Regulatory Authority Exists to Allow This Transfer

Under our existing statutory authority, this transaction would not be permissible before January 1, 2006, except for a specific enabling statute in 2002, AB 1235. AB X1-6 was enacted on January 18, 2001 and it added § 377⁴ to read in relevant part: "(n)otwithstanding any other provision of law, no facility for the generation of electricity owned by a public utility may be disposed of prior to January 1, 2006. The commission shall ensure that public utility generation assets remain dedicated to service for the benefit of California ratepayers."

SB 2X-39 was subsequently enacted on April 26, 2002. It amended § 362, adding § 362(a)⁵ and required the Commission to ensure in proceedings under § 851 that a sale would not adversely impact system reliability. The prepared testimony⁶ in this proceeding shows that the Naches facility is not critical to system reliability. This is an old plant, its output is small and it is run-of-the-river, which means that it can only generate power when there is sufficient water flow.

AB 1235 was enacted September 24, 2002, and it added § 377.1⁷ that specifically exempts the Naches hydroelectric facilities from the § 377 requirements. This statute did not exempt this project from CEQA and therefore, as discussed below, the Commission must be able to make the necessary findings under CEQA before approving this transfer.