5. Ratemaking Treatment

In the past, revenues from leases and licenses like the transactions in this application have been treated as other operating revenue and credited above-the-line to PG&E's ratepayers in the company's general rate cases. In the company's 2003 general rate case, PG&E has proposed continuing this ratemaking treatment for the lease and license revenues. With electric industry restructuring, however, jurisdiction over the company's electric transmission facilities with respect to rates and service has vested exclusively with FERC. PG&E anticipates that for FERC jurisdictional electric transmission property, revenues from miscellaneous leases in the future would be assigned to transmission and would be subject to applicable FERC accounting and ratemaking treatment. Lease and license revenues from the company's non-nuclear generation property would continue to be credited to the Transition Cost Balancing Account until such time as the Commission identifies an appropriate replacement.

In its review of this application, ORA states that the allocation of revenues under the licenses and leases that PG&E claims are FERC-jurisdictional would, under FERC accounting rules, be split 50-50 between shareholders and ratepayers. ORA states that it does not intend to challenge this proposed revenue allocation. ORA states that the proposal to treat revenues from other leases and licenses as other operating revenue is dealt with as part of an incentive mechanism in PG&E's general rate case. Under these circumstances, ORA states that it does not take issue with PG&E's revenue proposals. ORA has not participated further in this proceeding.