Jurris.COM
Article 6. Transfer Or Encumbrance Of Utility Property of California Public Utilities Code >> Division 1. >> Part 1. >> Chapter 4. >> Article 6.
A public utility, other than a common carrier by railroad
subject to Part A of the Interstate Commerce Act (49 U.S.C. Sec.
10101 et seq.), shall not 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 or
useful in the performance of its duties to the public, or any
franchise or permit or any right thereunder, or 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 either secured an order from the
commission authorizing it to do so for qualified transactions valued
above five million dollars ($5,000,000), or for qualified
transactions valued at five million dollars ($5,000,000) or less,
filed an advice letter and obtained approval from the commission
authorizing it to do so. If the advice letter is uncontested,
approval may be given by the executive director or the director of
the division of the commission having regulatory jurisdiction over
the utility. The commission shall determine the types of transactions
valued at five million dollars ($5,000,000) or less, that qualify
for advice letter handling. For a qualified transaction valued at
five million dollars ($5,000,000) or less, the commission may
designate a procedure different than the advice letter procedure if
it determines that the transaction warrants a more comprehensive
review. Absent protest or incomplete documentation, the commission
shall approve or deny the advice letter within 120 days of its filing
by the applicant public utility. The commission shall reject any
advice letter that seeks to circumvent the five million dollar
($5,000,000) threshold by dividing a single asset with a value of
more than five million dollars ($5,000,000), into component parts,
each valued at less than five million dollars ($5,000,000). Every
sale, lease, assignment, mortgage, disposition, encumbrance, merger,
or consolidation made other than in accordance with the advice letter
and approval from 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, 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.
This section does not prevent the sale, lease, encumbrance, or
other 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, as to any
purchaser, lessee, or encumbrancer dealing with that property in good
faith for value, provided that this section does not apply to the
interchange of equipment in the regular course of transportation
between connecting common carriers.
No public utility, and no subsidiary or affiliate of, or
corporation holding a controlling interest in, a public utility,
shall purchase or acquire, take or hold, any part of the capital
stock of any other public utility, organized or existing under or by
virtue of the laws of this state, without having been first
authorized to do so by the commission; provided, however, that the
commission may establish by order or rule categories of stock
acquisitions which it determines will not be harmful to the public
interest, and purchases within those categories are exempt from this
section. Every assignment, transfer, contract, or agreement for
assignment or transfer of any stock by or through any person or
corporation to any corporation or otherwise in violation of any of
the provisions of this article is void and of no effect, and no such
transfer shall be made on the books of any public utility. Nothing in
this section prevents the holding of stock previously lawfully
acquired.
(a) This article does not apply to any person or corporation
which 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 from time to time by order or rule, and subject to those terms and conditions as may be prescribed therein, exempt any public utility or class of public utility from this article if it finds that the application thereof with respect to the public utility or class of public utility is not necessary in the public interest. The commission may establish rules or impose requirements deemed 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) The provisions of Sections 851 and 854 that prohibit any assignment, acquisition, or change of control without advance authorization from the commission, do not apply to the transfer of the ownership interest in a water utility, with 10,000 or fewer service connections, from a decedent to a member of the decedent's family in the manner provided in Section 240 of the Probate Code or by a will, trust, or other instrument.
(d) It is the intent of the Legislature that transactions with monetary values that materially impact a public utility's rate base should not qualify for expedited advice letter treatment pursuant to this article. It is the further intent of the Legislature that the commission maintain all of its oversight and review responsibilities subject to the California Environmental Quality Act, and that public utility transactions that jurisdictionally require a review by the commission, as the lead agency, under the act should not qualify for expedited advice letter treatment pursuant to this article. An advice letter may be filed for transactions by the public utility if the lead agency has completed the appropriate review under the California Environmental Quality Act for the transaction, and the commission is the responsible agency under the act. The advice letter shall be subject to approval by resolution voted upon by the commission.
