10. Assignment of Proceeding
Susan P. Kennedy is the Assigned Commissioner and Glen Walker is the assigned ALJ in this proceeding.
1. Avista serves 298,000 natural gas customers in the states of Washington, Idaho, Oregon and California.
2. Avista's only gas distribution service in California is in its South Lake Tahoe District, where it serves 18,600 customers.
3. Southwest serves 1.6 million customers in the southwestern United States, including 22,000 natural gas customers concentrated in the Lake Tahoe Basin in its Northern California Division.
4. On September 3, 2004, Southwest and Avista filed this application for authority for Southwest to acquire Avista's South Lake Tahoe gas assets for approximately $15 million.
5. ORA on October 3, 2004, filed a protest to the application.
6. On January 11, 2005, the parties filed a settlement agreement and jointly moved for its approval.
7. A settlement hearing was conducted on January 14, 2005, in which three witnesses described the terms of the proposed acquisition and the provisions of the settlement agreement.
8. Among other things, the settlement agreement would freeze the existing base margin rates for current Avista gas customers for the years 2005, 2006, 2007 and 2008.
9. The settlement agreement also provides that Southwest will not seek Commission authority to recover its acquisition premium in this or in any future regulatory proceeding.
10. ORA recommends approval of the application, as modified by the settlement agreement.
1. The application, as modified by the settlement agreement, should be approved.
2. Avista's natural gas purchases for the period January 2001 through October 2004 were prudent and, barring some unexpected development, are likely to be deemed prudent for the period October 2004 to the date of this decision.
3. Upon consummation of this transaction, Southwest should be allowed to consolidate its natural gas purchases for South Lake Tahoe with its existing northern California gas purchases.
4. Southwest should be authorized to include the Avista service territory in Southwest's July 2005 purchased gas rate adjustment.
5. Southwest should be authorized to substitute its Tariff Rules Nos. 1 through 22 in lieu of Avista's Rules Nos. 1 through 21, retaining the Preliminary Statements and Rate Schedules in the existing Avista tariffs.
6. Pub. Util. Code §§ 851 and 854 govern this transaction.
7. This change of control qualifies for exemption from CEQA review under CEQA Guidelines Section 15061(b)(3).
8. The settlement agreement is reasonable in light of the whole record, consistent with law, and in the public interest.
IT IS ORDERED that:
1. The application of Avista Corporation (Avista) and Southwest Gas Corporation (Southwest) for authority for Avista to sell its South Lake Tahoe gas facilities to Southwest in accordance with the purchase and sale agreement attached to the application, as such agreement has been modified by a settlement agreement attached hereto and made part hereof as Attachment A, is approved.
2. The settlement agreement attached hereto and made part hereof as Attachment A is reasonable in light of the whole record, consistent with law, and in the public interest.
3. Pub. Util. Code §§ 851 and 854 govern this transaction.
4. The change in ownership of the South Lake Tahoe gas facilities qualifies for an exemption from the California Environmental Quality Act (CEQA) under CEQA Guidelines § 15301(b) and, therefore, additional environmental review is not required.
5. The cost of natural gas purchases by Avista was prudent and recoverable for ratemaking purposes prior to and through October 2004.
6. Upon consummation of this transaction, Southwest is authorized to substitute its Tariff Rules Nos. 1 through 22 in lieu of Avista's Rules Nos. 1 through 21, retaining the Preliminary Statements and Rate Schedules in the existing Avista tariffs.
7. Upon consummation of this transaction, Southwest is authorized to include the Avista service territory in Southwest's July 2005 Purchased Gas Cost Adjustment rate change, at which time the gas cost and gas cost-related balancing accounts will be merged, and all of Southwest's northern California customers will pay the same cost for gas.
8. Upon consummation of this transaction, and in the event the Commission authorizes Southwest to implement a gas cost incentive mechanism in its pending application (Application 04-11-009), the mechanism shall be applicable to the South Lake Tahoe service territory.
9. Upon consummation of this transaction, Southwest is authorized to consolidate its natural gas purchases for South Lake Tahoe with its existing northern California gas purchases.
10. Upon consummation of this transaction, the Certificate of Public Convenience and Necessity of Avista shall be transferred to Southwest, and Avista shall be relieved of its public utility obligation in California.
11. Southwest and Avista shall notify the Director of the Commission's Energy Division, in writing, of the transfer of ownership, as authorized herein, within 30 days of the date of transfer. A true copy of the instruments of transfer shall be attached to the notification.
12. The authority granted herein shall expire if not exercised within one year of the date of this order.
13. Application 04-09-009 is closed.
This order is effective today.
Dated March 17, 2005, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
DIAN M. GRUENEICH
Commissioners
