4. Jurisdiction and Scope of Proceeding

Applicants filed this application pursuant to § 854 and Rule 35 of the Commission's Rules of Practice and Procedure (Rules). Section 854 precludes any person or corporation from transferring the control of any public utility organized and doing business in the state without first securing authorization to do so from this Commission. Rule 35 sets forth the information needed to be included in an application seeking authority to merge public utility facilities.

Concerning the applicable statutes that control our investigation, no party disputes that § 854(a) applies. Parties, however, dispute what constitutes an appropriate showing of compliance with § 854(a), and whether AT&T has made such a showing.

Section 854(a) is a general statute that simply requires pre-approval of changes of control by the Commission. The primary question to be determined in a transfer of control proceeding is how the transaction affects the public interest. Questions relating to public convenience and necessity usually are not relevant to the transfer proceeding because they were determined in the proceeding in which the certificate was granted.¹⁴

Over time, the Commission has used its discretion in different ways in reviewing mergers. In D.70829, the Commission approved a transfer of control once determining that the transaction "would not be adverse to the public interest."¹⁵ Historically, the Commission has sought more broadly to determine whether a change in control is in the public interest:

"The Commission is primarily concerned with the question of whether or not the transfer of this property from one ownership to another...will serve the best interests of the public. To determine this, consideration must be given to whether or not the proposed transfer will better service conditions, effect economies in expenditures and efficiencies in operation."¹⁶

D.97-07-060 notes that over the years, our decisions have identified a number of factors that should be considered in making the determination of whether a transaction will be adverse to the public interest.¹⁷ More recently, D.00-06-079 provides an overview of these factors:

"Antitrust considerations are also relevant to our consideration of the public interest.¹⁸ In transfer applications we require an applicant to demonstrate that the proposed utility operation will be economically and financially feasible.¹⁹ Part of this analysis is a consideration of the price to be paid considering the value to both the seller and buyer.²⁰ We have also considered efficiencies and operating costs savings that should result from the proposed merger.²¹ Another factor is whether a merger will produce a broader base for financing with more resultant flexibility.²²

"We have also ascertained whether the new owner is experienced, financially responsible, and adequately equipped to continue the business sought to be acquired. ²³ We also look to the technical and managerial competence of the acquiring entity to assure customers of the continuance of the kind and quality of service they have experienced in the past.²⁴"²⁵

Subsequently, D.00-06-079 assessed the proposed transaction against the seven criteria identified in § 854(c),²⁶ and included a broad discussion of antitrust and environmental considerations.²⁷ We therefore conclude that a consideration of these factors constitutes the appropriate scope of this proceeding.

Both protests make the point that the applicants should have presented a record consistent with the criteria in § 854(c) and prior Commission decisions, but had not done so.²⁸ The Assigned Commissioner and the ALJ concurred with the protests and, as mentioned above, the Scoping Memo required the applicants to supplement their applications with submissions that explicitly use the Commission accepted criteria to show that the proposed transaction serves the public interest. In addition, the Scoping memo established a schedule that permitted parties to this proceeding to reply to the new submissions.