Pacific Gas & Elec. v. City & Co. of S.F. 5/31/12 CA1/5

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State: California

Court: California Eastern District Court

Docket No: A127554A

Case Date: 05/31/2012

Plaintiff: Pacific Gas & Elec.

Defendant: City & Co. of S.F. 5/31/12 CA1/5

Preview:Filed 5/31/12

Opinion following rehearing

CERTIFIED FOR PARTIAL PUBLICATION* IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FIVE

PACIFIC GAS AND ELECTRIC COMPANY, Plaintiff, Cross-Defendant and Appellant. v. CITY AND COUNTY OF SAN FRANCISCO, Defendant, Cross-Complainant and Appellant. For over 80 years, the City and County of San Francisco (City) has generated electric power at its Hetch Hetchy hydroelectric project in the Sierra Nevada. The City`s power transmission lines, however, reach only to the City of Newark. Pursuant to contract, Pacific Gas and Electric Company (PG&E) transmits City-generated electricity the remaining distance to San Francisco and distributes it locally. The contract distinguishes electricity to be used for municipal purposes (Municipal Load) and electricity to be used for commercial purposes, for which PG&E generally has the right to bill the end user. The Ferry Building, a property owned and originally largely occupied by the Port of San Francisco, was mutually agreed to be Municipal Load. This dispute arose after the Ferry Building was renovated in 2003. PG&E contended that the use of (San Francisco City and County Super. Ct. No. CGC-07-470086)

A127554

Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part III.B. 1

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the building had materially changed and that the account no longer qualified as Municipal Load. PG&E filed this action seeking declaratory relief and breach of contract damages. On cross-motions for summary adjudication, the trial court agreed that the postrenovation account was no longer Municipal Load and granted declaratory relief in favor of PG&E. In a separate bench trial, however, the court rejected PG&E`s damage claim for breach of contract, finding that PG&E had sued under the wrong contract and that it had failed to present a claim to the City under the correct agreement as required by the Government Code. In the published portion of this opinion, we affirm the ruling that the postrenovation account no longer qualified as Municipal Load. In the unpublished section of our opinion, we reverse the ruling on the breach of contract claim, vacate the judgment and remand to the trial court for reconsideration of PG&E`s claim for damages. I. FACTUAL AND LEGAL BACKGROUND In the 1920`s, the City began generating electricity at the Hetch Hetchy hydroelectric project in the Sierra Nevada. The City uses its own transmission lines to bring power from Hetch Hetchy to the City of Newark. However, the residents of San Francisco never approved funding for transmission lines between Newark and San Francisco or distribution lines within San Francisco, so the City contracts to use PG&E`s lines for that purpose. The City`s use of Hetch Hetchy power is governed by the 1913 federal Raker Act. (See Pub.L. No. 63-41 (Dec. 19, 1913) 38 Stat. 242; hereafter, Raker Act.) The City`s transmission of electricity over PG&E`s lines is governed by several contracts between the City and PG&E. For these purposes, the City includes the Port of San Francisco (Port), which manages City property on the San Francisco harbor, including the Ferry Building. The Raker Act Congress granted the City rights of way in the Stanislaus National Forest and Yosemite National Park to build, operate and maintain the Hetch Hetchy hydroelectric project. (See Raker Act,

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