(b) The commission may from time to time by order or rule, and subject to those terms and conditions as may be prescribed therein, exempt any public utility or class of public utility from this article if it finds that the application thereof with respect to the public utility or class of public utility is not necessary in the public interest. The commission may establish rules or impose requirements deemed 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) The provisions of Sections 851 and 854 that prohibit any assignment, acquisition, or change of control without advance authorization from the commission, do not apply to the transfer of the ownership interest in a water utility, with 10,000 or fewer service connections, from a decedent to a member of the decedent's family in the manner provided in Section 240 of the Probate Code or by a will, trust, or other instrument.
(d) It is the intent of the Legislature that transactions with monetary values that materially impact a public utility's rate base should not qualify for expedited advice letter treatment pursuant to this article. It is the further intent of the Legislature that the commission maintain all of its oversight and review responsibilities subject to the California Environmental Quality Act, and that public utility transactions that jurisdictionally require a review by the commission, as the lead agency, under the act should not qualify for expedited advice letter treatment pursuant to this article. An advice letter may be filed for transactions by the public utility if the lead agency has completed the appropriate review under the California Environmental Quality Act for the transaction, and the commission is the responsible agency under the act. The advice letter shall be subject to approval by resolution voted upon by the commission.
(a) No person or corporation, whether or not organized under
the laws of this state, shall merge, acquire, or control either
directly or indirectly any public utility organized and doing
business in this state without first securing authorization to do so
from the commission. The commission may establish by order or rule
the definitions of what constitute merger, acquisition, or control
activities which are subject to this section. Any merger,
acquisition, or control without that prior authorization shall be
void and of no effect. No public utility organized and doing business
under the laws of this state, and no subsidiary or affiliate of, or
corporation holding a controlling interest in a public utility, shall
aid or abet any violation of this section.
(b) Before authorizing the merger, acquisition, or control of any electric, gas, or telephone utility organized and doing business in this state, where any of the utilities that are parties to the proposed transaction has gross annual California revenues exceeding five hundred million dollars ($500,000,000), the commission shall find that the proposal does all of the following:
(1) Provides short-term and long-term economic benefits to ratepayers.
(2) Equitably allocates, where the commission has ratemaking authority, the total short-term and long-term forecasted economic benefits, as determined by the commission, of the proposed merger, acquisition, or control, between shareholders and ratepayers. Ratepayers shall receive not less than 50 percent of those benefits.
(3) Not adversely affect competition. In making this finding, the commission shall request an advisory opinion from the Attorney General regarding whether competition will be adversely affected and what mitigation measures could be adopted to avoid this result.
(c) Before authorizing the merger, acquisition, or control of any electric, gas, or telephone utility organized and doing business in this state, where any of the entities that are parties to the proposed transaction has gross annual California revenues exceeding five hundred million dollars ($500,000,000), the commission shall consider each of the criteria listed in paragraphs (1) to (8), inclusive, and find, on balance, that the merger, acquisition, or control proposal is in the public interest.
(1) Maintain or improve the financial condition of the resulting public utility doing business in the state.
(2) Maintain or improve the quality of service to public utility ratepayers in the state.
(3) Maintain or improve the quality of management of the resulting public utility doing business in the state.
(4) Be fair and reasonable to affected public utility employees, including both union and nonunion employees.
(5) Be fair and reasonable to the majority of all affected public utility shareholders.
(6) Be beneficial on an overall basis to state and local economies, and to the communities in the area served by the resulting public utility.
(7) Preserve the jurisdiction of the commission and the capacity of the commission to effectively regulate and audit public utility operations in the state.
(8) Provide mitigation measures to prevent significant adverse consequences which may result.
(d) When reviewing a merger, acquisition, or control proposal, the commission shall consider reasonable options to the proposal recommended by other parties, including no new merger, acquisition, or control, to determine whether comparable short-term and long-term economic savings can be achieved through other means while avoiding the possible adverse consequences of the proposal.
(e) The person or corporation seeking acquisition or control of a public utility organized and doing business in this state shall have, before the commission, the burden of proving by a preponderance of the evidence that the requirements of subdivisions (b) and (c) are met.
