BILL ANALYSIS
AB 736
Page 1
ASSEMBLY THIRD READING
AB 736 (Jerome Horton)
As Amended May 23, 2005
Majority vote
UTILITIES & COMMERCE 11-0
APPROPRIATIONS 18-0
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|Ayes:|Levine, Bogh, Baca, |Ayes:|Chu, Sharon Runner, Bass, |
| |Blakeslee, Jones, De La | |Berg, Calderon, Emmerson, |
| |Torre, Jerome Horton, | |Mullin, Haynes, Karnette, |
| |Keene, Montanez, | |Klehs, Leno, Nakanishi, |
| |Ridley-Thomas, Wyland | |Nation, Oropeza, |
| | | |Ridley-Thomas, Saldana, |
| | | |Walters, Yee |
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SUMMARY : Modifies the California 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 PUC approval prior to
selling, leasing, or disposing of a property in a transaction
valued at $5 million or less through an advice letter, rather
than through a formal proceeding as currently required.
2)Requires PUC to approve or deny an advice letter submitted
pursuant to the above requirements within 120 days of its
filing absent a protest or incomplete documentation by the
applicant public utility.
3)Requires any public utility to secure an order from PUC prior
to selling, leasing, or disposing of a property in a
transaction valued at $5 million or more, rather than through
a formal proceeding as currently required.
4)Exempts a public utility from having to obtain authorization
from PUC before merging or otherwise consolidating with a
subsidiary, an affiliate, or a corporation if certain
conditions are met.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, net special fund costs of up to $100,000 annually for
AB 736
Page 2
the equivalent of one position to review advice letters. PUC
indicates that bill will transfer workload from one division
that currently handles proceedings to several divisions, each of
which handles advice letters.
COMMENTS : According to the author, the purpose of this bill is
to help streamline an unduly long process at PUC for
non-controversial asset sales, transfers, leases or other
encumbrances of utility property. By reducing workload at PUC,
the author argues that this bill should reduce administrative
costs of both PUC and public utilities and could save ratepayer
dollars through reduced utility operating costs.
Current law requires public utilities to undergo a full
proceeding at 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 PUC
rather than undergoing a full proceeding if the value of the
transaction is less than $5 million. PUC is currently
considering the implementation of an advice letter pilot program
with substantially similar components to those included in this
bill.
The bill also exempts public utilities undergoing mergers,
partnerships and other ownership transfers from certain PUC
approval requirements if there is no change in the ultimate
ownership of the utility. However, the bill does not restrict
the ability of PUC to review and approve any sale, merger or
transfer of the public utility itself, or any transaction that
results in a change in ownership or control of the parent or
holding company which is the ultimate owner of the utility.
Analysis Prepared by : Adam Hunt / U. & C. / (916) 319-2083
FN: 0010461