II. Background

A. The Project

PG&E seeks a CPCN for a 230 kV double-circuit transmission line to be located on the east shore of San Francisco Bay, commencing in Fremont and travelling approximately 7.3 miles southward to a transmission/distribution substation situated on private property east of the Alviso area of San Jose. Most of the project consists of a continuous transmission line heading south from a spot east of PG&E's existing Newark substation and ending at the new substation to be built on property known as Los Esteros. However, one short segment of approximately 1.4 miles, known as the Trimble-Montague section, is separate from and south of the project. PG&E proposes to add facilities connecting both new segments, but does not anticipate more than nominal construction to add such connections.

The project as proposed by PG&E - and adopted for the most part in this decision3 - consists of the following specific components:

1. A new 24 acre combined transmission and distribution substation ("Los Esteros substation") and new 21 kV connections, with three transformers to be installed initially and a fourth transformer, distribution facility and distribution circuits installed later, if needed;4

2. A 7.3 mile 230 kV double-circuit transmission line from the existing Newark substation to the Los Esteros substation;5

3. A modification of the existing Newark substation to accommodate the 230 kV transmission line;6

4. A connection of the new Los Esteros substation to the 115 kV system, via the Los Esteros to Kifer 115 kV circuit, the Los Esteros to Trimble 115 kV circuit, the Los Esteros to Montague 115 kV circuit, and the Agnews 115 kV tap circuit; and

5. The replacement of a segment of the existing Newark to Trimble single circuit 115 kV wood pole line located along Trimble Road and Montague Expressway with a 1.4 mile double circuit steel pole line to complete a 115 kV circuit between the Los Esteros substation and the existing Montague substation.

B. Procedural History

PG&E first sought authorization for this project in a prior application, which the Commission dismissed without prejudice in 19997 due to problems with the proposed routing.8 PG&E then filed the present application seeking approval of a proposed route depicted in Appendix A to this decision. PG&E continued to propose this route through the August and September 2000 evidentiary hearings. However, for the first time during its closing arguments in September 2000, it changed slightly its preferred route to a route it calls the "Modified I-880-A/Proposed Route" alternative. According to PG&E, it supports the change because its prior proposed route has potential permitting problems with the Wildlife Refuge. Its revised proposed route is reflected in Appendix B to this decision.

Several parties intervened in the proceeding and participated actively during the evidentiary hearings and subsequent briefing. These parties are: the Commission's Office of Ratepayer Advocates (ORA), US Dataport, the City of Fremont (Fremont), the City of San Jose (San Jose), ProLogis Limited Partnership and ProLogis Trust (ProLogis), Aglet Consumer Alliance (Aglet), and the California Independent System Operator (ISO or CA ISO).9 Other groups and individuals commented on the Draft, Supplemental and Final EIRs, as described fully in the FEIR.10

Evidentiary hearings took place on August 21-25 and September 5-8, 2000. The parties were allowed to file post-hearing briefs.

C. Project Need and Cost

PG&E alleges the project is needed to ensure electric reliability in the South San Francisco Bay Area. The ISO agrees. The ISO conducted its own review of the project as part of a "grid planning process" it initiated after the passage of Assembly Bill (AB) 1890.11 Because this was the first transmission project the ISO reviewed after the passage of AB 1890, its procedures were in a state of flux and the review somewhat ad hoc. Ultimately, at a January 2000 meeting of ISO's governing board, the ISO voted to approve the project on the ground the project was urgently needed to provide reliable electric service to the Silicon Valley.

The ISO concedes it did not conduct a detailed assessment of the environmental, social or aesthetic impacts of the project and, hence, did not undertake a detailed consideration of the appropriate transmission line route or substation site. Likewise, the ISO does not purport to have conducted a detailed

review of PG&E's cost estimates. Finally, in its review, the ISO concluded that all alternatives considered in the EIR, except for the "No-Project" alternative, are adequate to maintain reliability.

