Conclusions of Law
1. If the activities proposed by SoCalGas do not require any discretionary approval by the Commission, then the Commission does not need to comply with CEQA.
2. The Commission's exercise of its authority under Pub. Util. Code § 851 is viewed as a discretionary decision under CEQA.
3. If the property is necessary or useful in the utility's performance of its duties to the public, then the utility must seek an order from the Commission before the property can be sold or encumbered.
4. Since the cushion gas is now being used in SoCalGas' gas storage operations, the cushion gas at these two storage fields is used and useful, and SoCalGas must receive approval under Pub. Util. Code § 851 before its proposed activities can proceed.
5. Authorizing SoCalGas to perform the well drilling and to rework the wells so as to free up 14 Bcf in cushion gas, and to reclassify the cushion gas as working gas, is in the public interest.
6. This Commission is the lead agency for CEQA purposes.
7. The proposed activities will only involve a negligible expansion of use, and therefore meet the Class 1 categorical exemption to CEQA.
8. The proposed activities will not have a significant effect upon the environment, and therefore the exemption provided for in § 15061(b)(3) applies.
9. The proposed activities are exempt from CEQA.
10. Since a negative declaration or an environmental impact report is not needed, SoCalGas does not need to tender the remainder of the $10,000 deposit with the Fiscal Office as ordered in the assigned Commissioner's ruling, and the Fiscal Office should be directed to return the unused portion of the monies to SoCalGas after the expenses incurred by the Energy Division have been paid.
11. SoCalGas should be prohibited from selling the 14 Bcf of reclassified cushion gas until further order of the Commission.
12. SoCalGas' request to waive certain provisions of Rules 35 and 36 should be granted.
13. All of the remaining ratemaking issues should be deferred to a second phase of this proceeding as directed in a future ruling or decision.
14. It is reasonable to reduce the review and comment period pursuant to Rule 77.7(f)(9) so that well drilling can begin expeditiously to increase the supplies of flowing gas and to help avert electricity outages.
IT IS ORDERED that:
1. The Southern California Gas Company (SoCalGas) is authorized to do all of the following:
a. Carry out all of the well drilling and well rework activity, and all other associated activities at its Aliso Canyon and La Goleta storage fields, as described in its application, that will permit SoCalGas to free up approximately 14 Bcf of cushion gas from these fields.
b. Reclassify as working gas available for sale, the 7 Bcf of cushion gas at Aliso Canyon, and the 7 Bcf of cushion gas at La Goleta, that will no longer be needed after the well drilling and associated work has been completed.
c. Sell, pursuant to Pub. Util. Code § 851, the 14 Bcf of reclassified cushion gas, however, SoCalGas is prohibited from selling the reclassified cushion gas until the Commission directs SoCalGas to do so on the terms and conditions specified in a future Commission decision.
d. Recover the costs associated with the cost of the well drilling and rework of the wells, and its capitalized overheads, the total of which is estimated at approximately $16 million, from the sale proceeds of the reclassified cushion gas.
e. Recover the book cost of the 14 Bcf of reclassified cushion gas, which is approximately $4.4 million, from the sale proceeds of the reclassified cushion gas.
f. Establish a memorandum account to track the costs associated with the well work at Aliso Canyon and La Goleta storage fields.
g. File and serve a monthly report in this docket regarding the status of its drilling work and associated activities, and a summary of the costs incurred.
(1) The first report shall be filed on August 1, 2001, and shall continue to be filed on the first of every month thereafter until all of the well drilling and associated activities, and reclassification of the cushion gas has been completed.
2. Interested parties may file comments on whether any restrictions should be imposed on SoCalGas with respect to the sale of the 14 Bcf of reclassified cushion gas, and to comment on the advantages or disadvantages of the various proposals to restrict the sale of the reclassified cushion gas.
a. Opening comments shall be filed and served on or before July 6, 2001. Reply comments shall be filed and served on or before July 20, 2001.
b. Parties should state in their opening or reply comments whether evidentiary hearings are needed.
c. Parties may also include in their opening comments whether the second phase of this proceeding should be handled in SoCalGas' upcoming Biennial Cost Allocation Proceeding.
3. The Commission's Fiscal Office is directed to return the unused portion of the monies that SoCalGas placed on deposit for Commission expenses related to the application's compliance with the California Environmental Quality Act.
4. SoCalGas' request for waiver of Rules 35 and 36 is hereby granted.
This order is effective today.
Dated ____________, at San Francisco, California.
