9. California Environmental Quality Act

Under the California Environmental Quality Act (CEQA) and Rule 17.1 of the Commission's Rules of Practice and Procedure (Rules), we must consider the environmental consequences of projects that are subject to our discretionary approval.⁸⁵ Thus, in deciding whether to approve A.04-07-032, we must consider if doing so will alter an approved project, result in new projects, change facility operations, etc., in ways that have an environmental impact.

PG&E estimates that it may use approximately $154 million of the proceeds from the Energy Recovery Bond issued by the SPE to fund capital expenditures in 2006.⁸⁶ However, PG&E represents that it cannot identify the specific capital expenditures that will be financed with the Bond proceeds. PG&E also represents that issuance of the Bonds will not result, either directly or indirectly, in any new construction or changes in use of existing assets and facilities. PG&E states that to the extent that capital expenditures are financed with Bond proceeds, CEQA review will occur as needed when PG&E goes through the regulatory processes applicable to each capital project.⁸⁷

CEQA guidelines expressly recognize that the timing of the environmental review involves a balancing of competing factors, and that such review should occur as early as feasible in the planning process to enable environmental considerations to influence project design, yet late enough to provide meaningful information for environmental assessment.⁸⁸ We conclude that it is premature to conduct a CEQA review of the projects that may be funded with Bond proceeds. This is because it is not certain that the SPE will actually issue the Bonds or that PG&E will use the Bond proceeds to fund capital expenditures. Furthermore, PG&E is unable to provide basic details about the potential projects, such as the location, design, and engineering of the projects. Consequently, there is not sufficient information to conduct a meaningful environmental assessment at this time.

This Financing Order does not authorize any capital expenditures or construction projects. PG&E shall not use Bond proceeds to begin construction of capital projects until PG&E has obtained the required approvals from the Commission, if any, including any required environmental review under CEQA.

⁸⁵ Pub. Resources Code, Section 21080.

⁸⁶ PG&E Supplement filed on August 12, 2004, p. 5.

⁸⁷ PG&E Supplement filed on August 27, 2004, pages 6 - 8.

⁸⁸ Code of Regs., Title 14, § 15004.