2. Procedural Background

2.1 General

By ruling dated March 29, 2001, the Assigned Commissioner directed PG&E to file a Certificate of Public Convenience and Necessity (CPCN) to upgrade the portion of Path 15 between Los Banos and Gates substations. On April 13, 2001, PG&E submitted a conditional CPCN Application (A.) 01-04-012, as directed. A prehearing conference (PHC) was held on May 10, 2001 and another on June 27, 2001 to address scheduling issues for A.01-04-012. Public participation hearings were held on September 19, 2001 in Los Banos and Coalinga.

PG&E and the ISO served opening testimony on September 25, 2001. PG&E's testimony focused on more fully describing the project and the expected costs to build the project. The ISO testimony addressed the economic need for the project. The Office of Ratepayer Advocates (ORA) submitted testimony criticizing the ISO's economic analysis on November 8, 2001. ISO responded with rebuttal testimony on November 15, 2001. Evidentiary hearings were scheduled to begin on November 26, 2001.

Before the testimony could be subject to evidentiary hearings, PG&E filed a motion to withdraw A.01-04-012.³ In its motion, PG&E stated that it would not build a stand alone Path 15 project in light of a recent agreement among various public and private entities to participate in a Path 15 expansion project, i.e., the October 16, 2001 Memorandum of Understanding (MOU) executed by WAPA, PG&E, PG&E National Energy Group, Kinder Morgan, Transmission Agency of Northern California (TANC), Trans-Elect, and Williams Energy Marketing and Trading Company. The document provides a general discussion of the planned Path 15 expansion project, and leaves to future agreements the definition of parties' shares of the project costs and benefits, as well as specific roles and responsibilities. The MOU states that such agreements are to be executed no later than 90 days after the MOU was executed (i.e., by January 14, 2002.)

ORA and ISO filed responses to PG&E's motion on November 13, 2001. By ruling dated November 30, 2001, the Assigned Commissioner denied PG&E's motion and consolidated A.01-04-012 with the Commission's generic investigation of transmission constraints, stating:

"I.00-11-001 provides a logical forum to further explore the issue of project economics and to examine the allocation of benefits among project participants under the MOU development approach or a PG&E stand-alone project.... PG&E is currently a respondent to I.00-11-001 and matters surrounding the economics of transmission projects throughout the state are the subject of the investigation. Parties to A.01-04-012 should be prepared to discuss a schedule for supplemental testimony regarding the allocation of costs and benefits of the federal project at the December 19, 2001 prehearing conference already scheduled in I.00-11-001.... [T]he assigned Administrative Law Judge in I.00-11-001 will establish the scope and schedule for further consideration of the Path 15 expansion application, previously served testimony and supplemental testimony."⁴

A further PHC was held on December 19, 2001, followed by the assigned ALJ ruling regarding the schedule and scope of evidentiary hearings.⁵ The ISO filed Errata to the September 25 testimony on January 25, 2002, and ORA filed additional rebuttal testimony on February 8, 2002. Three days of evidentiary hearings were held on February 25, 26 and 27. During these hearings, the ALJ requested additional information from the ISO regarding the assumptions and methodology used to perform the economic analysis. This information was examined during a fourth day of evidentiary hearings on
March 27, 2002.

Opening briefs were filed on April 10, 2002 by PG&E, ORA and ISO. ORA and the ISO filed reply briefs on April 22, 2002.

On April 30, 2002, WAPA filed a letter agreement at the Federal Energy Regulatory Commission (FERC) describing who will own the land, the lines and the transmission rights on the Path 15 upgrade and seeking pre-approval of a proposed ratemaking treatment for the project participants. Those project participants are identified as WAPA, PG&E and Trans-Elect. The letter agreement states that subsequent implementation agreements will provide more detail on the ownership percentages, project scope, and the nature of the ownership rights and responsibilities, including payments for project costs.⁶

On June 17, 2002, PG&E filed opening testimony on the expected net present value (NPV) of a PG&E financed project compared to the NPV of the project financed under the terms of the letter agreement. ORA filed its opening testimony on July 3, 2002, and PG&E filed rebuttal on July 15, 2002. One day of evidentiary hearing were held in San Francisco on July 25, 2002. Subsequent to hearings, the assigned Administrative Law Judge (ALJ) directed PG&E, ORA and Energy Division to clarify the treatment of entitlements under the letter agreement and the ISO tariff. They filed a joint statement on this issue on September 6, 2002. Also on that day, PG&E and ORA filed opening briefs on the July 25, 2002 hearings. PG&E and ORA filed reply briefs on September 18, 2002. On April 18, 2003, PG&E filed a request for an expedited decision by the full Commission that would reverse Assigned Commissioner Lynch's ruling that denied PG&E's withdrawal of A.01-04-012.

2.2 Environmental

In conjunction with its application, PG&E filed a Proponent's Environmental Assessment (PEA).⁷ The Commission, as state lead agency, retained outside consultants to prepare a supplemental EIR for the proposed project pursuant to the California Environmental Quality Act (CEQA),⁸ and to examine alternatives, including the "No-Project" alternative. The WAPA undertook an environmental review process for the Path 15 Expansion under the National Environmental Policy Act, resulting in an August 2001 Supplement Analysis that determined no supplemental EIS was required. A Record of Decision was issued by WAPA on December 20, 2001.

