BILL NUMBER: AB 736	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 23, 2005
	AMENDED IN ASSEMBLY  MAY 2, 2005
	AMENDED IN ASSEMBLY  APRIL 12, 2005

INTRODUCED BY   Assembly Member Jerome Horton

                        FEBRUARY 17, 2005

   An act to amend 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.
   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 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 prohibit, 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  filing   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 obtaining a resolution from the commission
authorizing it to do so. The bill would require the commission 
to determine the types of transactions that qualify for advice letter
handling and  to approve or deny 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: 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.
  49 U.S.C. Sec. 10101 et seq.  ) 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 
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
obtained a resolution from the commission authorizing it to do so.
 Absent   The commission shall determine the
types of transactions that qualify for advice letter handling and
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. Every sale, lease, assignment,
mortgage, disposition, encumbrance, merger, or consolidation made
other than in accordance with the 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.
  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 ultimate 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.