D. Discussion

The application identifies 25 licenses, which Edison now seeks to convert to leases. Ten are Stand-Alone Agreements, which license communications facility sites to Verizon Wireless; 1 is a license for a communications facility site executed under the master site agreement framework; and 14 are attachment location agreements executed under the attachment agreement framework.

Edison also seeks authority to use the Master Site Agreement as revised by its Amendment No. 1 (including the associated Standard Agreement), and the Master Attachment Agreement, as revised by its Amendments No. 1 and No. 2 (including the associated Standard Agreement), to process future, additional license/lease arrangements with Verizon Wireless. The application explains that:

To the extent that Verizon Wireless is permitted to use [Edison's] existing land, communication facilities, and buildings, it can avoid having to enter into separate time-consuming and expensive negotiations with other property owners for use of their land or buildings. Thus, Verizon Wireless will be able to develop its network more quickly. By facilitating the development and extension of Verizon Wireless's communication network, these lease arrangements benefit all Californians. Improvements to the State's telecommunications infrastructure enhances California's ability to develop, attract, and support businesses that require advanced telecommunications services. Importantly, these benefits accrue with a minimum of risk to [Edison] or its ratepayers. (Application, p. 23.)

The conversion of a license to a more durable lease requires Commission approval under § 851, since (1) GO 69-C does not apply to any arrangement that is not revocable within the terms prescribed in that general order and (2) § 851 requires a public utility to secure Commission authority before, among other things, leasing any property that is "necessary or useful in the performance of its duties to the public."

Prior Commission decisions address the license/lease of both telecommunications facility sites and of antenna and antenna equipment attachment locations. In D.00-07-010, the Commission authorized use by Edison and Pacific Bell Mobile Services of a similar master attachment agreement for the license/lease of attachment locations for wireless antenna equipment. In D.02-12-023, D.02-12-024, and D.02-12-025, the Commission approved master agreements and associated standard agreements for the license and subsequent lease of excess space at Edison communication facility sites and of Edison antenna equipment locations to Nextel of California, Inc. (Nextel), Sprint PCS Assets, L.L.C. (Sprint), and AT&T Wireless Services of California, L.L.C. (AT&T Wireless).

Edison is not the only energy utility to ask for such approvals. In March 2002, in D.02-03-059, we reviewed and approved a license/lease arrangement between Pacific Gas and Electric Company (PG&E) and AT&T Wireless and there have been other such decisions. D.02-03-059 is important because it expressly notes the significant difference between the licenses PG&E issued to AT&T Wireless for attachment of removable antenna equipment and other licenses, the subject of a pair of 2001 decisions, that PG&E issued in connection with permanent construction to interconnect two electric generation plants with its system.⁵ While we approved the license/lease agreement between PG&E and AT&T Wireless, we did so with some reservations, stating:

The Applicants in this case negotiated a single "Master License/Lease Agreement" which covers both the license and lease of the property. Under this single agreement, the Applicants have agreed that, upon Commission approval of the §851 application, the provision of the agreement that renders the entire agreement revocable becomes inoperative, which has the effect of transforming a fully revocable arrangement to a more durable lease arrangement.

Our reservations arise from the fact that, by virtue of the single agreement, it appears that the Applicants contemplated that they would eventually be seeking §851 approval. If parties anticipate that they will be entering into an agreement that will require such approval, they should file an application seeking such approval. When parties use the same agreement to convert a license to a lease, our concerns increase that the parties may be attempting to bootstrap upon a GO 69-C license to undermine our analysis of environmental and other factors in the §851 application.

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We give notice that single agreements that provide for the conversion of a license to a lease may not be approved in the future. (D.02-03-059, p.7. slip op.)

Like PG&E's licenses to AT&T Wireless and Edison's licenses to Nextel, Sprint, and AT&T Wireless, this application concerns licenses to locate wireless infrastructure, cooperatively, on real property already owned or used by another utility or as a part of existing utility infrastructure. The wireless facilities can be removed readily, if necessary, and constitute a limited use of utility property under GO 69-C. The Stand-Alone Site Agreements, the Master Site Agreement and Amendment No. 1, and the Master Attachment Agreement and Amendments No. 1 and No. 2, all contemplate a license-to-lease conversion and, in this respect, resemble the previously approved AT&T Wireless and Sprint licenses, as well.

Also like the previously approved AT&T Wireless and Sprint license/lease situations, those presented by this application do not appear to be structured to avoid the environmental review that may be required when, pursuant to § 851, the Commission considers whether to authorize a lease of public utility property.⁶ As we discuss below, conversion of these licenses into leases does not occasion additional environmental review by the Commission.