As described below, the Commission staff held public scoping meetings in July 2001. The Commission issued its Draft Supplemental EIR (DSEIR) in October 2001. The Administrative Law Judge (ALJ) presided over public participation hearings in September 2001. In February 2002, the Commission issued its FSEIR.⁹ The FSEIR considered each timely comment letter in reaching its conclusions. The FSEIR identifies the environmentally superior "build" alignments and an overall environmentally superior project taking the "No-Project" analysis into consideration. This decision deals only with whether the Commission should certify the FSEIR and does not determine whether PG&E should be granted a CPCN or if so, what alignment for the project should be adopted. Certification of the FSEIR does not prejudge final selection of a route for the project; nor does it impose mitigation measures on Path 15 project participants.

2.2.1 Notice and Public Participation

The process of preparing the FSEIR included the steps described below, which offered numerous opportunities for public involvement and were designed to maximize agency and public input for the Path 15 Expansion environmental review process. The scoping process for the Path 15 Expansion EIR consisted of four elements:

1. Publication of a Notice of Preparation (NOP) of an EIR and Notice of Public Scoping Meetings soliciting comments from affected public agencies, as required by CEQA, as well as from the public;

2. Public scoping meetings;

3. Review of scoping comments; and

4. Establishment of an Internet web site, electronic mail address, a telephone hotline, and local EIR Information Repositories.

The Commission issued the NOP on July 10, 2001 and distributed it to the State Clearinghouse and city, county, state and federal agencies, affected state and federal legislators, and local elected officials. Interested parties received 30 days to submit comments regarding the content of the EIR. Approximately 200 copies were distributed.

Scoping meetings are held prior to selection of alternatives to be studied in order to receive input from the public regarding the proper scope and content of the EIR. The scoping process is also used to identify alternatives and mitigation measures that should be considered in the analysis. Two public scoping meetings were conducted as part of the EIR scoping process. The dates, times and locations of the two scoping meetings were included in the NOP mailed to affected agencies and parties to this proceeding, about two weeks in advance of the meetings. This information was also posted on the Commission's project website and on the project hotline. On July 18, 2001, advertisements were published in the Hanford Sentinel, Fresno Bee, and Merced Sun Star, three newspapers in the project area. Both scoping meetings were held July 24, 2001.

A Notice of Release of the DSEIR was mailed in October 2001 to property owners on or adjacent to the proposed project and alternatives. The DSEIR was released on October 5, 2001. A newspaper notice was also published in the Hanford Sentinel, Fresno Bee, and Merced Sun Star during the week of October 15, 2001 to announce the release of the DSEIR. A 45-day public review period for the DSEIR was established, ending on November 19, 2001.

We have described the public participation and notice process in detail. CEQA requires that a notice of availability for a DSEIR must be issued to the county clerk, all responsible and trustee agencies, and any person or organization requesting, or who previously requested, a copy. In addition, CEQA requires that notice be issued in one of the following three manners: publication in a newspaper of general circulation; posting on and off the project site; and direct mailing to owners and occupants of contiguous property. Rule 17.1 of the Commission's Rules of Practice and Procedure requires two notices in newspapers. Consistent with these requirements, notices of availability were published in the Hanford Sentinel, Fresno Bee, and Merced Sun Star during the week of October 15, 2001. Thus, the notification procedures employed for this project meet the requirements of CEQA.

2.2.2 Adequacy and Certification of the FEIR

The FSEIR must be certified by the lead agency under CEQA before a project may be approved. Certification consists of two steps. First, the agency must conclude that the document has been completed in compliance with CEQA, and second, the agency must have reviewed and considered the FSEIR prior to approving the project. Additionally, the lead agency must find that the FSEIR reflects its independent judgment (Pub. Res. Code § 21082.1(c)(3).)

A. Adequacy of the FSEIR

The FSEIR must contain specific information according to the CEQA Guidelines, Sections 15120 through 1532 (CEQA Guidelines).¹⁰ The various elements of the FSEIR satisfy these CEQA requirements. THE FSEIR consists of the DSEIR, with revisions in response to comments and other information received. Section A of the FSEIR contains the comments received on the DSEIR; individual responses to these comments appear in the same section of the FSEIR.¹¹

B. Certification of the FSEIR

The Commission must conclude that the FSEIR is in compliance with CEQA before finally addressing PG&E's request for a certificate of public convenience and necessity. The basic purpose is to insure that the environmental document is a comprehensive, accurate, and unbiased tool to be used by the lead agency and other decisionmakers in addressing the merits of the project. The document should embody "an interdisciplinary approach that will ensure the integrated use of the natural and social sciences and the consideration of qualitative as well as quantitative factors."¹² It must be prepared in a clear format and in plain language.¹³ It must be analytical rather than encyclopedic, and emphasize alternatives over unnecessary description of the project.¹⁴ Most importantly, it must be "organized and written on such a manner that [it] will be meaningful and useful to decisionmakers and the public."¹⁵