BILL ANALYSIS
AB 698
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Date of Hearing: April 13, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
AB 698 (Skinner) - As Amended: April 2, 2009
SUBJECT : Utility property.
SUMMARY : Modifies certain eligibility requirements for
expedited review of low-value transactions made by public
utilities.
EXISTING LAW :
1) Prohibits public utilities from selling, leasing, assigning,
mortgaging, or otherwise disposing of or encumbering the whole
or any part of property necessary or useful in the performance
of its duties to the public without first having secured an
order from the California Public Utilities Commission (PUC)
authorizing it to do so for transactions valued above five
million dollars ($5,000,000).
2) Prohibits public utilities from selling, leasing, assigning,
mortgaging, or otherwise disposing of or encumbering the whole
or any part of property necessary or useful in the performance
of its duties to the public without first having filed an advice
letter and obtained a resolution from the PUC authorizing it to
do so for transactions valued at five million dollars
($5,000,000) or less, thereby creating an expedited process for
such transactions.
3) Requires the PUC to approve or deny an advice letter within
120 days of its filing by the applicant public utility absent
protest or incomplete documentation.
4) States the intent of the Legislature that public utility
transactions that jurisdictionally trigger a review by the PUC
under the California Environmental Quality Act (CEQA) not
qualify for the expedited advice letter process otherwise
available for transactions valued at five million dollars
($5,000,000) or less.
4) States the intent of the Legislature that public utility
transactions with monetary values that materially impact a
public utility's rate base not qualify for the expedited advice
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letter process otherwise available for transactions valued at
five million dollars ($5,000,000) or less.
THIS BILL:
1) Authorizes the executive director or the director of the
division of the PUC having regulatory jurisdiction over the
utility to approve public utility transactions valued at five
million dollars ($5,000,000) or less if the advice letter is
uncontested.
2) States the intent of the Legislature that public utility
transactions that jurisdictionally trigger a review by the PUC
under the California Environmental Quality Act (CEQA) not
qualify for the expedited advice letter process otherwise
available for transactions valued at five million dollars
($5,000,000) or less.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author's office, current law needs
clarification to ensure that legislative intent to create a
streamlined process by which a utility may for sell or buy
low-value property is being implemented. The sponsors of the
bill will be submitting a large number (potentially hundreds) of
applications for conservation easements required by a bankruptcy
settlement, and worry that the filings will suffer significant
delays. This bill allows the PUC greater flexibility to grant
streamlined approvals resulting in more timely approvals,
potential cost reductions and administrative efficiency.
1) Background: AB 736 (Horton), Chapter 370, Statutes of 2005,
authorized the PUC to allow the sale or disposal of public
utility property through the advice letter process for
transactions valued at $5 million or less. Prior to this change,
California law required the PUC to issue an order before a
public utility could engage in such a transaction. The intent of
AB 736 was to create in statute an expedited review process for
low-value transactions and was modeled after an existing PUC
pilot program.
The new advice letter process allows for approval in less than
120 days. The procedures for issuing an order can take the PUC
up to 18 months. AB 736 was amended to disallow certain
low-value transactions from being eligible for the expedited
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review. Specifically, transactions that trigger any PUC review
under CEQA and transactions that result in a "material impact"
on the utility's ratebase are not eligible.
2) Executive Resolution: This bill gives the executive director
of the PUC authority to approve uncontested transactions valued
at or less than $5 million. Current law requires approval by the
full commission. According to the sponsors of the bill, this
provision of AB 698 is consistent with 20 years of
administrative practice. The PUC currently delegates approval
authority for certain advice letters to these directors. This
practice was used under the PUC pilot program, but was
disallowed by the implementation of AB 736.
3) Lead vs. Responsible Agency: CEQA requires state and local
agencies to consider potential environmental effects prior to
approving new activities. When more than one agency is involved
in the approval process, the "Lead Agency" is the agency that
has the principal responsibility for carrying out or approving
the project. A "Responsible Agency" is any public agency, other
than the lead agency, that has discretionary approval power over
approving a project. The PUC is the lead agency for proposed
transmission lines and substations.
Current law has been interpreted to prohibit the use of the
advice letter review process for transactions for which the PUC
is a Responsible Agency. Such transactions were eligible under
the PUC pilot program, but were disallowed by the implementation
of AB 736. According to the PUC the decision to require an order
instead of the advice letter, was made because "even as a
Responsible Agency, the Commission has significant duties under
CEQA to review and address the environmental impacts of the
project." This bill reverses the policy and deems transactions
in which the PUC is a Responsible Agency eligible for the
expedited advice letter process. This bill does not modify the
prohibition in current law against using the advice letter
review process for transactions for which the PUC is the Lead
Agency.
REGISTERED SUPPORT / OPPOSITION :
Support
Pacific Gas and Electric Company (Sponsor)
AB 698
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Southern California Edison
Opposition
None on file.
Analysis Prepared by : Nina Kapoor / U. & C. / (916) 319-2083