Gain on Sale
PG&E and ORA concur that the total original cost of the property was $112,015, the sales price is $250,000, and the after-tax gain on sale will be approximately $63,379. PG&E cites several Commission decisions in arguing to record the gain to shareholders. ORA cites others in arguing to split the gain 56% to ratepayers and 44% to shareholders in recognition of the time the property was supported by each (18 years in rate base, and 14 years as non-utility property).8
The Commission recently initiated Rulemaking (R.) 04-09-0039 to consider policies and guidelines regarding allocation of the gains from sales of utility assets. We believe that it is more appropriate to consider the ratemaking issues raised by the parties in that forum. Therefore, as we have done in other recent Section 851 applications where this issue has arisen, we defer our decision on the allocation of PG&E's gain on sale to that forthcoming rulemaking. In the meantime, PG&E should record the net-of-tax gain in its Real Property Gain/Loss on Sale Memorandum Account, to accrue interest following the method established for that account
8 See, e.g., D.98-02-031, D.98-02-032, D.98-02-033, and D.98-04-009 cited by PG&E; and D.89-12-057 and D.87-12-067 cited by ORA. 9 R.04-09-003, Order Instituting Rulemaking on the Commission's Own Motion for the Purpose of Considering Policies and Guidelines regarding the Allocation of Gains from Sales of Energy, Telecommunications and Water Utility Assets.
