Decision 02-10-065 October 24, 2002

Before The Public Utilities Commission Of The State Of California

Application of PACIFIC GAS AND ELECRIC COMPANY For a Certificate of Public Convenience and Necessity Authorizing the Construction of the Northeast San Jose Transmission Reinforcement Project.	Application 99-09-029 (Filed September 9, 1999)

ORDER MODIFYING AND DENYING REHEARING

OF DECISIONS 01-05-059 AND 01-12-017

I. SUMMARY

By this Order, the Commission denies the applications for rehearing filed by Pacific Gas & Electric Company (PG&E) of Decision (D.) D.01-05-059 (First Decision or D.01-05-059) and Decision (D.) D.01-12-017¹ (Second Decision or D.01-12-017) timely filed on June 1, 2001 and January 11, 2002, respectively. The First and Second Decisions were issued in the proceedings for Application (A.) 99-09-029, filed on September 9, 1999. In A.99-09-029, PG&E requested a Commission order authorizing the construction of the Northeast San Jose Transmission Reinforcement Project (Project.) PG&E originally sought authorization for this project in Application (A.) 98-07-007, which the Commission dismissed without prejudice in 1997 in Decision (D.) 99-05-020 as a result of problems with the proposed routing.

D.01-05-059 granted PG&E's application for a certificate of public convenience and necessity (CPCN) to build a new 7.3 mile 230 kilovolt double-circuit transmission line, upgrade certain other transmission facilities, and construct a transmission/distribution substation to serve the Northeast San Jose area. After the Commission's issuance of D.01-05-059, the Commission issued Decision (D.) D.01-08-064 on August 23, 2001, staying D.01-05-059 because PG&E's cost estimate was not based on the chosen route and did not provide a sufficient basis for setting the Project's cost cap. Therefore, the Commission ordered PG&E to submit updated cost estimates. In D.01-12-017, the Commission determined that PG&E failed to justify its cost estimate and therefore, lowered the Project's cost cap.

In its Applications for Rehearing of D.01-05-059 (First Application for Rehearing) and D.01-12-017 (Second Application for Rehearing), PG&E makes several arguments. PG&E contends that the Commission does not have the statutory authority under state or federal law to review the California Independent System Operator's (ISO) determination that this transmission project is needed, to impose a cost cap on the Project or to order the Project to be built. PG&E also argues that that the Commission wrongly ordered PG&E to show cause why the cost cap should not be lowered. Lastly, PG&E claims that the Commission's reductions of PG&E's cost estimates are arbitrary and unsupported by the factual findings or evidence in the record. PG&E requests oral argument on these issues in both applications for rehearing. City of San Jose filed a response to both applications for rehearing and the ISO filed a response to the First Application for Rehearing. All responses have been considered in this order.

We have carefully reviewed PG&E's contentions and are of the opinion that good cause for rehearing has not been demonstrated. Accordingly, we deny these applications for rehearing. However, as explained below, we will modify the First and Second Decisions to clarify the Commission's bases for jurisdiction.