fiber from the tower to PG&E's communication room.

5. IP Net currently has a CPCN to operate as a limited-facilities based carrier in California.

6. IP Net's application for full-facilities based authority, A. 01-03-006, is presently pending, and the Commission is currently performing CEQA review of the application as the Lead Agency.

7. Limited-facilities based CPCN's have generally allowed companies to lease existing facilities, install switches in existing buildings, and to install fiber in existing conduit without triggering a new project that requires CEQA review.

8. As a limited-facilities based carrier, IP Net may not perform the construction activities contemplated in the two agreements, such as the installation of equipment stations and construction of a network operations center on PG&E property, until additional CEQA review is completed, and IP Net has obtained our approval of its application for full-facilities based carrier status and the proposed construction activities.

9. License revenues to be received by PG&E based on the license of distribution property and facilities to IP Net under the agreements fall within an existing NTP&S category.

10. Approval of the agreements will enable PG&E to obtain additional fiber optic capacity to expand its utility communications and control system in a cost-effective manner and IP Net to expand its broadband telecommunications network and thereby to offer increased telecommunications services.

11. 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 project sites by telecommunications providers.

12. There is no need to alter the preliminary determinations made as to categorization of this proceeding and the need for a hearing made in Resolution ALJ 176-3079 (January 9, 2002).

Conclusions of Law

1. Based on the specific facts of this case, the parties have not violated CEQA or Section 851 by entering into the revocable licenses pursuant to G.O. 69-C pending approval of this application.

2. The preliminary work performed on the site by PG&E pending approval of this application did not require a discretionary decision by the Commission under CEQA.

3. The work that IP Net may immediately perform pursuant to our partial approval of agreements today does not require CEQA review.

4. PG&E must treat license revenues that result from IP Net's use of PG&E's non-transmission facilities and property as OOR pursuant to D. 99-04-021, and must track these funds in an appropriate memorandum account.

5. PG&E should allocate revenues received from IP Net based on the license of transmission property according to the applicable FERC orders and legal requirements.

6. Approval of the two agreements in part, subject to the conditions stated in this decision, serves the public interest.

ORDER

IT IS ORDERED that:

1. The two master license and irrevocable right to use agreements (the agreements) between Pacific Gas and Electric Company (PG&E) and I.P. Networks, Inc. (IP Net), as described in Exhibits A and B to the application, are approved in part today, subject to the limitations set forth below.

2. When the final agreements are executed, PG&E shall submit a copy by advice letter within sixty (60) days of this order.

3. Our approval of the agreements is limited to permit IP Net to perform only those activities authorized by its limited-facilities based certificate of public convenience and necessity (CPCN), until the Commission has approved IP Net's application for full-facilities based authority, Application (A.) 01-03-006 and has completed environmental review of that application, and has approved IP Net's proposed construction activities pursuant to Pub. Util. Code § 851.

4. IP Net may not perform construction activities including the installation of equipment stations and the construction of a network operations center, on PG&E property, under the agreements as approved today.

5. This docket is consolidated with A.01-03-006 so that the Commission may consider IP Net's proposed construction activities pursuant to Section 851, together with IP Net's application for full-facilities based authority.

6. PG&E shall allocate license revenues that result from IP Net's use of PG&E's non-transmission property and facilities to Other Operating Revenue and shall track these revenues in an appropriate memorandum account, unless the Commission directs otherwise in a future proceeding related to revenue sharing issues.

7. PG&E shall allocate license revenues that result from IP Net's use of PG&E's transmission property and facilities according to the applicable Federal Energy Regulatory Commission orders and legal requirements.

8. This order is effective today in order to allow the parties to implement the agreements expeditiously.

This order is effective today.

Dated July 17, 2002, at San Francisco, California.

30 All Rule citations are to the Commission Rules of Practice and Procedure unless otherwise stated.

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