BILL NUMBER: AB 736 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 12, 2005
INTRODUCED BY Assembly Member Jerome Horton
FEBRUARY 17, 2005
An act to amend Section 851 Sections 851
and 853 of the Public Utilities Code, relating to the
regulation of public utilities.
LEGISLATIVE COUNSEL'S DIGEST
AB 736, as amended, Jerome Horton. Public utilities: regulation.
Existing
Under existing law, the Public Utilities Commission has
regulatory authority over public utilities. Under existing law, a
public utility has a duty to serve, including furnishing and
maintaining adequate, efficient, just and reasonable service,
instrumentalities, equipment, and facilities as are necessary to
promote the safety, health, comfort, and convenience of its patrons
and the public. Existing law prohibits , with certain
exemptions, any public utility other than a common carrier by
railroad, as defined, 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
requirements without first having obtained an
authorizing order from the commission . Existing law ,
with certain exemptions, makes void every sale, lease,
assignment, mortgage, disposition, encumbrance, merger, or
consolidation made other than in accordance with the order of the
commission authorizing it.
This bill would make technical, nonsubstantive changes to
that provision prohibit, with certain exemptions, any
public utility other than a common carrier by railroad, from
selling, leasing, assigning, mortgaging, or otherwise di
sposing 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 filing an advice
letter and obtaining a resolution from the commission authorizing it
to do so. The bill would require the commission to approve the advice
letter within 120 days of its filing absent a protest or incomplete
documentation by the applicant public utility .
Existing law prohibits, with certain exemptions, a public utility
and a subsidiary, an affiliate, or a corporation holding a
controlling interest in a public utility, from acquiring, taking, or
holding any part of the capital stock of any other public utility
without first having obtained an authorizing order from the
commission. Existing law prohibits, with certain exemptions, any
person or corporation from acquiring or controlling, directly or
indirectly, any public utility organized and doing business in this
state, without first having obtained an authorizing order from the
commission.
This bill would additionally exempt the creation, acquisition,
merger, reorganization, dissolution, sale, or transfer of an
affiliate, subsidiary, or partnership directly or indirectly
controlling a public utility from the above described requirements,
when certain conditions are met.
Vote: majority. Appropriation: no. Fiscal committee: no
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. No public utility other than a common carrier by railroad
subject to Part I of the Interstate Commerce Act (Title 49, U.S.C.)
shall 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, nor 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
secured from the commission an order authorizing it so to do
filed an advice letter and obtained a resolution from
the commission authorizing it to do so. Absent protest or incomplete
documentation, the commission shall approve the advice letter within
120 days of its fi ling by the applicant public utility
. Every sale, lease, assignment, mortgage, disposition,
encumbrance, merger, or consolidation made other than in accordance
with the order of advice letter and
resolution 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 of this part, 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.
Nothing in this section shall 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 nothing in this section shall apply to
the interchange of equipment in the regular course of transportation
between connecting common carriers. This section does not
prevent the sale, lease, encumbrance or other disposition by a public
utility of property used to provide service when the public utility
has been authorized by the commission to charge market‑based
rates.
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) This article does not apply to the creation, acquisition,
merger, reorganization, dissolution, sale, or transfer of an
affiliate, subsidiary, or partnership directly or indirectly
controlling a public utility, where both of the following are true:
(1) There is no change in ownership of any of the shares of the
capital stock of the public utility.
(2) Following the creation, acquisition, merger, reorganization,
dissolution, sale, or transfer, the beneficial owner of the public
utility continues to hold greater than 50 percent of the ownership
interest in any subsidiary or affiliated entity that is a direct or
indirect owner of the public utility.