8. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and Rule 14.2(a) of the Commission's Rules of Practice and Procedure.

We received comments and reply comments as follows: comments, filed May 9, 2007, by ConocoPhillips, May 11 by CFC, and May 14 by Indicated Shippers and Joint Applicants; reply comments filed May 21, 2007 by each of these parties and DRA. In addition, on May 18, 2007 Indicated Shippers filed a Motion to Reopen the Record and Joint and Joint Applicants filed their opposition the same day. After review of all of these pleadings, we make only minor changes to the proposed decision. We also correct typographical and other clerical errors and omissions.

May 18 Motion: We deny Indicated Shippers' motion, which proposes that we reopen the record to receive in evidence the prepared testimony of bankruptcy counsel on the need for a letter of credit, the terms such a document should include, and a recommended procedure for conducting payment to Shippers of any rate refunds ordered in C.97-04-024 et al. We conclude that the prepared testimony, which essentially expands upon Shippers' already expressed views, is not necessary to the record at this late stage of the proceeding nor is it particularly helpful. We see no reason to reopen the record to take further evidence on these matters since the comments and reply comments, relying on the current record, are sufficient to cause us to further weigh our order and fashion some minor revisions.

Payment of Potential Rate Refunds: We revise the proposed decision, in including text in Section 3.3.3, to require Joint Applicants to obtain a letter of credit sufficient to guarantee rate refunds of $100 million, which all parties agree is the maximum, if any, which may be found owing in C.97-04-024 et al. Indicated Shippers have persuaded us that cash reserves are insufficiently reliable and Joint Applicants, moreover, clearly indicate that they prefer to have more flexible use of SFPP's revenues. We decline to accept Joint Applicants' preference that we recognize a debt guarantee letter from a national bank in lieu of more liquid collateral. Section 854 Applicants proposed that in their case in chief, and the proposed decision rejected it, finding that the record contained unrebutted, underlying questions about the balance between SFPP's assets and outstanding liabilities, and whether its borrowing capacity actually can close the acknowledged deficit.

Filing of California Complement to FERC Form 6, Page 700: We agree with Shippers that the proposed decision should be revised to require that SFPP and Calnev file with the Commission, annually, cost of service, volume, and revenue data for the California intrastate market. That data is used to calculate the aggregate data filed as Page 700 of FERC Form 6 but is not reported publicly there nor anywhere else. The information is necessary to ongoing regulatory oversight and is an important input to the test year 2009 rate case application today's decision orders. We require the utilities to begin making the California filings concurrently with the first FERC Form 6 filed following the effective date of today's decision.

Non-Consolidation Opinion: We clarify that concurrently with the effective date of any future structural change in business form and organization above the utility tier, SFPP and Calnev shall submit an additional non-consolidation opinion.

Compliance with Section 816 et seq.: To ensure that no confusion exists, we reiterate that SFPP and Calnev shall continue to be bound by the statutory mandates of Section 816 et seq., which govern a utility's indebtedness for utility purposes, as well as Section 851, where required.