8. Assignment of Proceeding
Loretta M. Lynch is the Assigned Commissioner and Timothy Kenney is the assigned ALJ in this proceeding.
1. In A.00-08-022, PG&E requests retroactive approval of the Crockett lease agreement pursuant to Section 851.
2. PG&E signed the Crockett lease agreement in December 1994. The agreement allows Crockett to construct facilities on 25,000 square feet of PG&E's real property for the purpose of connecting the 240 MW CCP to PG&E's transmission grid.
3. Crockett constructed generation tie facilities on PG&E's property pursuant to the Crockett lease agreement. Crockett has used these facilities since 1996 to deliver power from the CCP to PG&E's transmission grid.
4. PG&E consummated the Crockett lease without obtaining prior approval from the Commission pursuant to Section 851.
5. The 240 MW of power provided by the CCP provides substantial benefits to PG&E's ratepayers and the public at large.
6. The Crockett lease serves the public interest by enabling Crockett to deliver 240 MW of power to PG&E's transmission grid.
7. The public interest is served when utility property is used for other productive purposes without interfering with the utility's operations or the provision of utility service to the public.
8. The Crockett lease allows PG&E's property to be used for other productive uses without interfering with PG&E's ability to serve the public.
9. There is no evidence in this proceeding that approval of the Crockett lease pursuant to Section 851 will adversely affect the public interest.
10. There is no evidence in this proceeding that Crockett has not dealt in good faith and for value with respect to the Crockett lease agreement.
11. It is the Commission's policy to use its authority under Section 853(b) to grant exemptions from Section 851 only in extraordinary circumstances.
12. There are no extraordinary circumstances that warrant the invoking of Section 853(b).
13. GO 69-C authorizes utilities to grant licenses for the use of their property without having to obtain prior approval from the Commission pursuant to Section 851 if certain conditions are met. One such condition is that the license must be for a "limited use" of the utility's property.
14. The facilities constructed on PG&E's property pursuant to the Crockett lease are not a limited use of PG&E's property; they are a substantial and permanent use of PG&E's property.
15. The activities contemplated by the Crockett lease have already occurred.
16. The CEC conducted an environmental review of the Crockett lease facilities in accordance with applicable California law. The CEC found that its adopted conditions would ensure that the Crockett lease facilities would have no significant adverse environmental impacts.
17. In Resolution ALJ 176-3046, the Commission preliminarily determined that this proceeding should be categorized as ratesetting and that hearings would be necessary.
18. There are no contested factual issues.
19. There were no protests or other opposition to A.00-08-022, as amended.
1. This is a ratesetting proceeding.
2. There is no need for hearings.
3. Section 851 requires a public utility to obtain authority from the Commission prior to leasing to a third party any utility property that is necessary or useful in the performance of the utility's duties to the public. Any such lease that is executed without Commission authorization is void under the statute.
4. The purpose of Section 851 is to enable the Commission to review a proposed transaction, before it takes place, in order to take such action as the public interest may require.
5. The purpose of Section 851 would be frustrated if PG&E were granted retroactive authority under Section 851 for the Crockett lease.
6. The Crockett lease serves the public interest and should be approved pursuant to Section 851. The approval should apply prospectively beginning on the effective date of today's decision. PG&E's request for retroactive approval of the Crockett lease should be denied.
7. Section 851 provides that, as to any lessee dealing in good faith and for value, there is a conclusive presumption that the leased property is not necessary or useful in the performance of the utility's duties to the public. This provision protects innocent lessees from having their transactions invalidated solely because a utility has leased its property without Commission authority.
8. Crockett's rights and obligations under the lease agreement remain in full force and effect for the period of time prior to today's decision.
9. The Crockett lease agreement should not be exempted from Section 851 pursuant to Section 853(b).
10. PG&E should be authorized to make minor modifications to the Crockett lease agreement without having to obtain additional Section 851 authority for the modifications. A minor modification is one that satisfies all the criteria enumerated in the body of this decision.
11. The appropriate regulatory treatment of the costs and revenues associated with the Crockett lease should be decided by the Commission in PG&E's GRC proceedings or other appropriate proceedings.
12. Based on the facts and circumstances of this proceeding, PG&E should not be penalized for its failure to obtain prior Commission approval of the Crockett lease under Section 851.
13. The Crockett lease does not qualify as a GO 69-C license agreement for the reasons stated in the body of this decision.
14. CEQA requires an environmental review to occur before an activity takes place. CEQA review of the Crockett lease agreement by the Commission is moot, as the activities contemplated by the agreement have already occurred.
15. The Commission's approval of the Crockett lease should be conditioned on the parties to the lease agreement complying with any conditions adopted by the CEC that pertain to the Crockett lease facilities.
16. The following order should be effective immediately so that the Crockett lease may become effective under Section 851 as soon as possible.
IT IS ORDERED that:
1. The lease agreement between Pacific Gas and Electric Company (PG&E) and Crockett Generation (Crockett) that is the subject of Application 00-08-022, as amended, is approved pursuant to Public Utilities Code Section 851. This approval applies prospectively beginning on the effective date of this Order.
2. PG&E's request for retroactive approval of the Crockett lease is denied.
3. PG&E is authorized pursuant to Section 851 to make minor modifications to the Crockett lease agreement. A minor modification is one that satisfies all the criteria enumerated in the body of this decision.
4. The authority granted by this Order is conditioned on the parties to the Crockett lease agreement complying with all conditions of certification adopted by the California Energy Commission (CEC) in CEC Adoption Order No. P800-93-004 that apply to (i) the facilities constructed pursuant to the Crockett lease agreement, and (ii) the activities permitted by the lease agreement. Failure to comply with the conditions adopted by the CEC shall invalidate the authority granted by this Order.
5. This proceeding does not require a hearing.
6. This proceeding is closed.
This order is effective today.
Dated August 19, 2004, at San Francisco, California.
MICHAEL R. PEEVEY
President
CARL W. WOOD
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
I dissent.
LORETTA M. LYNCH
Commissioner
I will file a concurrence.
CARL W. WOOD
Commissioner
Concurrence of Commissioner Carl Wood
Crockett Generation - Section 851
August 19, 2004 Item 69
I believe that the Commission should not be tolerant of a failure to comply with Section 851, or with any other legal obligations under the Commission's authority. However, I see no point to pursuing sanctions against Pacific Gas Electric Company (PG&E) in this case. PG&E should have sought timely 851 approval, which would have enabled the Commission to consider the terms of the transaction and assign the benefits of any net revenues. Yet, PG&E had informed the Commission of the planned use of the land when it requested and received a Certificate of Public Convenience and Necessity to build the generation tie itself. The Energy Commission took into account any relevant environmental factors when it granted Crockett a permit to construct the line and PG&E apparently complied with required mitigation. The rental revenues have been minimal.
I am more concerned that, in the future, PG&E identify and report these proposed transactions before they occur and seek Commission approval, as appropriate. It appears that PG&E has heard this message and has improved its internal screening of these transactions. If, nonetheless, the company flouts the law in the future, the Commission should then impose significant penalties.
/s/ CARL WOOD |
Carl Wood |
San Francisco, California
August 19, 2004
