????????????  PG&E has?filed the attached, &Motion to Establish Final Market  
Valuation of Non-Nuclear Generating Assets Pursuant to Public Utilities Code  
Section 367.8? The motion requests  that the Commission consolidate in the 
docket used for the recent rate  stabilization decision the existing record 
of PG&E,s remaining major  non-nuclear generating asset market valuation 
proceedings and immediately adopt  a final market valuation for all of PG&E,s 
remaining non-nuclear generating  assets.? The market valuation dockets that 
would be consolidated in this  proceeding include A.99-09-053 (hydroelectric 
assets); A.00-05-031 (Kern); and  A.00-05-034 (Humboldt Bay).  

??? ???  ??? The utility requests that this be done?prior to  establishing 
the revenue requirements and rates for PG&E,s retained  generating assets 
pursuant to the June 15 Chief ALJ,s Ruling.? That ruling set a hearing 
schedule for  determining the revenue requirements of the three utilities 
related to retained  generation,?QFs, bilateral contracts, and ancillary 
services.?  PG&E asks that the?Commission rule on its Motion as soon as 
possible  and no later than July 19, so that PG&E and interested parties have 
the  benefit of the ruling prior to the beginning of hearings on July 23, 
2001.

PG&E argues that since the Commission has  not completed market valuations 
for PG&E,s generating assets,?it  therefore may not legally determine the 
value of those assets for ratemaking  purposes until such time as those 
market valuations are complete.? In fact, there has been no action  
whatsoever in?PG&E,s hydroelectric market valuation proceeding since  January 
22,?when the Chief ALJ issued a ruling canceling a prehearing  conference and 
public participation hearings, and extending the comment period  on the draft 
environmental impact report.

The utility stresses that Section 367(b) of  the PU Code?requires the 
Commission to market value the utilities,  generation assets &not later than 
December 31, 2001,8 and that it has to be,  &based on appraisal, sale or 
other divestiture.8? They also note that AB 6 from the  Legislature,s First 
Extraordinary Session modified Section 377 to?prohibit  PG&E from selling any 
of its existing generating assets until at least  January 1, 2006, and 
requires that those assets be dedicated for the benefit of  California 
ratepayers.? Since AB 6X  precludes the Commission from valuing PG&E,s 
generating assets by sale or  divestiture, appraisal is the only lawful 
method.

PG&E concludes that effective January 1,  2002, its non-nuclear retained 
generation must be reflected in utility rates on  the same basis as the 
market value determined for purposes of AB 1890 stranded  cost computations.? 
Therefore,  the?market valuations adopted by the Commission will have to be 
included in  the consideration of URG ratemaking in this proceeding.? The 
motion says that the?valuations  are also essential prerequisites to the 
determination of any amounts that might  be made available under the current 
rate structure for payment to the DWR as  provided for in AB1X.? PG&E  
concludes that market valuation of its retained generating assets is an  
essential prerequisite to establishing their revenue requirement, which is  
hardly illogical.

Dan


Law Offices of Daniel W. Douglass
5959  Topanga Canyon Blvd.? Suite 244
Woodland Hills, CA  91367
Tel:?? (818) 596-2201
Fax:? (818) 346-6502
douglass@energyattorney.com
 - 7-3-01 PG&E URG Motion.doc