2. Background

PG&E is the owner of certain surface and subsurface water and water rights, together with the right of using such waters, which are necessary and useful in generating electricity at PG&E's Battle Creek Project near Manton, California. In 1984, the utility recorded an indenture to further perfect its rights and to establish a procedure by which PG&E could convey certain of its water rights for use by a property owner for domestic purposes. A copy of the indenture is attached to the application.

By this application, PG&E seeks authority to grant separate easements to one residential lot owned by Wayne B. and Annie L. Gipson and to two residential lots owned by Wayne J. and Kathy J. Morcom. All of the lots are located in Shasta County (the County), and the two couples seek to construct homes on their properties. The County will not issue permits to develop these properties unless PG&E grants easements for the property owners to install and use domestic water wells.

PG&E states that it has determined that granting the easements to permit domestic water wells on these properties will not interfere with the operation of PG&E's facilities or with the provision of service to PG&E's customers. The application is brought under § 851, which prohibits an encumbrance on utility property without Commission authorization.

Under the proposed easements, PG&E will receive payments of $491 per lot, and the net amount will be credited to Other Operating Revenue and used to reduce PG&E's generation revenue requirement in future general rate cases. The water rights are associated with PG&E's non-nuclear hydroelectric generation-related facilities. PG&E does not own the real property on which the proposed new wells are to be installed. Therefore, there are no PG&E book values associated with this application, and there is no effect on PG&E's rate base as a result of the proposed easements.