Issue Raised by Protestants

Protestants primarily focused on the role that the Cerberus companies might have in decision-making at Valencia, but were unable to articulate any specific effect on ratepayers from the proposed transfer.

Public Citizen challenged Valencia's water management practices. The Commission, however, reviews and approves each Class A water utility's Water Management Plan as part of the utility's general rate cases. Accordingly, the Commission's authority over Valencia's water management practices will be unchanged by the transfer. Similarly, the Commission will continue to oversee Valencia's efforts to address the perchlorate pollution problem.

Public Citizen also argued that acquisition by a land development company would undermine stability and accountability for Valencia. Land development companies, however, have always owned Valencia. Newhall, a land development company, created Valencia, and in D.04-01-051, the Commission approved the acquisition of Newhall by two other, larger land development entities, Lennar and LNR. No specific untoward effect on ratepayers has been attributed to this type of ownership.

Friends and Sierra Club focused on the operating arrangements between the ownership interests. Our standards, however, require that we review effects on ratepayers. The applicants stated that day-to-day operations at Valencia would not be affected by the transaction, and that the current Newhall and Valencia management teams will remain in place. Applicants contend that ratepayers would not be affected by the transaction.

Regardless of the operating arrangements among the upstream owners of Valencia, the Commission retains complete authority over Valencia's public utility operations, including its rates, as well as substantial power to "do all things . . . which are necessary and convenient in the exercise of [its] jurisdiction." (See § 701.) Thus, while the owners may have agreements in place, the Commission has final authority over any public utility effects in California.

In addition, our conditions of approval require Valencia to (1) maintain and store its books and records in California, (2) maintain offices in its service territory, and (3) retain Valencia's high level of customer service and community involvement. These conditions apply to Valencia regardless of the country of registration of any upstream, indirect, partial owners. The applicants have represented that the entities in the ownership chain with registrations outside the United States have taken all reasonable steps to ensure that they are and will remain in full compliance with all Federal law and regulations applicable to such entities doing business and owning property in the United States.

We are satisfied that the conditions imposed on Valencia are sufficient to protect Valencia's ratepayers.