4. Standard of Review
Section 854(a) requires Commission authorization before a company may "merge, acquire, or control either directly or indirectly any public utility organized and doing business in this state . . ." The purpose of this and related sections is to enable the Commission, before any transfer of public utility authority is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require.2 Absent prior Commission approval, § 854(a) provides that the transaction is "void and of no effect."
The standard generally applied by the Commission to determine if a transaction should be approved under § 854(a) is whether the transaction will be "adverse to the public interest."3 While on occasion the Commission has also inquired whether a transfer will provide positive ratepayer benefits, this additional assessment cannot be applied readily to an entity like Central Valley, which is not a traditional investor-owned public utility with captive ratepayers. In fact, the Commission has not considered "ratepayer benefits" in its review of other change of control applications by independent gas storage providers.
Section 854(b) and (c) do not expressly apply to the instant transaction because, according to Joint Applicants, neither Nicor nor AGLR have gross annual California revenues exceeding US $500 million. When California revenues reach this threshold, § 854(b)(3) requires the Commission to seek an opinion on competitive impacts from the California Attorney General. Below this threshold, there is no such requirement.
2 See San Jose Water Co. (1916) 10 CRC 56.
3 See, for example, Quest Communications Corp., D.00-06-079, 2000 Cal. PUC LEXIS 645, *18. This is also the standard applied by D.03-06-069 (2002 CalPUC LEXIS 975), in which the Commission authorized the transfer of control to EnCana, and most recently by D.05-12-007 (2005 CalPUC LEXIS 527), which authorized the transfer of a 50% interest in the parent of Lodi Gas Storage, L.L.C.
