BILL NUMBER: SB 429	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Morrow

                        FEBRUARY 20, 2003

   An act to add Section 854.5 to the Public Utilities Code, relating
to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 429, as introduced, Morrow.  Public utilities: acquisition or
control of electrical corporations and gas corporations.
   (1) The California Constitution establishes the Public Utilities
Commission, with jurisdiction over all public utilities.  The
Constitution grants the commission certain general powers over all
public utilities, subject to control by the Legislature, and
authorizes the Legislature, unlimited by the other provisions of the
Constitution, to confer additional authority and jurisdiction upon
the commission, that is cognate and germane to the regulation of
public utilities.
   The existing Public Utilities Act, prohibits any person or
corporation from acquiring or controlling, directly or indirectly,
any public utility organized and doing business in this state,
including electrical corporations and gas corporations, without first
securing authorization to do so from the commission.  Existing law
requires the commission, before authorizing the acquisition or
control of an electric, gas, or telephone utility having revenues in
excess of a specified amount, to consider, among other things, that
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.
   Pursuant to the act, the commission has authorized the formation
of holding companies holding a controlling interest in certain
electrical corporations and gas corporations.  The commission has
conditioned authorization upon the capital requirements of the
electrical corporation or gas corporation being given first priority
by the board of directors of the parent holding company, as
determined by the commission as being necessary to meet the
obligation to serve the electrical corporation or gas corporation.
   This bill would provide that any corporation or person holding a
controlling interest in an electrical corporation or gas corporation
organized and doing business under the laws of this state, is subject
to the continuing jurisdiction and power of the commission to
enforce a condition placed upon any authorization obtained to acquire
or control, directly or indirectly, the public utility.  The bill
would require that it be a condition of any authorization given a
corporation or person holding a controlling interest in an electrical
corporation or gas corporation, that the capital requirements of the
utility, as determined by the commission to be necessary to meet the
utility's obligations to serve, be given first priority.  The bill
would further require, when the commission determines it necessary to
meet the obligation of the utility to serve, that the commission
order the corporation or person holding a controlling interest in the
utility, to infuse sufficient capital into the utility subsidiary,
of any type deemed necessary by the commission, to enable the utility
to fulfill the obligation to serve.  Because a violation of the
Public Utilities Act or an order of the commission is a crime under
existing law, the bill would impose a state-mandated local program by
creating a new crime.
  (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 854.5 is added to the Public Utilities Code, to
read:
   854.5.  (a) Any corporation or person holding a controlling
interest in an electrical corporation or gas corporation organized
and doing business under the laws of this state, is subject to the
continuing jurisdiction and power of the commission to enforce a
condition placed upon any authorization obtained pursuant to Section
854.
   (b) It is a condition of any authorization given to a corporation
or person holding a controlling interest in an electrical corporation
or gas corporation organized and doing business under the laws of
this state, that the capital requirements of the electrical
corporation or gas corporation, as determined by the commission to be
necessary to meet the corporation's obligations to serve, shall be
given first priority.  When determined by the commission to be
necessary to meet the obligation of an electrical corporation or gas
corporation to serve, the commission shall order a corporation or
person holding a controlling interest in the electrical corporation
or gas corporation, to infuse sufficient capital into their
respective utility subsidiaries, of any type deemed necessary by the
commission to enable the electrical corporation or gas corporation to
fulfill the obligation to serve.