Discussion
A. The Sale of the Turlock Property
Under Section 851, no public utility "shall ...sell...the whole or any part of ... property necessary or useful in the performance of its duties to the public... without having first having secured from the Commission an order authorizing it to do so."
The primary question for the Commission in Section 851 proceedings is whether the proposed transaction is in the public interest. In reviewing a Section 851 application, the Commission may "take such action, as a condition to the transfer, as the public interest may require."3 The public interest is served when utility property is used for other productive purposes without interfering with the utility's operation or affecting service to utility customers.4
We find that this transaction is in the public interest. The sale of the Turlock property will enable GVN to relocate to Patterson, which is within its service area, and will make GVN's offices and staff more accessible to customers. The move will also benefit GVN customers because the new office will include a customer service center and a convenient drive-up window for payments, and relocating GVN's offices will not interfere with GVN's operations. Under the terms of the settlement agreement, the purchase of a new Patterson office and related land will not have adverse financial effects on GVN customers in upcoming years. Therefore, we approve this transaction under Section 851.
B. The Settlement Agreement
In this case, we must also evaluate whether the settlement agreement between GVN and ORA meets Commission requirements for approval. Under Rule 51.1 (e)5, the Commission will not approve stipulations or settlements, whether contested or uncontested, unless the stipulation or settlement is:
· Consistent with the law;
· Reasonable in light of the whole record, and
· In the public interest.
We find that the settlement agreement meets the criteria for approval under Rule 51.1(e), as follows:
1. The Settlement is Consistent with Law and Prior Commission Decisions.
GVN has properly applied for our authorization to sell the Turlock property pursuant to Section 851 before carrying out the transaction, and we have found that the transaction is in the public interest pursuant to Section 851. Further, this transaction does not violate any of the conditions we imposed on our approval of the acquisition and control of GVN (then known as Evans Telephone) by Country Road and Evans Holdings in D.01-06-084.6
2. The Settlement Agreement is Reasonable in Light of the Record as a Whole.
The record shows that GVN's decision to relocate its offices to Patterson, which is within its service area and in which GVN is serving an increasing number of customers, is a reasonable and sound business decision. Although GVN will not realize a financial gain from the sale of the Turlock property, the record shows that the property was on the market for one year and GVN had received only one, lower offer for the property before agreeing to sell it to purchasers for $2.8 million. Therefore, it appears that GVN has made reasonable efforts to obtain a fair return from the sale of its Turlock property. In addition, the settlement agreement shows that GVN customers will be protected from unreasonable rate increases or adverse financial effects resulting from GVN's relocation of its offices to Patterson in upcoming years.
3. The Settlement is in the Public Interest.
The settlement agreement is in the public interest, because it will allow GVN to relocate its offices to Patterson, which will create advantages for GVN customers, while protecting GVN customers from unreasonable rate increases or other adverse financial effects resulting from the move in upcoming years.
In addition to the above criteria applicable to all settlements, we must determine whether this transaction meets Commission requirements related to all-party settlements. All-party settlements must meet the following requirements:
· The settlement must command the unanimous sponsorship of all active parties to the proceeding. Since GVN and ORA are the only active parties in this proceeding, this criterion plainly is met.
· The sponsoring parties must be fairly representative of the affected interests. GVN's proposed sale of the Turlock property will affect its customers. Since ORA represents the interests of those customers and advocates for all customers,7 and GVN represents the interests of its shareholders, this criterion is met.
· No term of the settlement may contravene statutory provisions or prior Commission decisions. As discussed above, nothing in the Settlement Agreement contravenes statutory provisions or prior Commission decisions. The settlement agreement therefore meets this criterion.
· The settlement must convey to the Commission sufficient information to permit it to discharge its future regulatory obligations with respect to the parties and their interests. The settlement agreement includes sufficient information regarding the ratemaking aspects of this transaction and is adequately clear for the parties and the Commission understand its terms and for the parties to carry out the agreement.
3 D.3320, 10 CRRC 56, 63.
4 D.00-07-010 at p. 6.
5 All Rule citations are to the Commission Rules of Practice and Procedure, unless otherwise stated.
6 In D.01-06-084, we approved the acquisition and transfer of control of then Evans Telephone (later renamed as GVN), to Country Road and Evans Holdings. However, we found that this transaction was in the public interest only so long as Evans Telephone ratepayers are insulated from the debt repayment obligations of Country Road and Evans Holdings and from the success or failure of Country Road's CLC operations, and Evans Telephone followed through with its commitment to infrastructure investment and new service offerings, while maintaining adequate service to the public. We therefore imposed the following conditions on the acquisition and transfer of control of Evans Telephone to Country Road and Evans Holdings:
· Evans Telephone (GVN) shall not sell any assets used or useful in the provision of its regulated services to satisfy debt obligations incurred by Country Road or Evans Holdings to finance the acquisition of Evans Telephone (GVN) or Evans Communications;
· Evans Telephone (GVN) shall not increase rates for its customers due to any increase in costs brought about by its acquisition by Country Road and Evans Holdings;
· Evans Telephone (GVN) shall manage its finances on a stand-alone basis, independent of Country Road, CRC Communications of California, and other affiliates.
· Country Road and Evans Holdings shall provide Evans Telephone (GVN) with sufficient equity capital to maintain a reasonable and balanced capital structure and to provide service to the public that is safe, reliable, and in compliance with all applicable statutes and Commission orders;
· Evans Telephone (GVN) shall comply with all existing and future affiliate rules and reporting requirements;
· Evans Telephone (GVN) shall not pay a dividend, loan money, or provide any other forms of capital to Country Road, Evans Holdings, or other affiliates if doing so would jeopardize the utility's ability to provide reliable service at reasonable rates;
· Country Road shall invest approximately $11 million in network infrastructure for Evans Telephone (GVN) over the next five years and increase the offering of broadband and other services to Evans Telephone (GVN) customers, over current levels, without increasing local rates.
7 Cal. Pub. Util. Code § 309.5.