(f) In determining whether an acquiring utility has gross annual revenues exceeding the amount specified in subdivisions (b) and (c), the revenues of that utility's affiliates shall not be considered unless the affiliate was utilized for the purpose of effecting the merger, acquisition, or control.
(g) Paragraphs (1) and (2) of subdivision (b) shall not apply to the formation of a holding company.
(h) For purposes of paragraphs (1) and (2) of subdivision (b), the legislature does not intend to include acquisitions or changes in control that are mandated by either the commission or the Legislature as a result of, or in response to any electric industry restructuring. However, the value of an acquisition or change in control may be used by the commission in determining the costs or benefits attributable to any electric industry restructuring and for allocating those costs or benefits for collection in rates.
(b) Before authorizing the merger, acquisition, or control of any electric, gas, or telephone utility organized and doing business in this state, where any of the utilities that are parties to the proposed transaction has gross annual California revenues exceeding five hundred million dollars ($500,000,000), the commission shall find that the proposal does all of the following:
(1) Provides short-term and long-term economic benefits to ratepayers.
(2) Equitably allocates, where the commission has ratemaking authority, the total short-term and long-term forecasted economic benefits, as determined by the commission, of the proposed merger, acquisition, or control, between shareholders and ratepayers. Ratepayers shall receive not less than 50 percent of those benefits.
(3) Not adversely affect competition. In making this finding, the commission shall request an advisory opinion from the Attorney General regarding whether competition will be adversely affected and what mitigation measures could be adopted to avoid this result.
(c) Before authorizing the merger, acquisition, or control of any electric, gas, or telephone utility organized and doing business in this state, where any of the entities that are parties to the proposed transaction has gross annual California revenues exceeding five hundred million dollars ($500,000,000), the commission shall consider each of the criteria listed in paragraphs (1) to (8), inclusive, and find, on balance, that the merger, acquisition, or control proposal is in the public interest.
(1) Maintain or improve the financial condition of the resulting public utility doing business in the state.
(2) Maintain or improve the quality of service to public utility ratepayers in the state.
(3) Maintain or improve the quality of management of the resulting public utility doing business in the state.
(4) Be fair and reasonable to affected public utility employees, including both union and nonunion employees.
(5) Be fair and reasonable to the majority of all affected public utility shareholders.
(6) Be beneficial on an overall basis to state and local economies, and to the communities in the area served by the resulting public utility.
(7) Preserve the jurisdiction of the commission and the capacity of the commission to effectively regulate and audit public utility operations in the state.
(8) Provide mitigation measures to prevent significant adverse consequences which may result.
(d) When reviewing a merger, acquisition, or control proposal, the commission shall consider reasonable options to the proposal recommended by other parties, including no new merger, acquisition, or control, to determine whether comparable short-term and long-term economic savings can be achieved through other means while avoiding the possible adverse consequences of the proposal.
(e) The person or corporation seeking acquisition or control of a public utility organized and doing business in this state shall have, before the commission, the burden of proving by a preponderance of the evidence that the requirements of subdivisions (b) and (c) are met.
(f) In determining whether an acquiring utility has gross annual revenues exceeding the amount specified in subdivisions (b) and (c), the revenues of that utility's affiliates shall not be considered unless the affiliate was utilized for the purpose of effecting the merger, acquisition, or control.
(g) Paragraphs (1) and (2) of subdivision (b) shall not apply to the formation of a holding company.
(h) For purposes of paragraphs (1) and (2) of subdivision (b), the legislature does not intend to include acquisitions or changes in control that are mandated by either the commission or the Legislature as a result of, or in response to any electric industry restructuring. However, the value of an acquisition or change in control may be used by the commission in determining the costs or benefits attributable to any electric industry restructuring and for allocating those costs or benefits for collection in rates.
(a) For purposes of this section, a "nonstate entity" means
a company, corporation, partnership, firm, or other entity or group
of entities, whether organized for profit or not for profit.
