D. Legal Standards Under Pub. Util.
Code § 854
As we noted in D.03-02-071, our earlier decision regarding a change of control of LGS, § 854 of the Public Utilities Code requires authorization by the Commission before a company may "merge, acquire, or control . . . any public utility organized and doing business in this state . . . ." The purpose of this and related statutes 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 approving the transfer) as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)
We also pointed out in D.03-02-071 that § 854 does not define the term "control," and that the Commission has not promulgated any regulations defining this term in connection with a percentage of stock ownership. As a result of this, some of our decisions have held that where there is a change in the form of ownership but no change in the actual control of a public utility, § 854 is inapplicable and the application should be dismissed.5 However, we also noted in D.03-02-071 that in "diverse fact situations where a public utility owner has either transferred or proposed to transfer a 50% interest in the utility, or has acquired a 50% interest in another utility, the Commission has asserted jurisdiction to review the transaction under § 854 and has approved or disapproved the transfer."6 (Mimeo. at 11.)
5 See Crico Communications, D.92-05-006, 1992 Cal.PUC LEXIS 487 (dismissal appropriate because Pub. Util. Code § 854 inapplicable to public stock offering where original owners retain 20% of utility and no other person or entity acquires control); Paging Network of San Francisco, D.93-11-063, 52 CPUC2d 127, 1993 Cal. PUC LEXIS 794 (dismissal appropriate because Pub. Util. Code § 854 inapplicable to distribution of shares of utility's parent corporation from a limited partnership investment fund directly to its partners where no effect on actual or working control of utility's service or operations).
6 As examples of such rulings, D.03-02-071 cited Application of PacTel Cellular for control of Bay Area Cellular Telephone through Bay Area Cellular Telephone Company, D.87-09-028, 25 CPUC2d 350, 1987 Cal. PUC LEXIS 197 (definitions of term "control" in the Corporations Code are instructive for purposes of Pub. Util. Code § 854); Gale v. Teel, D.87478, 81 CPUC 817, 1977 Cal. PUC LEXIS 152 (public policy implication of transfer warrants review of acquisition of 50% interest in public utility for purposes of Pub. Util. Code § 854); Dana Point Marin Telephone Co., D.83493, 77 CPUC 347, 1974 Cal. PUC LEXIS 829 (Pub. Util. Code § 854 requires Commission authorization of relinquishment of 100% ownership for 50% ownership).
