BILL NUMBER: AB 698 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 2, 2009
INTRODUCED BY Assembly Member Skinner
FEBRUARY 26, 2009
An act to amend Sections 851 and 853 of the Public Utilities Code,
relating to utility property.
LEGISLATIVE COUNSEL'S DIGEST
AB 698, as amended, Skinner. Utility property.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities and can establish its own
procedures, subject to statutory limitations or directions and
constitutional requirements of due process. The existing Public
Utilities Act prohibits, with certain exemptions, any public utility
other than a common carrier by railroad, from selling, leasing,
assigning, mortgaging, or otherwise disposing of or encumbering the
whole or any part of specified property necessary or useful in the
performance of the public utility's duties to the public, without
first having either secured an order from the commission authorizing
it to do so for qualified transactions valued above $5,000,000, or
for qualified transactions valued at $5,000,000 or less, having filed
an advice letter and obtained a resolution from the commission
authorizing it to do so. Existing law requires the commission to
determine the types of transactions valued at $5,000,000 or less that
qualify for advice letter handling. Existing law states the intent
of the Legislature that transactions with monetary values that
materially impact a public utility's rate base, or transactions that
would trigger the commission's review responsibilities under the
California Environmental Quality Act, should not qualify for
expedited advice letter review.
This bill would authorize for qualified transactions
valued at $5,000,000 or less for which an advice letter is filed that
is uncontested, the executive director of the commission or the
director of the division of the commission having regulatory
jurisdiction over the utility to approve the advice letter. The bill
would require commission approval of an advice letter
for qualified transactions valued at $5,000,000 or less where review
of the transaction is necessary in the public interest and
would delete the requirement that the commission approve the
advice letter by resolution. The bill would authorize the
executive director of the commission or the director of
the division of the commission having regulatory jurisdiction over
the utility to approve the advice letter for qualified transactions
valued at $5,000,000 or less for which an advice letter is filed that
is uncontested. The bill would state the intent of the
Legislature that transactions with monetary values that materially
impact a public utility's rate base, or transactions that would
trigger the commission's review responsibilities as lead agency under
the California Environmental Quality Act, should not qualify for
expedited advice letter review. The bill would authorize the filing
of an advice letter for transactions by the public utility if the
lead agency has completed the appropriate review under the California
Environmental Quality Act for the transaction, and the commission is
the responsible agency under the act and approves the advice
letter by resolution voted upon by the commission .
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 851 of the Public Utilities Code is amended to
read:
851. A public utility, other than a common carrier by railroad
subject to Part I of the Interstate Commerce Act ( 49 U.S.C. Sec.
10101 et seq.), shall not sell, lease, assign, mortgage, or otherwise
dispose of, or encumber the whole or any part of its railroad,
street railroad, line, plant, system, or other property necessary or
useful in the performance of its duties to the public, or any
franchise or permit or any right thereunder, or by any means
whatsoever, directly or indirectly, merge or consolidate its
railroad, street railroad, line, plant, system, or other property, or
franchises or permits or any part thereof, with any other public
utility, without first having either secured an order from the
commission authorizing it to do so for qualified transactions valued
above five million dollars ($5,000,000), or for qualified
transactions valued at five million dollars ($5,000,000) or less,
filed an advice letter and , where review of the transaction is
necessary in the public interest, obtained approval from the
commission authorizing it to do so. If the advice letter is
uncontested, approval may be given by the executive director or the
director of the division of the commission having regulatory
jurisdiction over the utility. The commission shall determine the
types of transactions valued at five million dollars ($5,000,000) or
less, that qualify for advice letter handling. For a qualified
transaction valued at five million dollars ($5,000,000) or less, the
commission may designate a procedure different than the advice letter
procedure if it determines that the transaction warrants a more
comprehensive review. Absent protest or incomplete documentation, the
commission shall approve or deny the advice letter within 120 days
of its filing by the applicant public utility. The commission shall
reject any advice letter that seeks to circumvent the five million
dollars ($5,000,000) threshold by dividing a single asset with a
value of more than five million dollars ($5,000,000), into component
parts, each valued at less than five million dollars ($5,000,000).
Every sale, lease, assignment, mortgage, disposition, encumbrance,
merger, or consolidation made other than in accordance with the
advice letter and approval from the commission authorizing it is
void. The permission and approval of the commission to the exercise
of a franchise or permit under Article 1 (commencing with Section
1001) of Chapter 5, or the sale, lease, assignment, mortgage, or
other disposition or encumbrance of a franchise or permit under this
article shall not revive or validate any lapsed or invalid franchise
or permit, or enlarge or add to the powers or privileges contained in
the grant of any franchise or permit, or waive any forfeiture.
This section does not prevent the sale, lease, encumbrance or
other disposition by any public utility of property that is not
necessary or useful in the performance of its duties to the public,
and any disposition of property by a public utility shall be
conclusively presumed to be of property that is not useful or
necessary in the performance of its duties to the public, as to any
purchaser, lessee or encumbrancer dealing with that property in good
faith for value, provided that this section does not apply to the
interchange of equipment in the regular course of transportation
between connecting common carriers.
SEC. 2. Section 853 of the Public Utilities Code is amended to
read:
853. (a) This article does not apply to any person or corporation
which transacts no business subject to regulation under this part,
except performing services or delivering commodities for or to public
utilities or municipal corporations or other public agencies
primarily for resale or use in serving the public or any portion
thereof, but shall apply to any public utility, and any subsidiary or
affiliate of, or corporation holding a controlling interest in, a
public utility, if the commission finds, in a proceeding to which the
public utility is or may become a party, that the application of
this article is required by the public interest.
(b) The commission may from time to time by order or rule, and
subject to those terms and conditions as may be prescribed therein,
exempt any public utility or class of public utility from this
article if it finds that the application thereof with respect to the
public utility or class of public utility is not necessary in the
public interest. The commission may establish rules or impose
requirements deemed necessary to protect the interest of the
customers or subscribers of the public utility or class of public
utility exempted under this subdivision. These rules or requirements
may include, but are not limited to, notification of a proposed sale
or transfer of assets or stock and provision for refunds or credits
to customers or subscribers.
(c) The provisions of Sections 851 and 854 that prohibit any
assignment, acquisition, or change of control without advance
authorization from the commission, do not apply to the transfer of
the ownership interest in a water utility, with 10,000 or fewer
service connections, from a decedent to a member of the decedent's
family in the manner provided in Section 240 of the Probate Code or
by a will, trust, or other instrument.
(d) It is the intent of the Legislature that transactions with
monetary values that materially impact a public utility's rate base
should not qualify for expedited advice letter treatment pursuant to
this article. It is the further intent of the Legislature that the
commission maintain all of its oversight and review responsibilities
subject to the California Environmental Quality Act, and that public
utility transactions that jurisdictionally require a review by the
commission, as the lead agency, under the act should not qualify for
expedited advice letter treatment pursuant to this article. An advice
letter may be filed for transactions by the public utility if the
lead agency has completed the appropriate review under the California
Environmental Quality Act for the transaction, and the commission is
the responsible agency under the act. The advice letter shall
be subject to approval by resolution voted upon by the commission.