(b) The commission, by order, decision, motion, settlement, or other action, shall not establish a nonstate entity with any moneys other than those moneys that would otherwise belong to the public utility's shareholders. A nonstate entity to be created with moneys from a public utility's shareholders shall be subject to a 30-day review by the Joint Legislative Budget Committee prior to creation. This subdivision does not limit the authority of the commission to form an advisory committee or other body whose budget is subject to oversight by the commission and the Department of Finance.
(c) The commission shall not enter into a contract with a nonstate entity in which a person serves as an owner, director, or officer while serving as a commissioner. Any contract between the commission and a nonstate entity shall be void and cease to exist by operation of law, if a commissioner, who was a commissioner at the time the contract was awarded, entered into, or extended, becomes, on or after January 1, 2014, an owner, director, or officer of the nonstate entity while serving as a commissioner.
(d) Beginning June 1, 2014, a commissioner who acts as an owner, director, or officer of a nonstate entity that was established as a result of an order, decision, motion, settlement, or other action by the commission in which the commissioner participated, neglects his or her duty pursuant to Section 1 of Article XII of the California Constitution, and as a result the commissioner may be removed pursuant to that section by the Legislature, two-thirds of the membership of each house concurring.
(b) The commission, by order, decision, motion, settlement, or other action, shall not establish a nonstate entity with any moneys other than those moneys that would otherwise belong to the public utility's shareholders. A nonstate entity to be created with moneys from a public utility's shareholders shall be subject to a 30-day review by the Joint Legislative Budget Committee prior to creation. This subdivision does not limit the authority of the commission to form an advisory committee or other body whose budget is subject to oversight by the commission and the Department of Finance.
(c) The commission shall not enter into a contract with a nonstate entity in which a person serves as an owner, director, or officer while serving as a commissioner. Any contract between the commission and a nonstate entity shall be void and cease to exist by operation of law, if a commissioner, who was a commissioner at the time the contract was awarded, entered into, or extended, becomes, on or after January 1, 2014, an owner, director, or officer of the nonstate entity while serving as a commissioner.
(d) Beginning June 1, 2014, a commissioner who acts as an owner, director, or officer of a nonstate entity that was established as a result of an order, decision, motion, settlement, or other action by the commission in which the commissioner participated, neglects his or her duty pursuant to Section 1 of Article XII of the California Constitution, and as a result the commissioner may be removed pursuant to that section by the Legislature, two-thirds of the membership of each house concurring.
Whenever the commission determines, after notice and hearing,
that any water or sewer system corporation is unable or unwilling to
adequately serve its ratepayers or has been actually or effectively
abandoned by its owners, or is unresponsive to the the rules or
orders of the commission, the commission may petition the superior
court for the county within which the corporation has its principal
office or place of business for the appointment of a receiver to
assume possession of its property and to operate its system upon such
terms and conditions as the court shall prescribe. The court may
require, as a condition to the appointment of such receiver, that a
sufficient bond be given by the receiver and conditioned upon
compliance with the orders of the court and the commission, and the
protection of all property rights involved. The court shall provide
for disposition of the facilities and system in like manner as any
other receivership proceeding in this state.
Every officer, agent, or employee of a public utility, or of a
subsidiary or affiliate of, or a corporation holding a controlling
interest in, a public utility, and every other person subject to the
requirements of this article, who violates or fails to comply with,
or procures, aids, or abets any violation of, this article is guilty
of a misdemeanor.
(a) A public utility that owns real property acquired for
purposes of obtaining a utility right-of-way, may lease that property
to a governmental entity for purposes of a public park, if the
utility retains the use of the right-of-way for public utility
purposes.
(b) In determining whether a lease of real property to a governmental entity for park purposes is for fair value, the commission shall include the community benefits of parks and open space as a benefit to ratepayers.
(c) As used in this section, "community benefits" include, but are not limited to, improving public health, protecting the environment, and increasing recreational assets.
(b) In determining whether a lease of real property to a governmental entity for park purposes is for fair value, the commission shall include the community benefits of parks and open space as a benefit to ratepayers.
(c) As used in this section, "community benefits" include, but are not limited to, improving public health, protecting the environment, and increasing recreational assets.
