Discussion

Section 851 requires Commission authorization before a utility may "sell, lease, assign, mortgage, or otherwise dispose of or encumber" utility property. The purpose of the section is to enable the Commission, before any transfer of public utility property is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRRC 56.) Another purpose of the Commission's review is to ensure that any revenue from the transaction is accounted for properly, and that the utility's rate base, depreciation, and other accounts correctly reflect the transaction.

The parties here believe that the proposed sale of the property to the Buyer, under the terms and conditions in the Agreement, is in the public interest because, subject to the easement described above, the property to be sold is no longer necessary or useful for public utility purposes. PG&E's need for the existing, and any future facilities, will be adequately protected by the proposed easement.

Moreover, the easement will actually be more advantageous to PG&E and its ratepayers than continuing to own the property. In particular, with an easement, PG&E would retain all rights necessary for current maintenance and future operations of the existing facilities, including the right to enter on any part of the property for maintenance purposes, with none of the obligations attendant to ownership of the property. Also, PG&E would no longer be responsible for payment of property taxes associated with the property, nor would PG&E be liable for injury to trespassers or others who may enter the property. Therefore, we conclude that it is in the public interest that the property be sold.

With regard to CEQA compliance (Rule 17.1), although no change in use or physical change to the environment is proposed as part of the transaction, the sale of the property is a "project" requiring CEQA review. However, based on the record before us, it does not appear that this transaction has the potential to impact the environment. Accordingly, the Commission need not perform additional CEQA review (CEQA Guideline 15061(b)(3)). In this instance, any CEQA review should be deferred to the appropriate state and local authorities having jurisdiction over any proposed changes in use of the property that may occur in the future.

We agree with ORA that the sales agreement, as written, does not fully protect PG&E and its ratepayers from future environmental-related claims. Therefore, approval of the sale should be conditional upon Buyer executing and delivering to PG&E a Release and Indemnity Agreement which will ensure that PG&E and the ratepayers are at no risk from any future environmental related claims arising from the sale of the property.