As we discuss more fully below, only ORA challenges whether the project is needed, and even then does so only half-heartedly:


PG&E's load forecast is consistent with the increasing perception that the Bay Area, and especially San Jose, requires additional local transmission, distribution, and/or generation facilities, in light of this summer's brownouts and price spikes. Given these circumstances, ORA expects that the CPUC will approve this application, notwithstanding the absence of information on the cost-effectiveness of the project.12

However, ORA (as well as Aglet and ProLogis) also seeks imposition of a cost cap on the project, contending that PG&E's cost estimates are far too general. ORA asserts that PG&E ratepayers should not bear costs approaching $100 million without some check on PG&E's expenditures. ORA also seeks a Commission order prohibiting PG&E from exceeding the cost cap or requesting an increase in the cap. ORA claims the Commission has jurisdiction to impose such a cap pursuant to Cal. Pub. Util. Code § 1005.5, which provides:


Whenever the commission issues to an electrical . . . corporation a certificate authorizing the new construction of any addition to or extension of the corporation's plant estimated to cost greater than fifty million dollars ($50,000,000), the commission shall specify in the certificate a maximum cost determined to be reasonable and prudent for the facility.13

PG&E challenges this Commission's jurisdiction to impose a cost cap, claiming that AB 1890 preempts the CPCN cost cap provision.

Several parties also assail PG&E's cost figures on the ground they underestimate land/right-of-way costs, and thus overestimate the cost of placing the lines underground. These parties prefer undergrounding of the lines principally for aesthetic reasons.

Finally, both ORA and Aglet challenge PG&E's methodology for calculating project costs. PG&E derived its costs by adding together costs of labor, materials and land for the project. In contrast, ORA and Aglet seek a "cost effectiveness" analysis, performed "from the perspective of the ratepayers."14 Such an analysis would include a "sensitivity study," and consideration of the "value of service to customers" - the latter a consideration of the "negative present value to customers . . . if new transmission facilities are not built. . . ."15

D. Environmental Review

With its application, PG&E supplied a Proponents' Environmental Assessment (PEA). The Commission, as Lead Agency, then retained outside consultants to conduct environmental review of the proposed project pursuant to the CEQA, and to examine alternatives, including the "No-Project" alternative. The Commission's Energy Division oversaw the consultants' work.

As noted in Section II (E) below, the Commission staff held public scoping meetings in January 2000. The Commission issued its Draft EIR (DEIR) in June 2000. The then-assigned Administrative Law Judge (ALJ)16 presided over public participation hearings in July 2000. Due to comments received on the DEIR, and changed conditions along the route (e.g., other construction rendering prior routes infeasible), the Commission issued the Supplemental DEIR (SDEIR) in October 2000, and established a 45 day comment period. Finally, in February 2001, the Commission issued its Final EIR (FEIR).17 The FEIR considered each timely comment letter in reaching its conclusions. The FEIR found the alternative set forth in Appendix C to this decision to be environmentally superior to all others considered. In some cases, components of PG&E's proposed project are considered to be environmentally superior, and in other cases the alternatives are environmentally superior to PG&E's proposed project.

The principal concerns the EIR found with the "environmentally inferior" routes related to biological, geologic, recreation/land use, and visual impacts. Key among these impacts were bird mortality (from striking lines); risk of liquefaction and lateral spreading; reduction of recreational experiences; and adverse effects on views in the area. We describe these impacts more fully in Sections III (D) and (E) below.

E. Public Notice of Proceeding

The Commission provided for wide dissemination of and public input on the DEIR and SDEIR.18 These documents were available on the Commission's website, in public libraries, and at the Wildlife Refuge. The Commission oversaw mailing of notices of the availability of the environmental documents to all owners and tenants of property located within 300 feet of the proposed and alternative project sites. Notices of both the DEIR and SDEIR were mailed to County Clerks' offices, and newspaper advertisements announced all public meetings.

The Commission's Energy Division held two public scoping meetings in January 2000, and the assigned ALJ presided over two public hearings held in July 2000. The Commission's Energy Division also held two Informational Meetings on the DEIR in July 2000. PG&E was required to publish and post notice about, and arrange for print and electronic media coverage of and public service announcements regarding, the July 2000 public hearings.

