STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

September 18, 2003

Alternate to Agenda ID# 1987

Ratesetting

TO: PARTIES OF RECORD IN APPLICATION 99-09-006

Enclosed is the Alternate Proposed Decision of Commissioner Lynch to the Proposed Decision of Administrative Law Judge (ALJ) Patrick previously mailed to you on March 27, 2003.

When the Commission acts on the draft or alternate decision, it may adopt all or part of it as written, amend or modify it, or set aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Public Utilities Code Section 311(e) requires that an alternate to a draft decision be served on all parties, and be subject to public review and comment prior to a vote of the Commission. Rule 77.6(d) provides that comments on the alternate draft decision be filed at least seven days before the Commission meeting.

Comments on the alternate decision must be filed and served September 25, 2003. Reply comments are due September 30, 2003.

Pursuant to Rule 77.3 comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service. Please also provide an electronic copy of the comments and reply comments to Michael S. Campbell at msc@cpuc.ca.gov.

 /s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG: epg

Attachment

COM/LYN/epg ALTERNATE DRAFT

Alternate to Agenda ID # 1987

Ratesetting

Decision ALTERNATE DECISION OF COMMISSIONER LYNCH
(Mailed 9/18/2003)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of PACIFIC GAS AND ELECTRIC COMPANY in the 1999 Annual Transition Cost Proceeding.

Application 99-09-006 (Filed September 1, 1999)

(See Appendix A for a list of appearances.)

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT POWER PLANT SITE REMEDIATION FOR INCLUSION IN THE TRANSITION COST BALANCING ACCOUNT

TABLE OF CONTENTS

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT POWER PLANT SITE REMEDIATION FOR INCLUSION IN THE TRANSITION COST BALANCING ACCOUNT 2

I. Summary 2

II. Procedural Summary 3

III. Background 3

IV. Estimated Cost of Decommissioning HPPP 4

A. PG&E's Estimate 4

B. Position of CCSF 6

C. Position of SAEJ 6

D. Position of ORA 7

E. Response of PG&E. 7

F. Discussion 9

V. Ratemaking Treatment 11

A. Background. 11

B. PG&E's Proposal 12

C. Position of CCSF 13

D. Position of SAEJ 14

E. Position of ORA. 14

F. Response of PG&E. 15

G. Discussion 16

H. California Environmental Quality Act (CEQA) 17

Findings of Fact 19

Conclusions of Law 20

ORDER 21

APPENDIX A - Service List

OPINION ADOPTING ESTIMATE FOR HUNTERS POINT POWER PLANT SITE REMEDIATION FOR INCLUSION IN THE TRANSITION COST BALANCING ACCOUNT

I. Summary

The Commission approves Pacific Gas and Electric Company's (PG&E) estimate of approximately $65.1 million net present value (NPV) for the future decommissioning and site remediation of Hunters Point Power Plant (HPPP). This estimate will replace both the non-environmental and environmental decommissioning estimates currently being amortized through rates in the Transition Cost Balancing Account (TCBA).¹ In this decision, we establish a one-way balancing account for HPPP funds to ensure that the money collected for decommissioning will be spent on decommissioning work.

This decision does not prescribe site remediation measures or dictate clean-up levels. These matters will be determined by the Lead Agency and other regulatory agencies in a public forum when decommissioning actually occurs.

While recovering decommissioning costs based on estimates may sometimes be less desirable than recovering the actual costs, we believe PG&E's cost estimate is adequate for ratemaking purposes. As demonstrated in the volumes of evidence presented in this proceeding, PG&E's environmental decommissioning cost estimate employed- generally accepted industry, state, and federal standards.

We note that Decision (D.) 98-10-029 approved the request of PG&E to withdraw its request to sell the HPPP. This approval was found to be consistent with Pub. Util. Code § 363(c). We also approved an agreement between PG&E and the City and County of San Francisco (CCSF) that set out steps for closing the HPPP.