BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
AB 736 - J. Horton Hearing Date:
June 30, 2005 A
As Amended: June 27, 2005 FISCAL B
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DESCRIPTION
Current law requires an order by the California Public Utilities
Commission (CPUC) before a public utility sells or disposes of
any useful public utility property.
This bill authorizes the CPUC to authorize the sale or disposal
of public utility property through an advice letter process for
transactions valued at $5 million or less. That process must be
completed within 120 days unless the advice letter is contested
or the documentation supporting the sale or disposal is
incomplete. The CPUC is authorized to limit the types of
transactions that can use the advice letter process.
BACKGROUND
Reviewing and approving public utility asset sales ensures that
utilities retain the assets that are necessary for delivery of
high quality service. To the extent that assets are sold, this
process ensures that the utility and its ratepayers are fairly
compensated. These types of reviews are among the most common
formal proceedings before the CPUC.
This review process has been criticized for being costly and
cumbersome. Some have asserted that the high cost of compliance
has led some utilities to simply not comply. Independent of
this bill, the CPUC is establishing a pilot program to create a
more streamlined review process. Their proposal is to process
certain transactions via an advice letter process, which is a
less formalized review that does not require attorneys or
hearings. Only transactions worth less than $500,000 and that
are not subject to review by the CPUC under the California
Environmental Quality Act (CEQA) would be eligible for this
process. Theoretically advice letters are reviewed by
interested parties, including the Office of the Ratepayer
Advocate, though in practice this does not always happen.
This bill expands that proposed pilot program by specifically
requiring an advice letter process for transactions under $5
million. It also requires a decision to be made within 120 days
if there is no objection to the advice letter.
COMMENTS
There has been some concern that the informality of the advice
letter process may make it inappropriate where the sale of
utility property requires CEQA review. This concern could be
dealt with by giving the CPUC the authority to use a different
process for transactions worth less than $5 million. The bill
could also contain intent language clarifying the desire to
fully comply with CEQA. The author and committee may wish to
consider making these amendments .
For smaller utilities the $5 million threshold may represent
such a significant part of the utility's rate base that an
advice letter process would provide an inadequate review. The
author and committee may wish to consider adding intent language
that the CPUC not use the advice letter process where there is a
material impact on the utility's ratebase.
ASSEMBLY VOTES
Assembly Floor (76-0)
Assembly Appropriations Committee (18-0)
Assembly Utilities and Commerce Committee
(11-0)
POSITIONS
Sponsor:
Volcano Communications Group
Support:
California Telephone Association
California Water Association
Global Valley Networks
Kerman Telephone Company
Sierra Telephone
SureWest Communications
Wild Goose Storage, Inc.
An individual
Oppose:
None on file
Randy Chinn
AB 736 Analysis
Hearing Date: June 30, 2005