5. Discussion

Pub. Util. Code § 851 provides that no public utility may transfer its property that is necessary or useful in performing its duties to the public without first having secured the Commission's authorization. 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 these 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 an action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)

The proposed stock purchase and transfer of control will enable the three acquired entities, Excel, eMeritus, and LDWC to continue providing service to their California customers under the same terms and conditions that are currently in effect. VarTec has the financial qualifications and managerial background in telecommunications necessary to operate Excel, eMeritus, and LDWC.

The only remaining issue in this application is CSD's protest. Although CSD filed its protest in December 2001, CSD filed a motion on March 8, 2002 to withdraw its protest conditioned on approval of a settlement with VarTec in the CPCN application. In a companion order issued today, we have approved CSD's settlement with VarTec. Therefore, we herein grant CSD's request to withdraw its protest of this application.

The settlement of the CPCN application that we approve in a companion order today resolves the dispute between CSD and VarTec over whether VarTec should be granted a CPCN to serve the local exchange market. Given that

VarTec may now serve the competitive local exchange market along with its existing authority to serve the interLATA and intraLATA market, we see no reason to prevent VarTec from acquiring the three carriers involved in this transfer of control, two of whom are competitive local carriers in addition to being long distance carriers. Therefore, we find the Stock Purchase Agreement is not adverse to the public interest and we will approve it.

Finally, we will deny Applicants' March 12, 2002 motion requesting that we reverse the scoping ruling in this matter and issue an order in advance of the resolution of the CPCN application. We see no reason to reverse the determinations in the scoping ruling given the timely resolution of the CPCN application and our ability to act on this transfer of control application on the same agenda. We note that CSD's request to withdraw its protest was not filed until March 8, 2002 and today's action is occurring within a reasonable time frame from that request.

In Resolution ALJ 176-3075, dated November 8, 2001, the Commission preliminarily categorized this proceeding as ratesetting, and preliminarily determined that hearings were not necessary. Based on the record, we conclude that a public hearing is not necessary, nor is it necessary to alter the preliminary determinations.

The draft decision of the Administrative Law Judge in this matter was mailed to the parties in accordance with Section 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. As allowed by Section 311(g)(2), the parties agreed to a shortened comment period of one day. There were no comments on the draft decision.