II. Background

According to the application, in 1997, Pacific Enterprises, then the parent company of Southern California Gas Company (SoCalGas), purchased the land and the office building located at 10975 Technology Drive, in San Diego from TransAmerica Realty Services, Inc. This property is also known as Lot 5 of the Ranch Bernardo Technology Park.

In March 1998, in Decision (D.) 98-03-073, the Commission approved the creation of Sempra Energy (Sempra), a new holding company which would hold the stock of Pacific Enterprises (and thereby, indirectly, SoCalGas) and Enova Corporation, then the parent company of SDG&E. In June 1998, after the completion of the transaction authorized in D.98-03-073, SDG&E and SoCalGas became subsidiaries of Sempra. Sempra continued to own the land and office building and used this property to provide computer services to SDG&E and SoCalGas.

On January 10, 2000, Sempra entered into an agreement to lease part of the office building to ADP. As amended on April 26, 2000, the term of the lease was for three years, from March 1, 2000 to February 28, 2003. The lease also granted ADP the right to three one-year extensions, so that ADP could extend the lease for as long as until February 26, 2006. Sempra continued to use the rest of the building not leased to ADP as a data processing center that served SDG&E and SoCalGas.

In September 2000, Sempra filed an application to reorganize its regulated California utility businesses to further integrate the management of SDG&E and SoCalGas, including the transfer of certain services previously provided by Sempra, such as computer information services, to SDG&E and SoCalGas. In D.01-09-056, the Commission approved these organizational changes.

On April 1, 2002, Sempra transferred the land and the building located at 10975 Technology Drive, San Diego, California to SDG&E. Sempra also assigned the lease with ADP to SDG&E effective April 1, 2002.

On October 30, 2002, ADP exercised its first one-year option, which extended the lease from March 1, 2003 through February 28, 2004. On November 18, 2003, ADP exercised its second one-year option, which extended the lease from February 28, 2004 through March 1, 2005. On November 1, 2004, ADP exercised its final one-year option, which extended the lease from March 1, 2005 to February 28, 2006.

SDG&E now seeks approval of a lease extension which would permit ADP to remain in part of the building from March 1, 2006 to February 28, 2007.