Discussion
SCE requests authority under Section 851 to lease utility property to Anaheim RV. Section 851 states, in relevant part, as follows:
No [utility]...shall...lease...any part its plant, system, or other property necessary or useful in the performance of its duties to the public...without first having secured from the commission an order authorizing it to do so. Every such...lease...made other than in accordance with the order authorizing it is void...[Any lease] of property by a public utility shall be conclusively presumed to be of property that is not useful or necessary in the performance of its duties to the public, as to any...lessee...dealing with such property in good faith and for value....
The Commission has broad discretion to determine if it is in the public interest to authorize a transaction pursuant to Section 851. The primary standard used by the Commission is whether the transaction will serve the public interest. Where necessary and appropriate, the Commission may attach conditions to a transaction in order to protect and promote the public interest.4
The Commission has repeatedly held that the "public interest is served when utility property is used for other productive purposes without interfering with the utility's operation or affecting service to utility customers.5" We find that the proposed lease does not interfere with SCE's operation or affect its ability to serve the public. In other contexts, we have defined "productive" activities as those that lead to a measurable benefit to ratepayers. Because ratepayers will receive 30% of the gross revenue from the lease with little or no increase in costs, we find that the property is being "used for other productive purposes." Accordingly, the proposed lease is in the public interest and should be approved, subject to the conditions set forth below.
We place four conditions on our approval of the lease. First, the Option Agreement allows Anaheim RV to use SCE's property for any other purposes allowed by law, as long as such uses do not interfere with SCE's use of the property for utility-related purposes. We do not believe that it is prudent to grant such sweeping authority for the next 40-plus years. We will require any change in use of SCE's property to be approved by the Commission.6
Second, the Site is located on SCE's electric transmission right of way. In its application, SCE does not address the potential future need to expand transmission capacity within the right of way. We believe that it is possible that SCE may need to expand its transmission capacity during the next 40-plus years. To ensure that the public interest is protected, we will condition our approval of the lease on SCE having the ability to install new transmission facilities on the Site when deemed necessary by SCE or the Commission.
Third, the conditional use permit (CUP) for using the Site as an RV storage facility that was granted by the City of Anaheim expires in February 2007. The City will have to renew the permit in order for the authorized use to continue. This will give the City an opportunity to determine if the conditions have been met, add new conditions, deny a renewal of the CUP, or authorize a different use of the property. We will require SCE to notify the Commission whenever the City declines to authorize the continued use of the Site as an RV storage facility, authorizes a new use, or adopts new conditions governing the use of the Site that negatively affect SCE's ability to use the Site for utility-related purposes.
Finally, in D.01-04-004 and D.01-05-005, the Commission adopted the following limitation on ratepayer responsibility for future environmental claims on leased utility property:
Should environmental claims, in whole or in part, related to the tenancy or activities of the lessee be made on SCE subsequent to the execution of the lease, SCE shall not seek recovery of any such claims, or defense of such claims, from ratepayers. (D.01-05-005, mimeo., p. 3 and Ordering Paragraph 1.)
This provision is applicable here, and we adopt it as a condition of our approval.
4 D.01-06-007, mimeo., p. 17. 5 See, for example, D.02-01-058, mimeo., p. 7. 6 As discussed infra, our environmental review was limited to an RV storage facility. Any change in use could require additional environmental review by the Commission.
