Position of ORA

ORA agrees that PG&E acted reasonably when it used the lowest of the prices developed by the appraisal methods for establishing the sale price of the property. ORA does not protest the sale. However, ORA wants to ensure that the ratepayers are at no risk for any future problems arising from the sale of this property. As a condition of approving the sale, ORA recommends that the Commission require the Buyer execute and deliver to PG&E a Release and Indemnity Agreement at or prior to the close of escrow. The agreement would protect both PG&E and ratepayers against future environmental related claims.

ORA supports PG&E's request to assign the gain from this particular land sale to a memorandum account until a method of allocating the gain on sale from PG&E's non-generation-related assets has been adopted by the Commission. Recognizing that PG&E's distribution performance-based ratemaking proceeding will no longer serve as the docket in which to consider gain on sale policy, ORA is in discussions with PG&E regarding the policy to be applied to this and similar sales of utility assets. As stated above, PG&E expects to file a separate application on September 1, 2000, at which time ORA will address the ratemaking policy issues.