II. PG&E's Takings Claim

PG&E asserts that the URG Decision erroneously bases PG&E's prospective non-nuclear URG revenue requirement on net book value rather than market value. PG&E contends that by doing so, the URG Decision "deprives PG&E of important property rights without just compensation." (Application, at p. 2.) PG&E asserts that pursuant to AB 1890, it was to recover in rates the market value of its non-nuclear URG assets, once those assets were valued and removed from Commission regulation. PG&E believes that this "right to market valuation" is "a significant property interest." (Application, at p. 3.) Furthermore, PG&E asserts that it is entitled to sell the output from these assets "free of Commission rate regulation." (Application, at p. 4.) PG&E's arguments appear to be premised on its belief that AB 1890 has conferred a vested right to recover in rates the market value of its non-nuclear URG assets. It is mistaken.

Courts have distinguished between common law rights and rights established by statutes, and found that only the former are "vested." (See Flournoy v. California (1964) 230 Cal.App.2d 520, 531.) Contrary to PG&E's assertions, AB 1890 did not confer onto the utilities a constitutional right to sell the output from their non-nuclear URG assets into the FERC wholesale market after a certain date. Moreover, these provisions are not common law rights but were established as part of restructuring California's electricity market under AB 1890. Therefore, even though PG&E expected that these provisions would eventually occur, it had not acquired any vested right with respect to these provisions at the time AB 1890 was enacted that would prevent the Legislature from subsequently amending or repealing them.⁵

While PG&E states that it had made "timely requests" in 2000 to have its URG assets market valued (Application, at p. 3), there is no basis for concluding that the AB 1890 provisions for market valuation were "vested" upon filing of those requests. Courts have generally found that, with respect to vesting of statutory rights, there is no vested right until the administrative agency has acted. (See, e.g., Liberty State Bank v. Minnesota Life & Health Ins. Guaranty Assn. (1988, 8^th Cir.) 147 F.3d 532, 834; Senior Exec. Assn. v. U.S. (1983, D.D.C.) 576 F.Supp. 1207, 1214.) AB 6X was enacted before we had acted on PG&E's requests for market valuation of its non-nuclear generation facilities. Thus, it is unlikely a reviewing court would find that PG&E had acquired a "vested right" to market based rates merely upon filing of its request.

Moreover, assuming arguendo that PG&E had a vested right to market valuation of its generation facilities, PG&E's URG revenue requirements could nonetheless be based on net book value. An unlawful taking or confiscation occurs if a regulation or rate is unjust and unreasonable. (Duquesne Light Co. v. Barasch (1988) 488 U.S. 299.) Whether a regulation or rate is just and reasonable depends on a balancing of the interests of the regulated entity providing the services and the interests of the consumers of such services. (Federal Power Com. v. Hope Nat. Gas Co. (1943) 320 U.S. 591, 603.) In this instance, we balanced PG&E's interest in receiving higher profits from selling its power based on market value of its URG assets against providing reasonable rates for California ratepayers. Thus, we properly exercised our discretion in setting PG&E's URG revenue requirement based on net book value, since PG&E would recover its actual costs. Furthermore, PG&E's inability may not be able to sell its power at a rate above actual cost is not a basis for finding an unlawful taking. A regulated entity neither has a constitutional right to a profit nor a constitutional right against a loss. (20^th Century Ins. Co. v. Garamendi (1994) 8 Cal.4^th 216, 294.) Accordingly, even if PG&E had some property interest affected by our decision, this would not constitute an unlawful taking.

Finally, PG&E asserts that the URG Decision "establishes URG revenue requirements for the first time since AB X6 went into effect." Consequently, it challenges AB 6X on an as-applied basis. (Application, at p. 4.) This argument, however, is premature. The URG Decision does not do anything more than reaffirm our conclusions in D.01-10-067 that market valuation of generation assets for recovery of past uneconomic costs is outside the scope of a proceeding to establish a prospective URG revenue requirement. (D.02-04-016, at p. 2.) Moreover, the decision specifically notes that "[the URG Decision] does not preclude the possibility of later modifications to the utilities' revenue requirements to account for what were previously considered as stranded or uneconomic costs." (D.02-04-016, at pp. 2-3.) Furthermore, recovery of stranded costs is not decided in this decision, but is the subject of a separate proceeding. (D.02-04-016, at p. 4.) Thus, PG&E may raise its arguments at the time we adopt the final rates for 2002 URG revenue requirement.