SUBJECT: Request by Southern California Edison Company for Approval to Grant Easements to Praxair, Inc., a Delaware Corporation.

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1 STATE OF CALIFORNIA Edmund G. Brown Jr., Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA June 6, 2018 Advice Letter 3771-E Russell G. Worden Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, CA SUBJECT: Request by Southern California Edison Company for Approval to Grant Easements to Praxair, Inc., a Delaware Corporation. Dear Mr. Worden: Advice Letter 3771-E is effective as of May 31, 2018 per Resolution E Sincerely, Edward Randolph Director, Energy Division

2 Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations March 16, 2018 ADVICE 3771-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Request by Southern California Edison Company for Approval to Grant Easements to Praxair, Inc., a Delaware Corporation PURPOSE Southern California Edison Company ( SCE ) respectfully requests an order from the California Public Utilities Commission ( Commission ) authorizing SCE to grant to Praxair, Inc., a Delaware corporation, its successors and assigns (collectively, Praxair ), (a) a perpetual easement for a private road and utilities and (b) a perpetual easement for a railroad spur track (collectively, the Easements ) on land owned by SCE in the City of Fontana, County of San Bernardino, California (the Property ) pursuant to Public Utilities Code ( PUC ) Section 851 and General Order (GO) The form of the grant of the Easements is attached hereto as Exhibit A. PROPERTY DESCRIPTION/HISTORY/CONDITION/USE SCE owns land, buildings and other facilities in connection with its provision of electric services to its customers in southern and central California. The fee parcels that SCE owns include the Property. Portions of SCE s Etiwanda-Declez-Linde 66kV, Linde-Wimbledon 66kV and Etiwanda-San Bernardino 220kV lines are sited on the Property. The Property is irregularly shaped. It is used as a utility right-of-way. It is bordered by California Department of Transportation property and Praxair s fee property to the north, a County of San Bernardino flood control channel located on a private, undeveloped property to the east, Southern Pacific Railroad property and tracks to the south and 1 GO 173 makes permanent the former pilot program regulations for PUC Section 851 advice letters, as adopted or amended in the Commission Resolutions ALJ-186, ALJ-202, ALJ-244 and ALJ-272 (PUC Section 851 Pilot Program). The GO authorizes regulated utilities to request Commission approval of PUC Section 851 transactions transferring interests in utility property valued at $5 million or less by advice letter. P.O. Box Rush Street Rosemead, California (626) Fax (626)

3 ADVICE 3771-E (U 338-E) March 16, 2018 Etiwanda Avenue and North Loop Road to the west. The Property is located near the Etiwanda Avenue on-ramp to Interstate 10. SCE sold the parcels to the north of the Property to Union Carbine Corporation, a New York corporation, predecessor-in-interest to Praxair, in April The 1962 sale included the transfer of the fee parcels now owned by Praxair, as well as a perpetual grant of an easement for a private road and utilities and a terminable grant of easement for an extension of that private road and for a railroad spur (the Original Easement ). The Original Easement is attached hereto as Exhibit B. The Original Easement was made subject to Commission GO 69, which provided that SCE, by the order of the Commission or on its own motion, could resume use of the easement area for its own purposes if it became necessary or desirable to do so in the interests of SCE s service to its consumers or patrons. The Original Easement was also not assignable to a nonsubsidiary of the grantee without SCE s written permission. Praxair intends to sell its property to PI Development, LLC, which plans to construct and operate two warehouse/distribution/logistics buildings with associated office space, parking and loading areas on the Praxair site (the Project ). In connection with the sale, Praxair requested that SCE enter into perpetual easements to replace the Original Easement. The parties negotiated the Easements, which, unlike the Original Easement, are not terminable by SCE, run with the benefitted parcels and are assignable. The Easements also allow the owner of the Praxair property to install utilities within the road easement area. SCE does not currently have any facilities on the easement areas that would be impacted by the Easements. The Easements are being granted subject to SCE s right to construct its utility facilities on the easement areas, should that be necessary in the future, as long as such installations do not unreasonably interfere with the rights that Praxair is being granted in the Easements. The Easements require Praxair to maintain the road, utilities and railroad spur track on the easement areas and to indemnify SCE for all claims arising out of the exercise of the rights granted in the Easements. The portions of the Property to be burdened by the Easements currently contain road improvements, fencing, curbs, lighting, a gate and a railroad spur, all of which were installed in accordance with the rights Praxair has under the Original Easement. Should the Commission approve the granting of the Easements, the parties will execute the grant of the Easements and Praxair will quitclaim the Original Easement. SCE believes that the proposed transaction provides a public benefit that is not adverse to the public interest because the proposed transaction will (i) support the redevelopment of the Praxair site, which SCE believes will benefit the community, and (ii) provide additional ratepayer revenue. SCE believes that its utility service will not be affected as a result of Commission approval of the transaction.

