BILL NUMBER: AB 736	ENROLLED
	BILL TEXT

	PASSED THE ASSEMBLY  SEPTEMBER 1, 2005
	PASSED THE SENATE  AUGUST 30, 2005
	AMENDED IN SENATE  AUGUST 16, 2005
	AMENDED IN SENATE  JUNE 27, 2005
	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, 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 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 obtained a resolution from
the commission authorizing it to do so. The bill would require the
commission to determine the types of transactions valued at
$5,000,000 or less that qualify for advice letter handling. The bill
would authorize the commission to designate a procedure different
than the advice letter procedure if it determines that a particular
transaction of a value of $5,000,000 or less warrants a more
comprehensive review. For transactions subject to the advice letter
approval procedure, the commission would be required to approve or
deny the advice letter within 120 days of its filing absent a protest
or incomplete documentation by the applicant public utility. The
bill would require the commission to reject an advice letter that
seeks to circumvent the $5,000,000 threshold by dividing what is a
single asset with a value of more than $5,000,000, into component
parts, each valued at less than $5,000,000. The bill would state the
intent of the Legislature that transactions with monetary values that
materially impact a public utility's rate base, or transactions that
would trigger the commission's review responsibilities under the
California Environmental Quality Act, should not qualify for
expedited advice letter review.


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 ( 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. The
commission shall determine the types of transactions valued at five
million dollars ($5,000,000) or less, that qualify for advice letter
handling. For a qualified transaction valued at five million dollars
($5,000,000) or less, the commission may designate a procedure
different than the advice letter procedure if it determines that the
transaction warrants a more comprehensive review.  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. The commission shall reject any advice letter that seeks to
circumvent the five million dollars ($5,000,000) threshold by
dividing what is a single asset with a value of more than five
million dollars ($5,000,000), into component parts, each valued at
less than five million dollars ($5,000,000). 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) It is the intent of the Legislature that transactions with
monetary values that materially impact a public utility's rate base
should not qualify for expedited advice letter treatment pursuant to
this article. It is the further intent of the Legislature that the
commission maintain all of its oversight and review responsibilities
subject to the California Environmental Quality Act, and that public
utility transactions that jurisdictionally trigger a review under the
act should not qualify for expedited advice letter treatment
pursuant to this article.