4. Discussion
Section 854 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 a public utility is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require.8
The primary standard used by the Commission to determine if a transaction should be authorized under § 854 is whether the transaction will adversely affect the public interest, although the Commission may also consider if the transaction will serve the public interest.9 We conclude that the proposed transaction will not adversely affect the public interest, and that the transfer is in the public interest.
The Commission has determined the applicability of § 854 on a case-by-case basis. In certain cases, the Commission has held § 854 to be inapplicable on unique facts involving a change in the form of ownership but no change in the actual management or control of the utility.10 However, in connection with gas storage utilities, the Commission states:
Generally, we think it is prudent public policy to review and approve changes in the ownership and control of certificated natural gas storage utilities, whether those changes occur directly, or indirectly through corporate intermediaries. Such review should help to ensure the continued economic viability of such utilities and to prevent market manipulations that may affect not only their own customers but also larger ratepayer groups.11
Here, the proposed restructuring will change the legal ownership and control of GRS, but will not change the actual control of GRS. Prior to the transfer, NW Natural directly wholly owns GRS; and after the transfer, NW Natural will indirectly own GRS through NW Natural's ownership of its wholly owned subsidiaries, NW Natural Energy and NW Natural Gas Storage. However, because the change of legal control occurs indirectly through corporate intermediaries, Applicants have made a showing that the transfer of ownership and control is in the public interest.
The change in legal control and ownership will preserve the financial condition of GRS and the quality of service GRS will provide to California customers. In particular, there will be no change in the officers or operations of GRS, and there are no changes to the services to be provided by GRS or to the terms and conditions of service. GRS will provide storage services to the public at market-based rates, pursuant to the authority granted by D.09-10-035, and will continue to be bound by all of the terms and conditions of its CPCN.
The change in legal control and ownership will not negatively affect the continued economic viability of GRS, and will not negatively affect the market or ratepayer groups. Therefore, the change in legal ownership and control of GRS is not adverse to the public interest and should be approved.
Applicants must notify the Director of the Commission's Energy Division in writing of the transfer of control, as authorized herein, within ten days of consummation of the transaction. A true copy of the instrument(s) of transfer must be attached to the notification.
8 San Jose Water Co. (1916) 10 CRC 56.
9 See D.07-05-031 at 3; see also D.10-10-017 at 11.
10 See D.92-05-006, D.94-02-036.
11 D.03-02-071 at 12-14.
