D0611018 ATTACHMENT to Opinion Approving, with Conditions, Transfer of control and Related financing, and Exempting Ancillary Transaction from Public Utilities Code Section 852 Pursuant to Section 583(b)

ALJ/XJV/hl2 Mailed 11/14/2006

Decision 06-11-019 November 9, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application of Wild Goose Storage Inc., EnCana Corp., Carlyle/Riverstone Global Energy and Power Fund III, L.P., Carlyle/Riverstone Global Energy and Power Fund II, L.P. and Niska Gas Storage US, LLC for Review under Public Utilities Code Section 854 of the Transfer of Control of Wild Goose Storage Inc. from EnCana Corporation to Niska Gas Storage US, LLC and for Approval of Financing under Public Utilities Code Section 851.

Application 06-05-033
(Filed May 26, 2006)

OPINION APPROVING, WITH CONDITIONS, TRANSFER OF
CONTROL AND RELATED FINANCING, AND EXEMPTING
ANCILLARY TRANSACTION FROM PUBLIC UTILITIES CODE SECTION 852 PURSUANT TO SECTION 583(b)

TABLE OF CONTENTS

Title Page

OPINION APPROVING, WITH CONDITIONS, TRANSFER OF
CONTROL AND RELATED FINANCING, AND EXEMPTING
ANCILLARY TRANSACTION FROM PUBLIC UTILITIES CODE
SECTION 852 PURSUANT TO SECTION 583(b) 2 2

1. Summary 2 2

2. Background 4 4

3. Identity of Joint Applicants and Other Necessary Participants in the Transactions at Issue 4 4

4. Proposed Transfer of Wild Goose 9 9

4.1 Description of the Transfer 9 9

4.2 Protests 11 11

4.3 Standard of Review 13 13

4.4 Discussion 15 15

4.5 CEQA 19 19

5. Request for Financing Authority 20 20

6. KMI Stock Acquisition 22 22

6.1 Description 22 22

6.2 Authority 24 24

6.3 Discussion 24 24

7. Procedural History and Miscellaneous Procedural Matters 26 26

8. Comments on Proposed Decision 27 27

9. Assignment of Proceeding 28 28

Findings of Fact 28 28

Conclusions of Law 31 31

Order 32

Attachment 1: Summary of Current Carlyle/Riverstone Investments in the Energy and Power Industries

Attachment 2: Summary of Additional Carlyle/Riverstone Investments in Renewable Energy and Power Industries

Attachment 3: Summary of Additional Investments in the Energy and Power Industries that Carlyle/Riverstone III and Carlyle Partners IV will Acquire as a Result of Proposed Investment in Kinder Morgan, Inc.

Attachment 4: Summary of SemGroup Investments in the Energy and Power Industries

OPINION APPROVING, WITH CONDITIONS, TRANSFER OF CONTROL
AND RELATED FINANCING, AND EXEMPTING ANCILLARY
TRANSACTION FROM PUBLIC UTILITIES CODE SECTION 852
PURSUANT TO SECTION 583(b)

1. Summary

Wild Goose Storage Inc. (Wild Goose) is an independent natural gas storage provider in California. By this application as amended, Joint Applicants, the entities identified in the caption above, request:

· authority under Pub. Util. Code § 854¹ to transfer control of Wild Goose from the Canadian company, EnCana Corporation (EnCana), and a wholly-owned EnCana subsidiary to Niska Gas Storage US, LLC (Niska Gas Storage) via the sale of all issued and outstanding shares of Wild Goose. Niska Gas Storage is itself the subsidiary of a limited liability company 80%-owned by a joint venture known as Carlyle/Riverstone Funds, based in New York City, and 20%-owned by SemGroup, an Oklahoma limited partnership and its subsidiary.

· authority under § 851 to finance the acquisition of Wild Goose as proposed; and

· authority under § 852 (or an exemption under § 853(b)) to permit a separate acquisition of stock in Kinder Morgan, Inc. (KMI) by one member fund in Carlyle/Riverstone Funds, together with an affiliate, as part of a transaction with other entities not subject to this Commission's jurisdiction. KMI's business interests include partial ownership and effective indirect control of SFPP, L.P. (SFPP) and Calnev Pipe Line LLC (CALNEV), both California pipeline utilities. This separate transaction is part of a larger agreement to take KMI private. Joint Applicants acknowledge that the larger agreement will require Commission review and approval under § 854 in the future, via a separate application.

Joint Applicants also request that we decide this matter no later than November 9, 2006 so that ownership and control of Wild Goose is clear and does not interfere with Wild Goose's participation in Pacific Gas and Electric Company's upcoming Request for Proposal for incremental natural gas storage, ordered by Decision (D.) 04-09-022 and D.06-07-010.

We find that the change of control is not adverse to the public interest and authorize it to go forward. Post-transfer, Wild Goose will continue to operate as a natural gas storage provider in California, pursuant to terms and conditions ordered by D.97-06-091 and D.02-07-036. However, given the new owners' substantial investments in energy and power businesses, to ensure that we have the information necessary to monitor Wild Goose's position, we condition our authorization of the transfer by requiring that Wild Goose report promptly on the identity, nature and amount of its affiliates' acquisition of or investment in electric and/or natural gas entities and assets in California and Western North America.

The proposed financing package is riskier than we would approve for traditional electric and gas utilities, and requires Wild Goose assets to be pledged to secure the financing of assets acquired outside California. We authorize the proposed financing, however, given the solvency of the new owners and because Wild Goose is not subject to cost of service regulation. With respect to the ancillary KMI investment, we conclude that an exemption under § 853(b) is warranted and we authorize it. We express no opinion on the merits of the § 854 application which KMI and others filed as Application 06-09-016 on September 18, 2006.

¹ Unless otherwise indicated, all subsequent citations to sections refer to the Public Utilities Code.