F. Scope of Proceeding

In February 2000, the assigned Commissioner found the following issues to be within the scope of this proceeding:

1. Need for the project (Pub. Util. Code § 1001), including consideration of the decision by the ISO that the project is needed to maintain system reliability;

2. The appropriate deference to be given the ISO's determination of project need;

3. Consideration of the following factors contained in Pub. Util. Code § 1002:

    a) Community values;

    b) Recreational and park areas;

    c) Historical and aesthetic values; and

    d) Influence on the environment;

4. Consideration of whether, pursuant to the Commission's General Order (GO) 131-D, the project promotes the safety, health, comfort, and convenience of the public;

5. The cost effectiveness and necessary size of the project vis-à-vis other alternatives such as new generation or transmission facilities upgrades;

6. The advisability and amount of a cap on project cost;

7. The merits of alternative routes, including route segments located underground;

8. Impacts of electric and magnetic fields (EMF) on certain high tech businesses located near the proposed route in Fremont, and effects of mitigation on these EMFs;

9. Alternative substation locations.19

10. The relevance of a proposed Calpine Corporation (Calpine) generation plant on a parcel of property contiguous to the Los Esteros site in order to determine whether it is equitable for PG&E ratepayers to shoulder all the costs of this construction; and

11. Whether the project has cumulative and/or growth-inducing impacts.20

As the hearings progressed, it became apparent that the key issues in dispute were the following:

A. Project need

B. Cost justification/effectiveness

C. Jurisdiction over costs

D. Routing of transmission lines

E. Substation locations

F. EMF issues

G. Property value issues

We discuss each of these issues in order.

3 Where the route we adopt differs from PG&E's proposal, we indicate the differences in footnotes. 4 We discuss the costs of the proposed distribution facilities in Sections III (B) and (C) below. 5 We adopt a route that commences just east of the Newark substation. 6 Since the route we adopt does not commence at the Newark substation, but rather east of it, we do not approve this modification. 7 Decision (D.) 99-05-020. 8 Specifically, PG&E's proposed route crossed the Wildlife Refuge, which raised concerns with Refuge management. PG&E thus requested that the Commission approve two potential routes, one on and one off Refuge property. When the Commission determined it could not do so, PG&E filed, and the Commission approved, a motion dismissing the first application without prejudice. 9 We do not list the City of Santa Clara/Silicon Valley Power, which settled out of the case early into the hearings. We dismiss them as a party from this proceeding. 10 Individuals and organizations that sought "party" status, but did not participate actively in the hearings or briefing, have been redesignated as having "information only" status on the formal service list for this proceeding. Many of these individuals and organizations participated actively in the California Environmental Quality Act (CEQA) process by filing comments on various EIR drafts, and we consider their comments in adopting the environmentally superior route for the transmission line. 11 Stats. 1996, Ch. 854. 12 Opening Brief of the Office of Ratepayer Advocates, filed October 11, 2000 (ORA Opening Brief), at 2. 13 Emphasis added. 14 See ORA Opening Brief at 9; Opening Brief of Aglet Consumer Alliance, filed October 11, 2000 (Aglet Opening Brief), at 7. 15 Aglet Opening Brief at 7. 16 Since the public hearings, the proceeding has been reassigned from ALJ Andrea Biren to ALJ Sarah R. Thomas. 17 We do not reproduce the FEIR in its entirety in this decision. However, the FEIR is available on the Commission's website at http://www.cpuc.ca.gov. Those not already provided the FEIR may obtain hard copies of the FEIR by contacting Brad Wetstone, CPUC Energy Division, at (415) 703-2826. 18 As noted above, the original DEIR was supplemented in October 2000 with a SDEIR; the public was allowed to comment on both documents. 19 One such proposed alternative raised by the City of Santa Clara/Silicon Valley Power (SC/SVP) later dropped out of the case when SC/SVP settled with PG&E. 20 The foregoing description of the scope is derived from the text of the February 28, 2000 Assigned Commissioner's Ruling Establishing Category and Providing Scoping Memo. The order contained in the same document stated the issues slightly differently, as follows:

Previous PageTop Of PageNext PageGo To First Page