STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

July 17, 2003

TO: ALL PARTIES OF RECORD IN APPLICATION 02-03-035

Decision 03-07-031 is being mailed without the Dissent of Commissioner Wood. Commissioner Lynch might joint his dissent. The Dissent will be mailed separately.

Very truly yours,

ANGELA K. MINKIN by PSW

Angela K. Minkin, Chief

Administrative Law Judge

ANG:tcg

Attachment

ALJ/DJE/tcg Mailed 7/17/2003

Decision 03-07-031 July 10, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Joint Application of Southern California Edison Company (U-338-E) and Pacific Terminals LLC for Southern California Edison Company to Sell Fuel Oil Pipeline Facilities to Pacific Terminals LLC and for Pacific Terminals LLC to Purchase such Fuel Oil Pipeline Facilities and to Operate Them as a Public Utility.

Application 02-03-035 (Filed March 22, 2002)

Morrison & Foerster, LLP by Peter W. Hanschen, Attorney at Law, for Pacific Terminals LLC and Sumner J. Koch, Attorney at Law; for Southern California Edison Company; applicant.

Law Office of Thomas P. Corr by Thomas P. Corr, Attorney at Law, for City of Huntington Beach; Daniel Dominguez for Utility Workers Union of America-Local 246; Victor Hugo Hernandez, for UWUA 246; Gail Hutton, City Attorney, for City of Huntington Beach; Frank R. Lindh, Attorney at Law, for Pacific Gas and Electric Company; David P. Waite, for City of Huntington Beach; Katie P. Wilson, for City of Cerritos; interested parties.

R. Gordon Gooch, John B. Merritt, Attorney at Law; and Elisabeth R. Myers-Kerbal, for British Petroleum West Coast Products Company; Kate Poole, Attorney at Law, for Coalition of Calif. Utility Employees; protestants.

Patrick Gileau and Louis M. Irwin, for Office of Ratepayer Advocates.

OPINION APPROVING SALE

TABLE OF CONTENTS

Title Page

OPINION APPROVING SALE 1

1. Summary 2

2. Introduction 2

3. Procedural History 6

4. Pacific Terminals' Corporate History 6

5. Section 377 Applicability 7

5.1. Position of the Applicants 7

5.2. CUE's Position 8

5.3. Discussion of Section 377 9

6. California Environmental Quality Act 12

6.1. Applicants' Position 12

6.2. CUE's Position 12

6.3. Discussion 13

6.4. Discussion of Environmental Issues Raised by CUE 16

7. Ratemaking Treatment 19

7.1. SCE's Ratemaking Position 19

7.2. ORA's Ratemaking Position 22

7.3. CUE's Position on Ratemaking 24

7.4. Ratemaking Discussion 27

7.5. Other Ratemaking Issues 34

8. Public Interest 34

8.1. SEC's and Pacific Terminals' Position 35

8.2. CUE's Position 36

8.3. Discussion 37

9. Market Power and Competition 39

9.1. CUE's Position 39

9.2. SCE's Position 39

9.3. Pacific Terminals' Position 39

9.4. Discussion 42

10. SCE's Affected Utility Employees 42

10.1. SCE's Proposal 42

10.2. CUE's Position 43

10.3. Pacific Terminals' Proposal 43

10.4. ORA's Position 44

10.5. Discussion 44

11. Other Requests 47

12. Late Filed Exhibits and Responses 47

13. Conclusion 47

14. Comments on the Proposed Decision 47

15. Assignment of Proceeding 48

Findings of Fact 48

Conclusions of Law 49

ORDER 51

CEQA Addendum - Southern California Edison Transfer of Edison Pipeline and Terminal Company (EPTC) Facilities to Pacific Terminals (A.02-03-035)

OPINION APPROVING SALE

1. Summary

In this decision, the Commission approves the sale of Southern California Edison Company's (SCE) Fuel Oil Pipeline (FOP) Facilities to Pacific Terminals LLC (Pacific Terminals) under Pub. Util. Code §§ 851 and 854, and concludes that Pub. Util. Code § 377,¹ as amended by Assembly Bill (AB) 6X does not bar this sale.