IV. Conclusion
It is undisputed that the Commission has jurisdiction over the electric utilities to impose and enforce conditions relating to the holding company structures. Likewise, it is undisputed that we have jurisdiction over the electric utilities to require them to secure the agreement of their respective holding companies in order to obtain reorganization approval. Yet the resulting agreements do not amount to an express jurisdictional grant, either from the Constitution or the Legislature, over the non-public utility holding companies. Subject matter jurisdiction cannot be created by waiver, estoppel or unclean hands based on the agreements.
We grant the subject motions for lack of jurisdiction and dismiss the holding companies from our proceeding. If necessary to enforce the agreements against the holdings companies, we herein authorize our General Counsel to file in superior court. While not conferring subject matter jurisdiction, the holding company agreements are still binding and enforceable in superior court.
Comments on Draft Alternate Decision
The draft alternate decision of Commissioner Duque in this matter was mailed in accordance with Section 311 and Rule 77.7 of the Commission's Rules of Practice and Procedure. Comments were filed on _________.
Findings of Fact
1. In 1985, SDG&E applied to the Commission to reorganize under a holding company structure. Although the Commission approved that application, subject to certain conditions imposed on the utility, SDG&E decided not to form its holding company at that time.
2. One year later, SCE applied under Section 854 to reorganize under a holding company structure. The Commission approved the application subject to certain conditions placed on the utility. SCE filed a written notice agreeing to the conditions.
3. In 1995, the Commission approved, pursuant to Section 818, SDG&E's second application to reorganize under a holding company structure. The approval was made contingent on a number of conditions, which were determined to be necessary to protect the public interest and maintain ratepayer indifference. SDG&E and its holding company's board of directors passed a resolution agreeing to those conditions, and filed it with the Commission.
4. In 1996, PG&E applied under Section 818 to reorganize under a holding company structure. The following year, SDG&E's parent holding company, Enova Corporation, applied to merge with Pacific Enterprises to form a holding company called Sempra which would own SDG&E. We approved both applications, once again subject to certain conditions intended to maintain ratepayer indifference and protect the public interest.
5. On April 3, 2001, the Commission issued an OII to investigate whether PG&E, Edison, SDG&E, and their respective holding companies violated any of the terms of the holding company agreements.
6. In response to the OII, the holding companies filed motions to dismiss for lack of subject matter jurisdiction. The holding companies, in their motions, acknowledge that the Commission had jurisdiction to impose conditions on the reorganization, including the condition that the utilities secure the agreement of their holding companies.
7. The holding companies acknowledge their obligation to uphold the agreements, but they contend that the conditions are enforceable in superior court, not in this proceeding. The holding companies claim that the Commission lacks jurisdiction over them because they are not "public utilities." The holding companies add that subject matter jurisdiction may not be created through waiver or estoppel.
Conclusions of Law
1. The Commission does not have jurisdiction over non-public utilities.
2. The holding companies do not constitute "public utilities," as defined in the California Constitution or Section 216.
3. Under Section 818 and/or Section 854, the Commission has jurisdiction to condition its approval of the holding company structure. This includes requiring the public utilities to secure the agreement of their respective holding companies to certain terms.
4. The holding companies are bound to uphold the terms of the holding company agreements.
5. The holding company agreements are enforceable against the holding companies in superior court.
6. The holding companies are not barred under Section 1731 and/or Section 1709 from collaterally attacking the subject matter jurisdiction of the Commission.
7. The subject matter jurisdiction of the Commission cannot be created by waiver, estoppel or unclean hands.
8. The holding companies object to the very subject matter jurisdiction of the Commission. They do not contend that the Commission acted in excess of its jurisdiction.
IT IS ORDERED that:
1. Respondent holding companies' motions to dismiss are GRANTED.
2. The General Counsel is authorized to file an action in superior court to the extent necessary to enforce the holding company agreements.
This order is effective today.
Dated , at San Francisco, California.
