6. Jurisdictional Review

The joint application was filed under Pub. Util. Code § 851, which governs the sale or other disposition or encumbrance of public utility property. Southwest takes the position that § 854 of the Code (governing acquisition or control of a public utility doing business in California) does not apply since Southwest is acquiring only about 1% of Avista's assets.

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 authority 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.)

Historically, the Commission has determined the applicability of § 854 on a case-by-case basis. We believe that § 854 applies to this proceeding. While only about 1% of Avista's assets are being transferred, Southwest is taking over all of Avista's public utility operation in California. Southwest has asked for, and we will grant, the transfer of Avista's certificate of public convenience and necessity to serve the South Lake Tahoe district. While the transaction may be minimal as far as Avista's total holdings are concerned, it is a substantial transfer in California, since the entire Avista service territory in this state will be conveyed to another public utility. Since the purpose of § 854 is to enable us to review and set conditions on the transfer of public utility authority in California, the transaction here falls within the meaning of § 854(a), although § 854(b) does not apply since neither Avista nor Southwest has gross annual California revenues exceeding $500 million. (See, generally, Lodi Gas Storage (2003) Decision 03-02-071, at 10-20.)

Fortunately, in an exercise of caution, Southwest and Avista in their application have supplied sufficient documentation for our review, and for ORA's review, under both § 851 and § 854 of the Code, and both we and ORA have examined the reasonableness of this transaction under both of these statutes.