BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 736|
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THIRD READING
Bill No: AB 736
Author: Jerome Horton (D)
Amended: 8/16/05 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 10-0, 6/30/05
AYES: Escutia, Morrow, Alarcon, Battin, Bowen, Cox, Dunn,
Kehoe, Murray, Simitian
NO VOTE RECORDED: Campbell
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/26/05 - See last page for vote
SUBJECT : Public utilities: regulation
SOURCE : Volcano Communications Group
DIGEST : This bill modifies the Public Utilities
Commissions approval process for public utilities to sell,
lease or otherwise transfer a property.
ANALYSIS : Current law requires an order by the Public
Utilities Commission (PUC) before a public utility sells or
disposes of any useful public utility property.
This bill authorizes the PUC 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
CONTINUED
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unless the advice letter is contested or the documentation
supporting the sale or disposal is incomplete. The PUC is
authorized to limit the types of transactions that can use
the advice letter process.
This bill authorizes the PUC to designate a procedure
different than the advice letter procedure if it determines
that a transaction warrants a more comprehensive review.
This bill requires the PUC to reject an advice letter that
seeks to circumvent the $5 million threshold by dividing
what is a single asset worth more than $5 million into
component parts.
This bill states legislative intent that transactions with
monetary values that impact a utility's rate base, or
transactions that trigger the PUC's review responsibilities
under the California Environmental Quality Act should not
qualify for the expedited advice letter review.
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 PUC.
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 PUC 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 PUC 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.
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/23/05)
Volcano Communications Group (source)
California Telephone Association
California Water Association
Global Valley Networks
Kerman Telephone Company
Sierra Telephone
SureWest Communications
Wild Goose Storage, Inc.
ASSEMBLY FLOOR :
AYES: Aghazarian, Arambula, Baca, Bass, Benoit, Berg,
Bermudez, Blakeslee, Bogh, Calderon, Canciamilla, Chan,
Chavez, Chu, Cogdill, Cohn, Coto, Daucher, De La Torre,
DeVore, Dymally, Emmerson, Evans, Frommer, Garcia,
Goldberg, Hancock, Haynes, Jerome Horton, Shirley Horton,
Houston, Huff, Jones, Karnette, Keene, Klehs, Koretz, La
Malfa, La Suer, Laird, Leno, Leslie, Lieber, Liu,
Matthews, Maze, McCarthy, Montanez, Mountjoy, Mullin,
Nation, Nava, Negrete McLeod, Niello, Oropeza, Parra,
Pavley, Plescia, Richman, Ridley-Thomas, Sharon Runner,
Ruskin, Saldana, Salinas, Spitzer, Strickland, Torrico,
Tran, Umberg, Vargas, Villines, Walters, Wolk, Wyland,
Yee, Nunez
NO VOTE RECORDED: Gordon, Harman, Levine, Nakanishi
NC:mel 8/24/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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