SB 1112, as amended, Cannella. Utilities: water and sewer systems corporations: transactions.
The 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, among other things, without first having either secured an order from the Public Utilities 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 approval from the commission authorizing it to do so. Under existing law, 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.
Existing law requires the commission, before authorizing the merger, acquisition, or change in control of an electric, gas, or telephone utility when one of the parties has revenues in excess of a specified amount, to consider, among other things, whether the proposal provides short-term and long-term economic benefits to ratepayers, and equitably allocates the short-term and long-term forecasted economic benefits of the proposed merger, acquisition, or control, as determined by the commission, between shareholders and ratepayers, where the commission has ratemaking authority. Under existing law, any merger, acquisition, or change in control without that prior authorization is void.
This bill would require a water or sewer system corporation with less than 2,000 service connections to receive the commission’s approval before entering into specified transactions valued at $5,000,000. The
end delete
begin insert Thisend insert bill would provide that if a water or sewer system corporationbegin insert with less than 2,000 service connectionsend insert fails to receive the commission’sbegin delete approval,end deletebegin insert approval before entering into any of the specified transactions valued at $5,000,000 or less,end insert the transaction is voidable by the commission until the commission either retroactively approves or conditionally approves the transaction. The bill would authorize the commission to delegate this approval authority to a specified division director.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 853.2 is added to the Public Utilities
2Code, to read:
begin deleteNotwithstanding Sections 851 and 854, for end deletebegin insertFor end inserta water
4or sewer system corporation with less than 2,000 service
5connections, the following shallbegin delete apply:end deletebegin insert apply to transactions valued
6at five million dollars ($5,000,000) or less, notwithstanding
7Sections 851 and 854:end insert
8(a) (1) A water or sewer system corporation shall receive the
9commission’s approval
before entering into a transaction that
10would otherwise be subject to Section 851 orbegin delete 854 and that is valued begin insert 854.end insert
11at five million dollars ($5,000,000) or less.end delete
12(2) If a water or sewer system corporation fails to receive the
13commission’s approval pursuant to paragraph (1), the transaction
14is voidable by the commission until the commission does either
15of the following:
16(A) Retroactively approves the transaction upon a determination
17that the transaction is in the best interests of both the corporation
18and its ratepayers.
19(B) Conditionally approves
the transaction, subject to the
20fulfillment of specified conditions that would ensure that the
P3 1transaction is in the best interests of both the corporation and its
2ratepayers.
3(b) The commission may delegate the authority to make the
4determinations described in subdivision (a) to the director of the
5division that investigates water and sewer system service quality
6issues and analyzes and processes utility rate change requests.
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