BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 736
                                                                  Page  1

          Date of Hearing:   May 18, 2005

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                  AB 736 (Jerome Horton) - As Amended:  May 2, 2005 

          Policy Committee:                               
          UtilitiesVote:11-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill modifies the Public Utilities Commission's (PUC's)  
          approval process for public utilities to sell, lease or  
          otherwise transfer a property. Specifically, this bill:

          1)Requires any public utility to obtain Public Utilities  
            Commission (PUC) approval prior to selling, leasing, or  
            disposing of a property through an advice letter, rather than  
            through a formal proceeding as currently required. 

          2)Requires the PUC to approve or deny the advice letter within  
            120 days of its filing absent a protest or incomplete  
            documentation by the applicant public utility. 

          3)Exempts a public utility from having to obtain authorization  
            from the PUC before merging or otherwise consolidating with a  
            subsidiary, an affiliate, or a corporation if certain  
            conditions are met. 

           FISCAL EFFECT  

          Net special fund costs of up to $100,000 annually for the  
          equivalent of one position to review advice letters. [Public  
          Utilities Reimbursement Account] The PUC indicates that bill  
          will transfer workload from one division that currently handles  
          proceedings to several divisions, each of which handles advice  
          letters.

           COMMENTS  

           1)Purpose  . According to the author the purpose of this bill is  








                                                                  AB 736
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            to help streamline an unduly long process at the PUC for  
            non-controversial asset sales, transfers, leases or other  
            encumbrances of utility property.  By reducing workload at the  
            PUC, the author argues that this bill should reduce  
            administrative costs of both the PUC and public utilities and  
            could save ratepayer dollars through reduced utility operating  
            costs.

           2)Background  . Current law requires public utilities to undergo a  
            full proceeding at the PUC before selling, leasing, assigning,  
            mortgaging, other otherwise disposing of any property  
            necessary for performing its duties to the public.  These  
            proceedings result in significant costs for the applicant and  
            other parties and can take up to 18 months to complete. This  
            bill modifies the approval process to require public utilities  
            to file an advice letter and obtain an authorizing resolution  
            from the PUC rather than undergoing a full proceeding. 
           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081