BILL NUMBER: SB 797	AMENDED
	BILL TEXT

	AMENDED IN SENATE   APRIL 12, 1999

INTRODUCED BY    Senator Costa   Senators Costa
and Bowen 

                        FEBRUARY 25, 1999

   An act  to amend Sections 851 and 853 of the Public
Utilities Code,  relating to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 797, as amended, Costa.  Public utilities:  property.
   Existing law requires a public utility other than a specified
common carrier to secure authorization from the Public Utilities
Commission before disposing of or encumbering certain property
necessary or useful in the performance of its duties to the public,
or any related franchise, permit, or right.  Existing law states that
the above provision shall not prevent the disposition by any public
utility of property that is not necessary or useful in the
performance of its duties to the public, and any disposition of
property by a public utility shall be conclusively presumed to be of
property that is not useful or necessary in the performance of its
duties to the public. Existing law authorizes the commission, by
order or rule, to exempt any public utility or class of public
utility from provisions governing the disposal of utility property,
as prescribed.
   This bill would  modify those provisions relating to the
disposal of public utility property to apply only to property
necessary in the performance of duties of the public utility to the
public, or any related franchise, permit, or right.  The bill would
require the commission, on or before July 1, 2000, to designate, by
rule or order, categories of public utility property that a public
utility may sell, lease, or otherwise dispose of or encumber, as
determined to be necessary by that public utility, without further
approval   state the intent of the Legislature to
establish a comprehensive process and standards to govern the
disposition and future operation of utility-owned hydroelectric
facilities and associated properties, addressing specified issues
 .  
   The bill would become operative only if Senate Bill 1063 of the
1999-2000 Regular Session is enacted and becomes operative. 
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  
yes   no  .  State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  (a) The Legislature finds and declares  
  SECTION 1.  (a) It is the intent of the Legislature to establish a
comprehensive process and standards to govern the disposition and
future operation of utility-owned hydroelectric facilities and
associated properties.
   (b) It is the further intent of the Legislature that the process
and standards described in subdivision (a) address all of the
following issues:
   (1) The appropriate valuation and credit towards transition costs.

   (2) The exercise of market power in electricity generation and
ancillary services.
   (3) Water supply and water quality.
   (4) Environmental protection.
   (5) Recreation.
   (6) Economic impacts.
  SEC. 2.  This act shall become operative only if Senate Bill 1063
of the 1999-2000 Regular Session is enacted and becomes operative.
  all of the following:
   (1) In enacting electric industry restructuring legislation in
1996 (Chapter 854 of the Statutes of 1996), the Legislature found and
declared that competition will encourage innovation, efficiency, and
better service in certain electricity markets, and will permit the
reduction of costly regulatory oversight.
   (2) The same state policies regarding the benefits of competition
that are applicable to electric power also apply to certain natural
gas utility services.
   (3) The Public Utilities Commission needs to implement reforms of
its regulatory procedures to secure to state consumers and businesses
the full benefits of competition in the sale and disposition of
surplus utility assets in light of electric and gas industry
restructuring and other changes in electric and gas utility services.

   (b) It is the intent of the Legislature in enacting this act to
ensure that the Public Utilities Commission streamlines its processes
for the sale and disposition of electric and gas utility assets that
are no longer necessary for utility service or that would be better
utilized through sale or disposition.  It is the further intent of
the Legislature in enacting this act that the determination by the
Public Utilities Commission of new regulatory procedures for the sale
and disposition of those assets should be expedited and implemented
as soon as possible, to benefit consumers and the marketplace.
  SEC. 2.  Section 851 of the Public Utilities Code is amended to
read:
   851.  (a) No public utility other than a common carrier by
railroad subject to Part I of the federal Interstate Commerce Act (
49 U.S.C. Sec. 10101 and following) shall sell, lease, assign,
mortgage, or otherwise dispose of or encumber the whole or any part
of its railroad, street railroad, line, plant, system, or other
property necessary in the performance of its duties to the public, or
any franchise or permit or any right thereunder, nor by any means
whatsoever, directly or indirectly, merge or consolidate its
railroad, street railroad, line, plant, system, or other property, or
franchises or permits or any part thereof, with any other public
utility, without first having secured from the commission an order
authorizing it so to do.  Every sale, lease, assignment, mortgage,
disposition, encumbrance, merger, or consolidation made other than in
accordance with the order of the commission authorizing it is void.
The permission and approval of the commission to the exercise of a
franchise or permit under Article 1 (commencing with Section 1001) of
Chapter 5 of this part, or the sale, lease, assignment, mortgage, or
other disposition or encumbrance of a franchise or permit under this
article shall not revive or validate any lapsed or invalid franchise
or permit, or enlarge or add to the powers or privileges contained
in the grant of any franchise or permit, or waive any forfeiture.
   (b) Nothing in this section shall prevent the sale, lease,
encumbrance or other disposition by any public utility of property
that is not necessary in the performance of its duties to the public,
and any disposition of property by a public utility shall be
conclusively presumed to be of property  that is not necessary in the
performance of its duties to the public, as to any purchaser, lessee
or encumbrancer dealing with the property in good faith for value.
Nothing in this section applies to the interchange of equipment in
the regular course of transportation between connecting common
carriers.
  SEC. 3.  Section 853 of the Public Utilities Code is amended to
read:
   853.  (a) This article does not apply to any person or corporation
that transacts no business subject to regulation under this part,
except performing services or delivering commodities for or to public
utilities or municipal corporations or other public agencies
primarily for resale or use in serving the public or any portion
thereof, but shall apply to any public utility, and any subsidiary or
affiliate of, or corporation holding a controlling interest in, a
public utility, if the commission finds, in a proceeding to which the
public utility is or may become a party, that the application of
this article is required by the public interest.
   (b) The commission may , by order or rule, and subject to those
terms and conditions prescribed therein, exempt any public utility or
class of public utility from this article if  the commission finds
that the application of this article with respect to the public
utility or class of public utility is not necessary to protect the
public interest.  The commission may establish rules or impose
requirements that it determines to be necessary to protect the
interest of the customers or subscribers of the public utility or
class of public utility exempted under this subdivision.  These rules
or requirements may include, but are not limited to, notification of
a proposed sale or transfer of assets or stock and provision for
refunds or credits to customers or subscribers.
   (c) On or before July 1, 2000, the commission, by rule or order,
shall designate categories of public utility property that a public
utility may sell, lease, or otherwise dispose of or encumber, as
determined to be necessary by that public utility, without further
approval pursuant to this article.