BILL ANALYSIS AB 736 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 736 (Horton) As Amended August 16, 2005 Majority Vote ----------------------------------------------------------------- |ASSEMBLY: |76-0 |(May 26, 2005) |SENATE: |40-0 |(August 30, | | | | | | |2005) | ----------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY : Modifies the California Public Utilities Commission's (PUC's) approval process for the sale or transfer of public utility assets by allowing public utilities to sell, or otherwise transfer property valued at less than $5 million if the transfer is approved by PUC through a 120-day advice letter process rather than through a formal proceeding. The Senate amendments : 1)Delete a provision that exempted 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. 2)Provide that PUC may designate a process other than an advice letter process if it determines that the transaction requires a more comprehensive review. 3)Provide that PUC shall reject any advice letter request that seeks to circumvent the $5 million threshold by dividing a single asset into component parts. EXISTING LAW requires a public utility to obtain an order from PUC before selling, leasing, assigning, mortgaging, other otherwise disposing of any property that is necessary or useful in the performance of its duties to the public. AS PASSED BY THE ASSEMBLY , this bill: 1)Required PUC to approve a public utility's request to sell, lease or otherwise transfer a property valued at less than $5 million through a 120-day advice letter process rather than AB 736 Page 2 through a formal proceeding. 2)Exempted 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 Appropriation Committee, net special fund costs of up to $100,000 annually for the equivalent of one position to review advice letters COMMENTS : The purpose of this bill is to help streamline a long process at PUC for non-controversial asset sales, transfers, leases or encumbrances of utility property. 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 can 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 by allowing public utilities to file an advice letter and obtain an authorizing resolution to sell or transfer property from PUC rather than requiring the utility to undergo 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. Analysis Prepared by : Edward Randolph / U. & C. / (916) 319-2083 FN: 0012604