STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

October 9, 2003

TO: ALL PARTIES OF RECORD IN APPLICATION 99-09-006

Decision 03-10-013 is being mailed without the Dissent of Commissioner Lynch. The Dissent will be mailed separately.

Very truly yours,

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:sid

Attachment

ALJ/BDP/sid Mailed 10/9/2003

Decision 03-10-013 October 2, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of PACIFIC GAS AND ELECTRIC COMPANY in the 1999 Annual Transition Cost Proceeding.

Application 99-09-006 (Filed September 1, 1999)

(See Appendix A for a list of appearances.)

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT POWER PLANT SITE REMEDIATION

TABLE OF CONTENTS

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT 2

POWER PLANT SITE REMEDIATION 2

I. Summary 2

II. Procedural Summary 3

III. Background 3

IV. Estimated Cost of Decommissioning HPPP 4

A. PG&E's Estimate 4

B. Position of CCSF 5

C. Position of SAEJ 6

D. Position of ORA 6

E. Response of PG&E. 6

F. Discussion 9

V. Ratemaking Treatment 11

A. Background. 11

B. Discussion 12

VI. California Environmental Quality Act (CEQA) 13

VII. Comments on Proposed Decision 15

VIII. Assignment of Proceeding 16

Findings of Fact 16

Conclusions of Law 17

ORDER 18

APPENDIX A - Service List

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT

POWER PLANT SITE REMEDIATION

I. Summary

The Commission adopts Pacific Gas and Electric Company's (PG&E) estimate of approximately $65.1 million net present value (NPV) for the future decommissioning and site remediation of Hunters Point Power Plant (HPPP).¹ The appropriate ratemaking treatment for this cost estimate will be determined in PG&E's 2003 General Rate Case (GRC) application, A.02-11-017.

This decision does not prescribe site remediation measures or dictate clean-up levels. These matters will be determined by the Lead Agency and other regulatory agencies in a public forum when decommissioning actually occurs.

While recovering decommissioning costs based on estimates may sometimes be less desirable than recovering the actual costs, we believe PG&E's cost estimate is adequate for ratemaking purposes. As demonstrated in the volumes of evidence presented in this proceeding, PG&E's environmental decommissioning cost estimate is based on industry-accepted practices to determine the amount of remediation expected to be required at HPPP, and the regulatory requirements expected to apply to those activities once they commence.

We note that Decision (D.) 98-10-029 approved the request of PG&E to withdraw its request to sell the HPPP. This approval was found to be consistent with Pub. Util. Code § 363(c). We also approved an agreement between PG&E and the City and County of San Francisco (CCSF) that set out steps for closing the HPPP.