Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Section 311(g)(1) of the Public Utilities Code and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on October 29, 2003, and reply comments were filed on November 3, 2003. Comments and reply comments were filed by PG&E and ORA.

PG&E comments that, while the final outcome proposed by the draft decision is correct, the draft decision inappropriately discusses issues and authorities not raised by the parties and makes incorrect statements concerning the risks of investment and ownership. PG&E indicates that the discussion of "gain-on-sale" allocations constitutes an advisory opinion disfavored by the Commission.

We have issued many decisions in the past on the allocation of gain from transactions subject to Section 851, and they have not always been consistent. A rulemaking proceeding will be beneficial because it will allow us to consider allocation outcomes in the diversity of circumstances in which they occur. The allocation issues in this proceeding were well briefed by the parties, and the discussion in these issues in the draft opinion provides useful observations on transmission-related property that will assist in our anticipated rulemaking proceeding. The draft decision's discussion of these issues is not an advisory opinion because these allocation questions were at issue in this proceeding. We have only deferred the final decision on these questions.

PG&E also requests a correction of the findings of fact stipulated to by the parties in the proceeding. This suggested correction concerns the estimated 2002 revenue requirement for the property, and PG&E indicates that the correction does not constitute a substantial change to the application or alter the result. ORA objects to this request, indicating that PG&E seeks to offer new evidence without complying with Commission rules. Given this objection, the stipulated finding of facts, adopted by the draft decision, will not be changed.

ORA filed comments indicating that the draft decision, in its findings of fact, inaccurately misstates one of the facts stipulated to by the parties. The discrepancy between the use of the terms "land" or "property" in findings of facts 7 and 16 relate to ORA's argument that the transfer results in a divided property estate with the transferred portion no longer being transmission-related property. This argument was rejected by the Administrative Law Judge in an earlier ruling. The factual findings and the conclusion of law that the property is transmission-related will not be disturbed.

ORA also indicates that the administrative record does not support the deferral of the "gain-on-sale" allocation issue to another proceeding that, at present, has not commenced. We have deferred such allocation issues in the past, as ORA's recitation of instances confirms. We see no error in deferring this issue again to a rulemaking proceeding that we contemplate initiating.