9. Assignment of Proceeding

Michael R. Peevey is the Assigned Commissioner and Jean Vieth is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. Wild Goose is an independent natural gas storage provider regulated as a public utility by this Commission.

2. The transfer of change of control over Wild Goose is one part of a transfer of virtually all of the natural gas storage assets owned by EnCana and its affiliates to Carlyle/Riverstone Funds (80% ownership) and SemGroup (20% ownership).

3. Carlyle/Riverstone Funds, both limited partnerships, are two in a series of investment funds established by the joint venture between The Carlyle Group and Riverstone Holdings LLC formed to provide private equity capital for buyouts, growth capital opportunities, strategic joint ventures and leverage buildups globally in the energy and power industry. The objective of investments by the joint venture is to generate long-term capital appreciation through privately negotiated equity and equity-related investment in energy and power companies. The member funds in the joint partnership, Carlyle/
Riverstone III and Carlyle/Riverstone II, have committed capital of over US $4 billion between them.

4. SemGroup has a diverse range of oil and natural gas businesses. Its financial statements show, for the six months ending June 30, 2006, revenues of more than US $8 billion, total assets of more than US $3.5 billion, and total partners' capital of $444 million.

5. KMI's business interests include partial ownership and effective indirect control of SFPP and CALNEV, both California pipeline utilities.

6. Carlyle/Riverstone Funds and SemGroup and its subsidiaries have no natural gas or gas transportation assets, products, or services in California or in

any location that could affect the California market. Neither does KMI and its subsidiaries or affiliates.

7. Wild Goose's public interest showing discusses many of the criteria listed in § 854(c), even though no party to this transaction has gross annual California revenues of $500 million.

8. The change of control over Wild Goose should leave its service quality and management quality unimpaired, should not be adverse to the current Wild Goose workforce in Butte County or to many of those serving in key operational and management positions elsewhere, and should be free from any negative impacts-and may have positive impacts-on the completion of the Wild Goose expansion.

9. The change of indirect control over Wild Goose is a project subject to environmental review pursuant to CEQA, but because the project qualifies for an exemption, no further review needs to be done.

10. Wild Goose has no plans or intentions to make any changes to its facilities or in its operations that have not already been approved as part of D.02-07-036.

11. It can be seen with reasonable certainty that the change of indirect control over Wild Goose will not have a significant effect on the environment. This is the independent judgment of the Commission.

12. Given the significant global investments in the energy and power industries that Carlyle/Riverstone Funds, SemGroup, and their subsidiaries and affiliates have made and report they will continue to make, and the rapidity with which some assets appear to change hands, the Commission should ensure that it has sufficient information to monitor important developments.

13. The financing package for the purchase and sale of the EnCana assets, including Wild Goose, requires that all of the financing will be guaranteed by all of the subsidiaries that own the gas storage facilities and other assets purchased.

14. Because, post-transfer, Wild Goose will not issue debt or equity, Joint Applicants have imputed a 65% debt to total capital ratio to Wild Goose by dividing the imputed equity by the acquisition cost.

15. The financing package is riskier than the Commission would approve for traditional electric and gas utilities and requires Wild Goose assets to be pledged to secure the financing of the assets acquired outside California. However, it is not unreasonable given the solvency of the buyers and because Wild Goose is not subject to cost of service regulation.

16. Upon approval by KMI's shareholders, and once all regulatory approvals have been obtained, Carlyle/Riverstone III and Carlyle Partners IV would each acquire a minority equity interest in KMI of about 12.5%; the interest in SFPP and CALNEV will be much smaller.

17. The KMI investment by Carlyle/Riverstone III and Carlyle Partners IV is too small to give them or their affiliates indirect control over SFPP or CALNEV. Neither does this investment appear to have any competitive ramifications for Wild Goose, which provides no refined petroleum products or services in California.

18. Neither Roseville Land nor Lodi has established the existence of material, disputed facts that require hearing.

Conclusions of Law

1. Because no party to the transfer of control has California revenues exceeding $500 million, § 854(b)(3) is inapplicable. Section 854(b)(3) requires the Commission to seek an opinion on competitive impacts from the California Attorney General if revenues reach this threshold.

2. The change of control over Wild Goose should be approved under § 854(a) subject to reporting requirements designed to ensure that the Commission has sufficient information to monitor its affiliates' acquisition of or investment in electric and natural gas entities and assets located in California and Western North America.

