BILL NUMBER: SB 1112	CHAPTERED
	BILL TEXT

	CHAPTER  631
	FILED WITH SECRETARY OF STATE  SEPTEMBER 25, 2016
	APPROVED BY GOVERNOR  SEPTEMBER 25, 2016
	PASSED THE SENATE  AUGUST 25, 2016
	PASSED THE ASSEMBLY  AUGUST 18, 2016
	AMENDED IN ASSEMBLY  AUGUST 11, 2016
	AMENDED IN ASSEMBLY  AUGUST 1, 2016
	AMENDED IN SENATE  APRIL 27, 2016

INTRODUCED BY   Senator Cannella

                        FEBRUARY 17, 2016

   An act to add Section 853.2 to the Public Utilities Code, relating
to utilities, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1112, Cannella. Utilities: water and sewer system corporations:
transactions.
   The Public Utilities Act prohibits, with certain exemptions, any
public utility other than a common carrier by railroad from selling,
leasing, assigning, mortgaging, or otherwise disposing of or
encumbering the whole or any part of specified property necessary or
useful in the performance of the public utility's duties to the
public, among other things, without first either having secured an
order from the Public Utilities Commission authorizing it to do so
for qualified transactions valued above $5,000,000, or for qualified
transactions valued at $5,000,000 or less, having filed an advice
letter and obtained approval from the commission authorizing it to do
so. Under existing law, 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.
   Existing law requires the commission, before authorizing the
merger, acquisition, or change in control of an electric, gas, or
telephone utility when one of the parties has revenues in excess of a
specified amount, to consider, among other things, whether the
proposal provides short-term and long-term economic benefits to
ratepayers and equitably allocates the short-term and long-term
forecasted economic benefits of the proposed merger, acquisition, or
change in control, as determined by the commission, between
shareholders and ratepayers, if the commission has ratemaking
authority. Under existing law, any merger, acquisition, or change in
control without that prior authorization is void.
    This bill would provide that if a water or sewer system
corporation or an entity merging with or acquiring control of a water
or sewer system corporation with less than 2,000 service connections
fails to receive the commission's approval before entering into any
of the specified transactions valued at $5,000,000 or less, the
transaction is voidable by the commission until the commission either
retroactively approves or conditionally approves the transaction.
The bill would authorize the commission to delegate this approval
authority to a specified division director.
   This bill would declare that it is to take effect immediately as
an urgency statute.


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

  SECTION 1.  Section 853.2 is added to the Public Utilities Code, to
read:
   853.2.  For a water or sewer system corporation or an entity
merging with or acquiring control of a water or sewer system
corporation with less than 2,000 service connections, the following
shall apply to transactions valued at five million dollars
($5,000,000) or less, notwithstanding Sections 851 and 854:
   (a) (1) A water or sewer system corporation or an entity merging
with or acquiring control of a water or sewer system corporation
shall receive the commission's approval before entering into a
transaction that would otherwise be subject to Section 851 or 854.
   (2) If a water or sewer system corporation or an entity merging
with or acquiring control of a water or sewer system corporation
fails to receive the commission's approval pursuant to paragraph (1),
the transaction is voidable by the commission until the commission
does either of the following:
   (A) Retroactively approves the transaction upon a determination
that the transaction is in the best interests of both the corporation
and its ratepayers.
   (B) Conditionally approves the transaction, subject to the
fulfillment of specified conditions that would ensure that the
transaction is in the best interests of both the corporation and its
ratepayers.
   (b) The commission may delegate the authority to make the
determinations described in subdivision (a) to the director of the
division that investigates water and sewer system service quality
issues and analyzes and processes utility rate change requests.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to ensure the safety of water and sewer systems, thereby
protecting the public health, it is necessary that this act take
effect immediately.