XI. Categorization and Comments on the Proposed Decision

Pursuant to Rule 6.1, the Commission preliminarily determined in Resolution ALJ 176-3036, dated April 6, 2000, that this is a ratesetting proceeding that would not require a hearing. Based on the record in this matter, it is not necessary to alter these preliminary determinations.

The Commission mailed the draft decision of the ALJ in this matter to the parties in accordance with Section 311 (g) (1) and Rule 77.7 of the Rules of Practice and Procedure. Sierra filed comments on March 5, 2001. In its comments, Sierra states that the Commission has reached the wrong resolution by denying the settlement agreement. Specifically, Sierra states that a state-mandated prohibition on the sale of out-of-state property principally dedicated to serving customers outside the state places an unreasonable burden on interstate commerce in violation of Article I, § 8, Clause 3 (Commerce Clause) of the United States Constitution and Public Utilities Code Section 202. At the same time, Sierra acknowledges that its comments assume the Legislature will remove the current prohibition on sale of utility generation assets in the newly amended Public Utilities Code Section 377. Sierra also urges the Commission to provide advice to the parties on what evidence would be needed to sustain an order authorizing the divestiture. Finally, Sierra asks the Commission to address whether the application to divest its plants complies with CEQA and Section 363(a) regarding operation and maintenance of divested plants.

Public Utilities Code Section 202 indicates that the California Public Utilities Act, and accordingly this commission's authority, does not apply to interstate commerce "except insofar as such application is permitted under the Constitution and laws of the united States." Sierra requests that the Commission act in a manner consistent with Sierra's position that the draft order is an unconstitutional burden on interstate commerce. Yet for the commission to do so would require the Commission to, at a minimum, refuse to enforce Section 377. Article III, Section 3.5 of the California Constitute provides that the Commission has no power to "declare a statute unenforceable, or refuse to enforce a statute, on the basis of it being unconstitutional unless an appellate court has made a determination that such statute is unconstitutional" or to "declare a statute unconstitutional." (Cal. Const., Article III, § 3.5, subd. (a) & (b).) We are expressly barred from finding the prohibition on divestiture in Section 377 to be an unreasonable burden on interstate commerce. Despite Sierra's assumption, we are not aware of any modifications to Section 377 as of the date of this order. Therefore, we decline to make any changes to the draft order based on Sierra's comments.

Findings of Fact

1. On September 18, 2000, Sierra and ORA filed a joint motion to adopt a proposed settlement that asks the Commission to either exempt Sierra's proposed auction and divestiture from review under Section 853 or in the alternative, approve it under Section 851.

2. Hearings are not required on the settlement.

3. The public interest in protecting the interests of Sierra's California ratepayers requires the Commission to retain review over the auction and divestiture under Section 851.

4. The Commission has an ongoing obligation under Section 362 to ensure that generation facilities remain available and operational, while avoiding an overconcentration of market power.

5. The proposed settlement is not consistent with the law because it does not assure reliability of supply and avoid an overconcentration of market power as required by Section 362 and it does not comport with the language of AB 6X prohibiting the sale of public utility generation assets.

Conclusions of Law

1. The Commission should deny Sierra's request for exemption from Section 851 for the sale of certain generating assets.

2. The Commission should deny the motion requesting approval of the proposed settlement because it is not consistent with the law or in the public interest.

3. This application is a project under CEQA but does not require further CEQA review by the Commission because the motion regarding the proposed settlement is denied.

ORDER

IT IS ORDERED that:

1. The joint motion of Sierra Pacific Power Company (Sierra) and the Office of Ratepayer Advocates to Adopt Proposed Settlement Agreement, filed on September 18, 2000 is denied.

2. Sierra's request for an exemption from Public Utilities Code Section 851 is denied.

3. In all other respects, Sierra's application is denied without prejudice.

4. This proceeding is closed.

This order is effective today.

Dated March 15, 2001, at San Francisco, California.

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