Assignment of Proceeding

Geoffrey F. Brown is the Assigned Commissioner and John E. Thorson is the assigned ALJ in this proceeding.

Findings of Fact

1. Findings of Fact 2 to 20, below, are stipulated to by the applicants and ORA; and we find them to be supported by the record. We also reach Findings of Fact 22 to 26 based on our own review of the record.

2. By A.02-12-033 (filed December 20, 2002), PG&E seeks authority under Public Utilities Code Section 851 to sell and transfer a certain parcel of land to William L. Brickner.

3. The property that is subject of A.02-12-033 consists of approximately 1.53 acres of land in the City of Oakland, Alameda County (property).

4. Brickner and PG&E executed a Purchase and Sale Agreement dated September 25, 2001.

5. The purchase price as set forth in the Purchase and Sale Agreement is forty thousand dollars ($40,000).

6. PG&E originally acquired the property as a corridor for electric transmission lines.

7. The property contains transmission lines and transmission towers.

8. PG&E will retain easements for the electric transmission lines and transmission towers.

9. PG&E states in the application that the property consists only of nondepreciable land with an estimated 2002 revenue requirement, including taxes, franchise requirements and provision for uncollected amounts, of $6,648 (based on estimated taxes of $842, estimated maintenance costs of $5,000, and PG&E's authorized cost of capital for transmission assets for 2001 of 11.22% on equity and 9.12% on rate base).

10. The property is classified as a transmission asset in PG&E's transmission rate base.

11. Maintenance and operating costs related to the property have been recovered through FERC ratemaking for transmission service in the Company's transmission owner rate cases.

12. PG&E originally acquired the property on October 4, 1921.

13. The total original cost and net book value of the nondepreciable property is $5,670.

14. The property was recorded in the rate base in 1921.

15. The property has not been taken out of the rate base.

16. The property is nondepreciable land only.

17. Ratepayers have not contributed to the initial acquisition of the property.

18. PG&E has not recovered the initial cost of the property from ratepayers through depreciation expense.

19. After the sale, PG&E's electric transmission rate base will be reduced by the original cost of the property, $5,670.

20. After the sale, PG&E will no longer be responsible for the maintenance costs or the payment of property taxes associated with the property, nor will the company be responsible for the liability for injury to trespassers or others who may enter onto the property.

21. PG&E provides an analysis of how it derives the after-tax gain of $20,342 in Exhibit G of the application.

22. Applicants' application provides the information required by Rules 15(a), 15(b), 16, 17, 17.1, 35, and 36 of our Rules of Practice and Procedure.

23. The record contains no substantial evidence that our approval of the proposed conveyance will result in any direct or indirect change to the environment. The record does indicate that any future development will be substantially controlled and reviewed because the property is subject to several City of Oakland zoning restrictions (R-30, One-Family Residential; S-10, Scenic Route; and S-11, Site Development and Design Review); a city building permit will be required for any development of the property; and PG&E's grant deed to Brickner will contain the following restriction: "Grantee shall not erect or construct any building or other structure, including but not limited to fences, sheds, tool houses or animal shelters, or drill or operate any well, or construct any reservoir or other obstruction or diminish or substantially add to the ground level in said real property, without the written consent of PG&E[.]."

24. By reserving an easement for transmission purposes, PG&E can continue to maintain the existing transmission line and make any necessary future modifications or improvements.

25. The fair market value of the property at the time of the Purchase and Sale Agreement was $40,000.

26. PG&E has represented that its rights under the reserved easement, in addition to any rights it may have under the common law of servitudes, are sufficient for all foreseeable future needs. The utility further represents that any cost due to any expansion to the easement which is not funded by new customers pursuant to tariffs will be borne by PG&E and will not be reflected in rates.

Conclusions of Law

1. The applicants have satisfied all requirements of our Rules of Practice and Procedure.

2. An evidentiary hearing is not required.

3. Public Utilities Code Section 377, prohibiting the disposition of certain utility generation facilities, does not apply to this transaction.

4. PG&E is authorized by the Bankruptcy Court to convey the property.

5. Our approval of the proposed conveyance does not constitute a project under the CEQA and no further environmental review is required under that statute.

6. Our approval of the proposed conveyance is not injurious to public rights or the public interest.

7. PG&E will receive full, fair and timely consideration for the sale of the property.

8. The requirements of Public Utilities Code Section 851 are satisfied.

9. We do not decide whether we have jurisdiction to assign the "gain-on-sale" proceeds from this sale of transmission-related property to either shareholders or ratepayers, and we make no assignment of the proceeds. This assignment is properly made after we have completed a rulemaking proceeding concerning "gain-on-sale" issues.

ORDER

IT IS ORDERED that:

27. Applicants' application is approved authorizing Pacific Gas and Electric Company (PG&E) to convey the property to William L. Brickner subject to easements for public utility purposes as described in the Purchase and Sale Agreement, dated September 25, 2001, and attached to the application.

28. Within 30 days of the transfer of title, the applicants shall file by advice letter, referencing this proceeding and decision, notice of the completed transfer and a copy of the deed including the final legal description of the conveyed property.

29. PG&E shall record the proceeds from the sale in a memorandum account pending further order of the Commission.

30. Upon a party's motion or the Commission's own motion under Section 1708 of the Public Utilities Code, this proceeding may be reopened for the purposes of determining jurisdiction and assigning proceeds.

31. This proceeding is closed.

This order is effective today.

Dated December 18, 2003, at San Francisco, California.

I will file a concurrence.

/s/ CARL W. WOOD

Commissioner

I will file a concurrence.

/s/ LORETTA M. LYNCH

Commissioner

Concurrence of Commissioners Wood and Lynch

Pacific Gas and Electric Co., and William L. Brickner

The record in this proceeding supports a conclusion that the transaction in question is consistent with the public interest. The majority opinion acknowledges this fact, but then goes on to state that the Commission's traditional approach is to determine merely whether the transaction leaves ratepayers indifferent to whether or not it is consummated. We see the "indifference" standard not as traditional, but as an aberration. Many Commission decisions in the past, and several in recent months, have acknowledged and applied the more appropriate standard of ensuring that the transaction is in the public interest. In approving the majority opinion, we are assuming that the Commission is applying the public interest standard, despite the reference to "indifference."

/s/ CARL W. WOOD /s/ LORETTA LYNCH

Carl W. Wood Loretta Lynch

Commissioner Commissioner

San Francisco, California

December 18, 2003

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