ALJ/TIM/hl2 Mailed 8/26/2004

Decision 04-08-048 August 19, 2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company (U-39-E) for an Order Under Section 851 of the California Public Utilities Code Approving the Lease of Real Property to Crockett Generation.

Application 00-08-022 (Filed August 15, 2000)

OPINION

AUTHORIZING THE LEASE OF UTILITY PROPERTY PURSUANT TO
PUBLIC UTILITIES CODE SECTION 851

TABLE OF CONTENTS

Title Page

OPINION AUTHORIZING THE LEASE OF UTILITY PROPERTY PURSUANT TO PUBLIC UTILITIES CODE SECTION 851 1

1. Summary 2

2. Factual Background 2

3. Procedural Background 4

4. Summary of the Application 4

a. Request for Authority Under Section 851 4

b. Alternative Request for Authority Under General Order 69-C 6

c. Alternative Request for Authority Under Section 853(b) 6

d. Penalty 7

e. Crockett's Construction of the Lease Facilities 8

f. Compliance with CEQA 9

g. Ratemaking Treatment of Revenues 11

5. Discussion 12

a. Section 851 12

b. GO 69-C 16

c. CEQA 20

6. Categorization and Need for Hearings 20

7. Comments on the Draft Decision 21

8. Assignment of Proceeding 21

Findings of Fact 22

Conclusions of Law 23

ORDER 26

1. Summary

Pacific Gas and Electric Company (PG&E) requests Commission approval of a lease agreement pursuant to Public Utilities Code Section 851.¹ The agreement allows Crockett Generation (Crockett) to lease approximately 25,000 square feet of real property from PG&E for the purpose of installing equipment to interconnect Crockett's 240 Megawatt (MW) power plant to PG&E's transmission grid. PG&E consummated the agreement in December 1994 without obtaining Commission approval for the agreement as required by Section 851.

This decision grants prospective approval of the Crockett lease agreement pursuant to Section 851. PG&E's request for retroactive approval of the agreement is denied. This decision also finds that any activity that may have warranted an environmental review by the Commission pursuant to the California Environmental Quality Act (CEQA) has already occurred. Accordingly, CEQA review at this time is moot for practical purposes, and this decision declines to undertake such a review. Finally, this decision does not penalize PG&E for its failure to obtain Commission approval for the lease agreement prior to consummating the lease as required by Section 851.