4 ADVICE 3771-E (U 338-E) March 16, 2018 INFORMATION AS REQUIRED UNDER RULES 3 AND 4 OF GENERAL ORDER 173 Rule 3 Requirements SCE is permitted to file this advice letter seeking Commission approval under PUC Section 851 because it believes it has satisfied the eligibility requirements set forth in Rule 3 of GO 173: 3a: The activity proposed in the transaction will not require environmental review by the Commission as a Lead Agency under California Environmental Quality Act ( CEQA ). The City of Fontana reviewed the Project (CEQA Clearinghouse No ) and adopted its Environmental Impact Report pursuant to a Notice of Determination filed with the County Clerk for San Bernardino County on March 8, b: The transaction will not have an adverse effect on the public interest or on the ability of the utility to provide safe and reliable service to customers at reasonable rates. This transaction is in the public interest as it will allow for the redevelopment of the benefitted parcels. It will not diminish the safety or reliability of SCE s electric systems operations. 3c: Any financial proceeds from the transaction will either be booked to a memorandum account for distribution between shareholders and ratepayers during the next general rate case or be immediately divided between shareholders and ratepayers based on a specific distribution formula previously approved by the Commission for that utility. The financial proceeds received by SCE frovim the proposed transaction will be allocated between SCE s shareholders and ratepayers through the Gross Revenue Sharing Mechanism as described in SCE s response to Rule 4e below. 3d: If the transaction results in a fee transfer of real property, the property does not have a fair market value in excess of $5 million. Not applicable because there is no fee transfer of real property. 3e: If the transaction results in the sale of a building, the building does not have a fair market value in excess of $5 million. Not applicable because no building is being sold in this transaction. 2 SCE provided the Commission with a copy of the Environmental Impact Report. SCE shall provide other interested parties with a copy upon request.

5 ADVICE 3771-E (U 338-E) March 16, f: If the transaction is for the sale of depreciable assets, the assets do not have a fair market value in excess of $5 million. Not applicable because the transaction does not involve the sale of depreciable assets. 3g: If the transaction is a lease or a lease-equivalent, the total net present value of the lease payments, including any purchase option, does not have a fair market value in excess of $5 million, and the term of the lease will not exceed 25 years. Not applicable because the transaction does not involve a lease. 3h: If the transaction conveys an easement, right-of-way, or other less than fee interest in real property, the fair market value of the easement, right-of-way, or other interest in real property, the fair market value of the easement, right-of-way, or other interest in the property does not exceed $5 million. The fair market value of the Easements, as replacement rights for the Original Easement, has been valued at $636,000, as described in SCE s response in Section 4(i) below. 3i: The transaction does not materially impact the ratebase of the utility. The value of this transaction will not materially impact SCE s ratebase. 3j: If the transaction is a transfer or change in ownership of facilities currently used in regulated utility operations, the transaction will not result in a significant physical and operational change in the facility. There will be no physical or operational change in the SCE facilities on the Property. 3k: The transaction does not warrant a more comprehensive review that would be provided through a formal PUC Section 851 application. SCE believes that this transaction does not contain any issues that would trigger a need for a more comprehensive review through a formal PUC Section 851 application. Rule 4 Requirements Rule 4 requires that the following information be included in advice letters submitted under General Order 173: 4a: Identity and addresses of all parties to the proposed transaction: Southern California Edison Company 2244 Walnut Grove Avenue

6 ADVICE 3771-E (U 338-E) March 16, 2018 Rosemead, CA Praxair, Inc. 10 Riverview Drive Danbury, CT b: A complete description of the property including present location, condition and : use: The Property is irregularly shaped. It is a utility corridor, undeveloped except for SCE s facilities and Praxair s existing road, gate, fence, lights, curb and railroad spur track improvements. It is bordered by California Department of Transportation property and Praxair s fee property to the north, a County of San Bernardino flood control channel located on a private, undeveloped property to the east, Southern Pacific Railroad property and tracks to the south and Etiwanda Avenue and North Loop Road to the west. 4c: Transferee s intended use of the property: Praxair will use the easement areas for a private road, utility installations and a railroad spur track that will support the Project located on parcels adjacent to the Property. 4d: Complete description of financial terms of the proposed transaction: Praxair will pay SCE $636,000 for the Easements. The appraiser valued the different easement interests as follows: Appraised Interest Road Easement Spur Track Easement Total Value Permanent, nonterminable easements Terminable, nontransferrable easements Conversion cost from terminable $990,000 $73,000 $1,063,000 $398,000 $29,000 $427,000 $592,000 $44,000 $636,000

