5. The J-Power and Wellhead Agreements Should be Exempted from the Requirements of § 851
Section 851 requires that all leases entered into by a public utility must be approved by the Commission. Under the agreements with J-Power and Wellhead, SDG&E is granting an option to lease the property, rather than entering into the leases. As a result, § 851 would require a subsequent proceeding to approve the leases. SDG&E has noted that this would add significantly to the time to construct the peakers, and would make it impossible to make the peakers available for the summer of 2008.30
Section 853(b) authorizes the Commission to exempt a public utility from the § 851 requirements upon a finding that the application of § 851 is not necessary in the public interest. SDG&E seeks such an exemption on several grounds.
First, SDG&E cites D.01-06-006, which granted SDG&E an exemption to construct generation units during the Energy Crisis of 2000-01.31 SDG&E contends that these facilities are needed due to similar compelling need for the period beginning in the summer of 2008, as well as the statements made in the Assigned Commissioner Ruling (ACR) in R.06-02-013 ordering SCE to procure additional peaking capacity. DRA did not agree that SDG&E should rely on the ACR in R.06-02-013. DRA contends that the need was demonstrated in Exhibits 3 and C-3, which interpret portions of SDG&E's 2007-2016 LTPP filing in R.06-02-013, as well as projections of SDG&E and the CEC.32
Second, SDG&E states that the operation of the peakers will not interfere with SDG&E's provision of utility service, and as noted above, the CEC and local governments would ensure compliance with the environmental requirements of the California Environmental Quality Act (CEQA).33
Third, SDG&E notes that the generation will provide power, reliability, resource adequacy and least cost/best fit procurement benefits.
Exemplary copies of the leases that SDG&E seeks to exempt from further review under § 851 are included as an attachment to the agreements.34 If these leases were presented to us for approval as part of the present application, they would receive such approval. As a general policy, with regard to approval under § 851, we have found that "[t]he public interest is served when utility property is used for other productive purposes without interfering with the utility's operation or affecting service to utility customers."35 That test is fully met by the proposed leases. The land in question will be used for a very productive purpose directly related to that of the utility's service obligations - to meet the reliability and power needs of its customers.
We do not have the final leases before us for approval, but it would be redundant to seek further approval for the leases as long as they are the same as presented in the record of this proceeding. It is not in the public interest to delay execution of these leases pending a further proceeding, and therefore the requirements of § 853(b) are satisfied.36
There is therefore no need to rely upon our prior decision D.01-06-006 or upon the ACR in R.06-02-013. DRA is correct that the showings in Exhibits 3 and C-3 are independently sufficient to justify waiver of the § 851 requirements for these specific projects.
30 Application, p. 8.
31 Application, p. 5.
32 Joint PHC Statement, p. 6.
33 Application, p. 7.
34 See Exhibits C-2, Attachments 3 and 4.
35 D.00-07-010, pp. 6-7, 2000 Cal.PUC LEXIS 576 *9.
36 SDG&E may not have needed to seek a waiver under § 853(b), as their application may have contained sufficient information to seek direct approval of the proposed leases. In general, we do not favor parties seeking waiver of the requirements under § 851. However, due to the urgency of the present application and since no party has addressed whether SDG&E's filing was adequate to support approval under § 851, we shall not make any finding regarding this question, and this decision should not be considered precedential.
