Discussion
The Commission has held that the purpose of Section 851 and related sections is to enable the Commission, before any transfer of public utility property is consummated, to review the transfer and to take such action, as a condition of the transfer, as the public interest may require.4 Our primary objective in reviewing the sale of property is to ensure that disposition or encumbrance of public utility property does not impair a utility's public service to customers. As the Commission has stated previously, "the relevant inquiry is whether the proposed transaction is adverse to the public interest."5 However, Section 851 also provides that, "Nothing in this section shall prevent the sale, lease, encumbrance or other disposition by any public utility of property which is not necessary or useful in the performance of its duties to the public." The threshold issue to be decided is whether the property in question is "necessary or useful."
This issue is resolved by granting the Joint Motion and adopting the Stipulation. As stated in the Stipulation:
1) SJWC agrees that it failed to comply with the notice requirement set forth in D.06-05-041 prior to selling Property 181;
2) SJWC has complied with OP 15 of D.09-11-032 by filing this Section 851 Application;
3) DRA has examined Property 181 and concluded the property was not used or useful at the time of sale;
4) SJWC agrees to comply with the notice requirement for all real property sales in the future; and
5) DRA and SJWC agree that the issues presented in this Application have been resolved to the satisfaction of both parties and apply solely to SJWC and DRA.
DRA and SJWC state that the terms of the Stipulation are reasonable, consistent with the law and in the public interest. As SJWC has fulfilled its requirement to file the Application, and as DRA has reviewed Property 181 and concluded that the property was not used or useful at the time of sale, and as there are no unresolved issues in this proceeding, we agree.
By granting the Joint Motion and applying the Stipulation and in consideration of the requirements of Section 851, and the relevant facts, we determine that SJWC's Property 181 was not necessary or useful when SJWC sold the property on October 15, 2008. Furthermore, as the property has been sold, we conclude that Property 181 is not necessary or useful for utility purposes at this time, and therefore Commission authorization of the sale is not necessary.
As noted in the Joint Motion, we remind SJWC of the Commission's requirement in D.06-05-041 that the water company provide 30 days advance written notice to the Directors of the Commission's Division of Water and Audits and DRA if they plan to sell land, building, water rights, or all or part of a water system that the water company believes to be no longer used and useful for public utility service.
4 San Jose Water Company, 10 CRC 56 (1916) at 62-63.
5 Universal Marine Corporation, 14 CPUC 2d 644, 646 (1984).
