2. Analysis and Action
Public Utilities Code Section 851 requires Commission authorization before a company may "merge, acquire, or control ... 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 property is consummated, to review the situation and to take such action, as a condition of the transfer, as the pubic interest may require.2
Where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, we apply the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired.3
2.1. California Environmental Quality Act (CEQA)
The CEQA requires the Commission as the designated lead agency to assess the potential environmental impact of a project in order that adverse effects are avoided, alternatives are investigated, and environmental quality is restored or enhanced to the fullest extent possible.
CBC proposes to offer competitive local carrier (CLC) services obtained via the requested transfer of operating authorities and related assets and control over Champion's existing public utility operations. Joint Applicants assert that, because this transaction represents a transfer of control of existing assets it will not have any effect on the environment. We first note that no CEQA review was deemed necessary when Champion obtained the CPCN now at issue. As set forth in D.05-60-047:
Since Applicant states that it will not be constructing any additional facilities for the purpose of providing local exchange services, except for equipment to be installed in existing buildings or structures, it can be seen with certainty that there is no possibility that granting this application will have an adverse impact upon the environment. Applicant must file for additional authority, and submit to any necessary CEQA review, before it can construct additional facilities.
As CBC seeks to offer only limited facilities-based services, the transfer that is the subject of this application is a "paper transaction" that does not involve any construction. Therefore, it can again be seen with certainty that there is no possibility that granting this application will have an adverse impact upon the environment.
2.2. Financial Qualification
To be granted a CPCN for authority to provide facilities-based and resold local exchange service, an applicant must demonstrate that it has $100,000 cash or cash equivalent to meet the firm's start-up expenses. The applicant must also demonstrate that it has sufficient additional resources to cover all deposits required by other telecommunications carriers in order to provide service in California.4 CBC provided a guarantee of payment up to $125,000 and a balance sheet from its bank that demonstrates its ability to meet the financial requirements.
2.3. Technical Qualifications
To be granted a CPCN for authority to provide local exchange service, an applicant must make a reasonable showing of technical expertise in telecommunications or a related business. CBC supplied biographical information on its management that demonstrates that it has sufficient expertise and training to operate as a telecommunications provider.
CBC represents that, with one exception, no one associated with or employed by it as an affiliate, officer, director, partner, or owner of more than 10% of CBC was previously associated with a telecommunications carrier that filed for bankruptcy, or was sanctioned by the Federal Communications Commission or any state regulatory agency for failure to comply with any regulatory statute, rule, or order.5
2.4. Tariffs
Commission staff reviewed Champion's draft tariffs for compliance with Commission rules and regulations. The deficiencies were noted in Attachment A to D.05-06-047 and Champion's obtaining a CPCN was conditioned upon these deficiencies being corrected. CBC has filed no new tariffs and has provided assurances that the transaction will be transparent to Champion's customers. In acquiring Champion's assets CBC adopts Champion's previously approved tariffs and therefore Champions' obligation to correct any outstanding deficiencies.
2.5. CPCN - Conclusion
As set forth above, CBC is qualified to operate as a limited facilities-based and resale provider of local exchange and interexchange telecommunications services within California. Therefore, CBC is qualified to acquire these assets of Champion. Once granted the application, CBC should be subject to the applicable Commission rules, decisions, General Orders, and statutes that pertain to California public utilities and shall comply with the requirements applicable to competitive local exchange carriers and NDIECs included in Attachments A, B, and C to this decision
2 D.05-06-047, citing San Jose Water Co. (1916) 10 CXRC 56.
3 See D.05-06-047, p. 9.
4 The financial standards for certification to operate as a CLC are set forth in Decision (D.) 95-12-056, Appendix C, Rule 4.B.
5 Ruben Garcia, President and CEO of CBC was an officer and managed the California operations of Telscape International, Inc., a national telecommunications carrier that entered into Chapter 11 bankruptcy proceedings in 2001. Garcia, and other investors, subsequently purchased the failing operations (as part of a CPCN approved in D.01-10-061) and restored it to financial and operational health.
