ALJ/DOT/k47 DRAFT CA-6

3/15/2001

Decision DRAFT DECISION OF ALJ DUDA Mailed February 13, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Sierra Pacific Power Company (U-903-E) for an Order Pursuant to Section 853 of the Public Utilities Code Exempting the Sale of Certain Generating Plants and Related Assets Located in the State of Nevada from Section 851 of the Public Utilities Code.

Application 00-03-024 (Filed March 10, 2000)

FINAL OPINION

I. Summary

This decision denies the application of Sierra Pacific Power Company ("Sierra" or "applicant") seeking an exemption from the approval process required under Section 851 of the Public Utilities Code¹ for the sale of certain electric generating plants and related assets located in the State of Nevada. Sierra is required to divest its generation assets as a condition of its merger with Nevada Power Company (NPC) and to comply with Nevada electric restructuring legislation.

We deny Sierra's request for exemption because we find it is in the public interest for the Commission to review the transaction. In addition, we find that a subsequent settlement jointly filed by Sierra and the Office of Ratepayer Advocates (ORA), which requests approval of the auction under Section 851, is not consistent with the law or in the public interest. Despite the order of the Public Utilities Commission of Nevada (PUCN) for Sierra to divest its generation plants, the Commission has a continuing obligation under Section 362 to ensure the reliability of California's electric supply. In addition, a recently enacted California statute prohibits the sale of public utility generation assets before January 1, 2006 if the assets are currently serving California ratepayers.² The settlement does not ensure facilities needed to maintain the reliability of the electric supply remain available and operational while avoiding an overconcentration of market power as required by Section 362. Furthermore, the settlement allows the sale of generation assets in violation of the newly enacted language of Section 377. This decision denies the joint motion requesting approval of the settlement.