Discussion

Pub. Util. Code § 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 public utility property is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)

In a situation where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, we will apply the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired. Since McLeod possesses a CPCN to operate as a limited facilities-based and resale provider of local exchange and interexchange telecommunications services within California, we will apply the requirements for such authority to FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII.

The Commission has established two major criteria for determining whether a CPCN should be granted. An applicant who desires to operate as a facilities-based and resale provider of local exchange and interexchange service must demonstrate that it has a minimum of $100,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs. In addition, the applicant is required to make a reasonable showing of technical expertise in telecommunications or a related business.

FL-V, FLDE-VI, and FLDE-VII provided audited financial statements that demonstrate that they have sufficient resources to meet our financial requirements. Since McLeod will continue to operate under the same management, we find that our requirement for technical expertise is satisfied.

The transaction will improve McLeod's access to capital from Parent. In addition, it will be transparent to customers. Therefore, the proposed transaction is not adverse to the public interest.

As discussed above, FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII have satisfied our financial and experience requirements, and the proposed transaction is not adverse to the public interest. Therefore, we will grant the application.