We rely upon GO 159-A, which delegates authority to regulate the location and design of cellular facilities to local agencies, though the Commission retains oversight jurisdiction in cases of conflict with Commission goals and/or statewide interests.⁷ The framework established under each contractual arrangement (the Stand-Alone Site Agreements, the Master Site Agreement and Amendment No. 1, and the Master Attachment Agreement and Amendments No. 1 and No. 2), requires Verizon Wireless to obtain all required governmental permits and approvals, which is consistent with GO 159-A. Further, as required by GO 159-A, Verizon Wireless must notify the Commission if the permits or approvals are granted or if none are necessary because the proposed construction is minor. We believe these conditions in the agreements provide that environmental review will occur at the appropriate time.

Edison states that the parties entered into the licenses with the intention to convert them into leases once Commission approval to do so had been obtained. Proceeding in this manner enabled Verizon Wireless "to secure locations for the development of its telecommunications network as quickly as possible," (Application, pp. 11, 16.) Though we disfavor license/lease arrangements generally, since issuing D.02-03-059 we have approved other license-to-lease conversions for use of excess space at communications facility sites and for wireless equipment attachments.

Edison also states that the license/lease arrangements are examples of its "ongoing effort to pursue opportunities to generate additional revenues from utility assets, while also ensuring that its electrical ratepayers receive substantial benefits without risk." (Id., at p. 22.) Edison proposes to treat the revenues received from Verizon Wireless in accordance with the gross revenue sharing mechanism for other operating revenues, known as "OOR," which the Commission adopted in D.99-09-070. Under the gross revenue sharing mechanism, all applicable gross revenues above the Commission-adopted annual threshold for OOR are to be split between shareholders and ratepayers according to the allocation rules approved in D.99-09-070. In D.02-12-023 and D.02-12-024, the Commission adopted the agreement between Edison and the Commission's Office of Ratepayer Advocates (ORA) that revenues associated with the site agreements are to be shared between shareholders and ratepayers on a 70/30 basis, and revenues associated with the attachment agreements are to be shared between shareholders and ratepayers on a 90/10 basis.

In D.02-03-059, we determined that the PG&E and AT&T Wireless attachment agreements made "good sense from several perspectives" and we quoted D.00-07-010, our earlier decision approving the agreements between Edison and PBMS:

It is sensible for California's energy utilities, with their extensive easements, rights-of-way, and cable facilities, to cooperate in this manner with telecommunications utilities that are seeking to build an updated telecommunications network. Joint use of utility facilities has obvious economic and environmental benefits. The 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. (D.02-03-059 at p. 9, slip op. quoting D.00-07-010, p. 6.)

We conclude that the communications facility site agreements and the attachment agreements at issue in this application likewise make productive joint use of available space, do not interfere with Edison's obligations to its electric utility customers and permit improved service to customers of Verizon Wireless. We are favorably influenced, also, by Edison's commitment to notify the Commission of changed circumstances in connection with these agreements. We adopt these notification requirements, with one modification, as a condition of our approval. Edison shall:

· Notify ORA and the Commission's Energy Division of all substantive extensions or terminations of these agreements.

· Notify ORA and the Energy Division assistant directors for energy, in writing, of any substantive changes to plant in service resulting from implementation of these agreements, within 60 days of the change.

· Notify ORA and the Energy Division assistant directors for energy, in writing, if any right-of-way which is the subject of these agreements ceases to be used and useful for the provision of electric service or if there are any substantive changes in the right-of-way segments which are the subject of these agreements, within 30 days of any such event.

However, we do not accept Edison's proposal to notify ORA and the Energy Division of substantive amendments to the agreements. Instead, consistent with our direction to PG&E in D.02-03-059, Edison shall file an application under § 851 for approval of any such proposed changes to any of the agreements, whether the Stand-Alone Site Agreements, the Master Site Agreement and Amendment No. 1 (including the associated Standard Agreement), or the Master Attachment Agreement and Amendments No. 1 and No. 2 (including the associated Standard Agreement). Our approval of the 25 identified leases, for the lease of additional communications facility sites under the Master Site Agreement as modified by Amendment No. 1, and for the lease of additional antenna equipment attachment locations under the Master Attachment Agreement as modified by Amendment No. 1 and No. 2, is based upon the terms in the documents submitted for our review. We do not think it prudent, or consistent with our responsibilities under § 851, to give Edison advance authority to negotiate substantive amendments to these agreements.