3. Following the change of control, Wild Goose will continue to be bound by the terms of its CPCN, by all the requirements and conditions mandated in
D.97-06-091 and D.02-07-036, as modified by subsequent Commission decisions, and by the tariff filed with the Commission, as approved and subsequently modified by any approved amendments.

4. Carlyle/Riverstone Funds and Wild Goose Storage should be authorized under § 851 to enter into the financing described herein.

5. Carlyle/Riverstone III and Carlyle Partners IV, and their affiliates, will become subject to § 852 immediately upon the closing of the sale of Wild Goose from EnCana to Carlyle/Riverstone Funds.

6. An exemption from the requirements of § 852 should be granted under § 853(b) to permit Carlyle/Riverstone III and Carlyle Partners IV, and their affiliates, to invest in the proposed KMI transaction, as described herein.

7. The preliminary determinations in Resolution ALJ 176-3174, confirmed in the scoping memo, should be reaffirmed.

8. This transfer of control qualifies for an exemption from CEQA under CEQA Guidelines § 1506(b)(3)(1) and therefore, additional environmental review is not required.

9. Before any transfer of control of SFPP or CALNEV occurs, the Commission must review and approve the transfer proposal under § 854.

10. This order should be effective immediately so that Wild Goose may participate in PG&E's upcoming RFO.

 

ORDER

 

IT IS ORDERED that:

1. Application (A.) 06-059-033 is approved, as further provided in these Ordering Paragraphs.

2. Pursuant to Public Utilities Code § 854(a) and subject to the reporting requirements provided in Ordering Paragraph 7, the transfer of control over Wild Goose Storage Inc. (Wild Goose) from EnCana Corporation to Carlyle/Riverstone Funds and SemGroup, L.P. and SemGroup Subsidiary Holding, L.L.C. (collectively SemGroup) through the sale by Alenco, Inc. of all issued and outstanding shares of Wild Goose to Niska Gas Storage US, LLC (Niska Gas Storage), is approved.

3. Pursuant to Public Utilities Code § 851, Carlyle/Riverstone Funds and Wild Goose Storage are authorized to enter into the financing described herein and in the Application (including Exhibits O, P and Q), and the Amendment to Application.

4. Pursuant to Public Utilities Code § 853(b), an exemption is granted to Carlyle/Riverstone Global Energy and Power Fund III, L.P. (Carlyle/Riverstone III) and Carlyle Partners IV, L.P. and their affiliates, from the requirements of Public Utilities Code § 852 for their investment in the proposed Kinder Morgan, Inc. transaction, as described herein and in the Amendment to Application. However, no transfer of control of SFPP, L.P. and Calnev Pipe Line LLC shall occur without approval of the Commission under Public Utilities Code § 854.

5. The transfer of control qualifies for an exemption from the California Environmental Act (CEQA) under CEQA Guidelines § 1506(b)(3)(1) and therefore, additional environmental review is not required.

6. Wild Goose and its owners shall continue to be bound by all terms and conditions of Wild Goose's certificate of public convenience and necessity, as granted by Decision (D.) 97-06-091 and modified by subsequent decisions of the Commission, including D.02-07-036 and by the tariff filed with the Commission, as approved and subsequently modified by any approved amendments.

7. Wild Goose shall semi-annually report the following information to the Commission: the identity of any affiliate that directly or indirectly has acquired or has made an investment resulting in a controlling interest or effective control, whether direct or indirect, in an entity in California or elsewhere in Western North America that produces natural gas or provides natural gas storage, transportation or distribution services, to the extent such transactions are not already captured by Decision 02-07-036, Ordering Paragraph 3(c); the identity of any affiliate that directly or indirectly has acquired or has made an investment resulting in a controlling interest or effective control, whether direct or indirect, in an entity in California or elsewhere in Western North America that generates electricity, or provides electric transmission or distribution services; the nature (including name and location) of the asset acquired or in which the investment was made, and the amount of the acquisition or investment. For the purposes of this Ordering Paragraph, "Western North America" is defined to mean, in addition to California, the states of Oregon, Washington, Arizona, New Mexico, Texas, Nevada, Colorado, Wyoming and Utah, as well as the provinces of British Columbia and Alberta in Canada and the State of Baja California Norte in Mexico.

8. Application 06-05-033 is closed.

Dated November 9, 2006, at San Francisco, California.

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