3. Standard of Review
Pub. Util. Code § 851, in relevant part, requires Commission approval before a public utility may sell the whole or any part of its system. Section 854(a) prohibits any person or corporation to acquire a public utility without prior Commission authorization. The Commission has long interpreted Section 851 and the ensuing code sections to prohibit acquisitions, mergers, and transfers of control unless the Commission finds the proposed transaction to be in the public interest. (D.02-12-068, mimeo., p. 6.)
Where a community services district is to be the purchaser, our review of whether the proposed transfers are in the public interest is substantially different from instances where the sale is between private parties:
In the common transfer proceedings between private parties, the function of the Commission is to prevent the impairment of the public service of a utility which could result from the transfer of utility property into the hands of parties incapable of performing an adequate service at reasonable rates or upon terms which would bring about the same undesirable result (Southern Cal. Mountain Water Co. (1912) 1 CRC 520). But such concerns are not the determinant where a community services district is involved. If the Commission were to impose terms not acceptable to a district, the proposed sale could be abandoned and the district could resort to its eminent domain alternative (See People ex rel. PUC v City of Fresno (1967) 254 CA 2d 76; petition for hearing denied by Supreme Court 11/22/67). Furthermore, after transfer and sale to a district, the customers transferred must continue to receive service and rates that are "fair, reasonable, just, and nondiscriminatory." (See Hansen v City of San Buenaventura (1985) 213 C[al.] Rptr. 859.)
In re Park Water (D.88-10-030), 29 CPUC2d 415.2 Thus, for example, the Commission has found the standard to have been met upon a finding that the public entity will operate and maintain the system with the lowest rates possible consistent with providing reliable service to the community. (D.03-08-055; D.02-10-050.)
2 California Water Service Company submits that this language (as it is similarly stated in Bidwell Water Company, Inc. (D.02-10-003), mimeo. at p. 3) should not govern the standard of review because Hansen v. City of San Buenaventura was superseded by grant of review and then reversed by Hansen v. City of San Buenaventura, 42 Cal.3d 1172, 233 Cal. Rptr. 22 (1986). However, the particular language cited by the Commission is itself based on decisions that are still good law, and the premise that rates established by a public entity are presumed reasonable, fair and lawful is reiterated in the later, California Supreme Court decision reversing the earlier decision. (42 Cal.3d at 26.)