7 ADVICE 3771-E (U 338-E) March 16, 2018 to nonterminable easements Praxair will also pay all special assessments or fees levied against its improvements located on the Easements. 4e: Description of how financial proceeds of the transaction will be distributed: D approved a settlement between SCE and the Office of Ratepayer Advocates ( ORA ) concerning SCE s application for a revenue sharing mechanism for certain other operating revenue. The adopted Gross Revenue Sharing Mechanism allocates revenues resulting from non-tariffed products and services between shareholders and ratepayers. In the settlement, SCE and ORA agreed to classify all existing non-tariffed products and services as either active or passive. The gross revenue from active products and services is allocated 90 percent to shareholders and 10 percent to ratepayers; passive products and services are allocated 70 percent to shareholders and 30 percent to ratepayers. The classifications are listed in Attachment A to the settlement agreement and were subsequently affirmed in Resolution E-3639 (effective May 15, 2000, approving Advice Letter 1286-E/1286-E-A). They were also filed as Preliminary Statement G to SCE s tariffs. The granting of the Easements on the Property are classified as a passive use of SCE s land and, accordingly, the easement payment paid by Praxair will be allocated 70 percent to shareholders and 30 percent to ratepayers. 4f: A statement on the impact of the transaction on ratebase and any effect on the ability of the utility to serve customers and the public: Due to the small amount of revenue derived from this transaction compared to SCE s ratebase, the transaction will not materially impact SCE s ratebase. SCE believes that the granting of the Easements on the Property to Praxair will have no effect on SCE s ability to serve its customers or the public as the Easements do not affect SCE operations and allows SCE to operate its current facilities on the Property. The Easements also allow SCE to place its facilities along and under the burdened property, subject to the rights granted in the Easements. 4g: For sales of real property and depreciable assets, the original cost, present book value, and present fair market value, and a detailed description of how the fair market value was determined (e.g. appraisal): Not applicable as this transaction did not involve a sale of real property and depreciable assets.

8 ADVICE 3771-E (U 338-E) March 16, h: For leases of real property, the fair market rental value, a detailed description of how the fair market rental value was determined, and any additional information necessary to show compliance with Rule 3(g): Not applicable as this transaction does not involve a lease of real property. 4i: For easements or rights-of-way, the fair market value of the easement or right-of-way and a detailed description of how the fair market value was determined: An appraisal of the fair market value of the Easements was completed by Integra Realty Resources with an effective date of April 7, The appraisal is attached as Exhibit C and used a sales comparison approach to establish the fair market conversion value of the Easements. 4j: A complete description of any recent past (within the prior two years) or anticipated future transactions that may appear to be related to the present transaction, such as sales or leases of real property that are located near the property at issue or that are being transferred to the same transferee; or for depreciable assets, sales of similar assets or sales to the same transferee: There are no other transactions between SCE and Praxair. Praxair intends to sell its interest in the property benefited by the Easements (and transfer its interest in the Easements) as discussed above. 4k: Sufficient information and documentation (including environmental documentation) to show that all of the eligibility criteria stated in Rule 3 have been met: As presented in the discussion on Rule 3, SCE believes that all applicable eligibility criteria stated in Rule 3 have been satisfied. 4l: The filing utility may submit additional information to assist in the review of the advice letter, including recent photographs, scaled maps, drawings, etc.: No additional information is being submitted. 4m: Environmental Information: If the applicant believes that the transaction is not a project under CEQA, the applicant shall include an explanation of its position. Not applicable.

9 ADVICE 3771-E (U 338-E) March 16, 2018 TIER DESIGNATION Pursuant to PUC Section 851, GO 96-B, and GO 173, this advice letter is submitted with a Tier 2 designation. EFFECTIVE DATE Pursuant to the review process outlined in GO 173, SCE requests that this advice letter filing become effective April 15, 2018, the 30 th calendar day after the date filed. NOTICE Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California EDTariffUnit@cpuc.ca.gov Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above). In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) AdviceTariffManager@sce.com

10 ADVICE 3771-E (U 338-E) March 16, 2018 Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415) Karyn.Gansecki@sce.com There are no restrictions on who may file a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above. In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-B list and, in accordance with GO 173, on the Energy Division, the Commission ORA, the Commission CEQA Team (clu@cpuc.ca.gov; jnr@cpuc.ca.gov; jmu@cpuc.ca.gov), and the City of Fontana. Address change requests to the GO 96-B service list should be directed by electronic mail to AdviceTariffManager@sce.com or at (626) For changes to all other service lists, please contact the Commission s Process Office at (415) or by electronic mail at Process_Office@cpuc.ca.gov. Further, in accordance with PUC Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE s corporate headquarters. To view other SCE advice letters filed with the Commission, please visit For questions, please contact Claire Keane at (626) or by electronic mail at claire.keane@sce.com. Southern California Edison Company /s/ Gary A. Stern Gary A. Stern, Ph.D. GAS:ck:cm Enclosures

11 CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/cpuc Utility No.: Southern California Edison Company (U 338-E) Utility type: Contact Person: Darrah Morgan ELC GAS Phone #: (626) PLC HEAT WATER Disposition Notice to: EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 3771-E Tier Designation: 2 Subject of AL: Request by Southern California Edison Company for Approval to Grant Easements to Praxair, Inc., a Delaware Corporation Keywords (choose from CPUC listing): AL filing type: Monthly Quarterly Annual One-Time Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information: Resolution Required? Yes No Requested effective date: 4/15/18 No. of tariff sheets: -0- Estimated system annual revenue effect: (%): Estimated system average rate effect (%): When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: None Service affected and changes proposed 1 : Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed.

12 Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this filing, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415)

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