VIII. Assignment of Proceeding
John A. Bohn is the assigned Commissioner and Thomas R. Pulsifer is the assigned Administrative Law Judge in this proceeding.
1. GSWC, a California corporation, is a public utility subject to the jurisdiction of this Commission.
2. GSWC projects a need for external funds for the purposes authorized in Section 817, as set forth in the Application.
3. The proposed issue of Debt Securities and Equity Securities are for proper purposes and not adverse to the public interest.
4. The use of debt enhancement features and interest rate management techniques in appropriate circumstances is not adverse to the public interest.
5. Authorizing GSWC to determine the amount, timing, terms and conditions, and method of offering its proposed financing would not be adverse to the public interest.
6. Public Utilities Code Section 823(d) provides that no note payable at a period of not more than 12 months after the date of issuance of such note shall be refunded, in whole or in part, by any issue of stocks or stock certificates or other evidence of interest or ownership, or of bonds, notes of any term or character, or any other evidence of indebtedness, without the consent of the Commission.
7. As a relatively small and infrequent participant in the capital and debt markets, the debt offerings of GSWC require substantial marketing efforts to potential investors.
8. If a competitive bidding process were utilized by GSWC, bidding underwriters would be unable to obtain adequate market intelligence, and as a result, underwriters would be forced to bid up their price for GSWC debt securities above levels available through a negotiated offering.
9. An exemption from the Commission's Competitive Bidding Rules would enable GSWC to obtain lower cost financing through the negotiated offering process.
10. GSWC's request for exemption from the Commission's Competitive Bidding Rule is reasonable.
11. Granting GSWC's request for exemption from the Commission's Competitive Bidding Rule with respect to issuance of its New Securities would not be adverse to the public interest.
12. The Commission does not by this decision determine that the construction budget, cash requirements forecast, and capital ratios presented in the Application are necessary or reasonable for ratemaking purposes.
13. Notice of the filing of the Application appeared on the Commission's Daily Calendar of October 27, 2006, and no protests have been received. There is no known opposition to the Application and no reason to delay granting the authority requested.
1. A public hearing is not necessary.
2. The Application should be granted to the extent set forth in the order, which follows.
3. The proposed issue of Debt and Equity Securities, including features to enhance the terms and conditions of the offerings, is for lawful purposes.
4. The following order should be effective immediately.
IT IS ORDERED that:
1. On or after the effective date of this order, Golden State Water Company (GSWC), upon terms and conditions substantially consistent with those set forth or contemplated in Application 06-10-029 (Application) is authorized to:
a. issue, sell and deliver by public offering or private placement securities not exceeding $200,000,000 in aggregate offering amount, said securities consisting of, but not limited to, (i) common shares and preferred shares (New Equity Securities), and (ii) bonds, debentures, medium-term notes, loans and tax exempt debt (New Debt Securities) on terms and conditions in accordance with its Application (collectively, the New Securities). The authorization to issue preferred shares is predicated on the requirement that prior to issuing such shares, GSWC shall amend its Articles of Incorporation to permit issuance thereof, and submit the amended articles to the Commission's Water Division Director;
b. use the net proceeds to be received from the New Securities for the purposes permitted under Section 817 of Public Utilities Code, including (i) retirement and discharge of all or a portion of its then-outstanding short-term debt issued for temporary financing of additions to GSWC's utility plant, (ii) reimbursement of GSWC for capital expenditures and for the acquisition of properties for utility purposes and (iii) refund of existing long-term debt obligations; and
c. execute and deliver one or more indentures, supplemental indentures, or board resolutions and/or loan, credit, or note purchase agreements or other agreements; in connection with any issue of Debt Securities, and to assign, mortgage or encumber utility property in connection with the issuance and sale of Debt Securities.
2. GSWC is exempt from the Commission's Competitive Bidding Rule in connection with GSWC's issuance of any and all of the New Securities authorized in this order.
3. GSWC is authorized to utilize the interest rate management techniques and debt securities features to enhance its New Debt Securities as proposed with this Application.
4. The instruments to manage and enhance the Debt Securities described in the Application shall not be counted against GSWC's authorized amount of New Securities since these instruments would not affect the dollar amount of the underlying securities issued; GSWC shall maintain and provide within 30 days from request by the Commission any or all of the following:
a. The price, interest rate and other terms pertaining to the issuance of Debt Securities.
b. Copies of the purchase and underwriting agreements and the final prospectus pertaining to the Common Shares offering.
c. Copies of the Indentures and/or Supplemental Indentures setting forth, among other things, the aggregate principal amount, interest rate, conversion factors, redemption and sinking fund requirements and the maturity date of the series of the debentures.
d. Copies of the agreements setting forth, among other things, the aggregate principal amount, interest rate, final maturity date and other items of series of the notes.
5. The authority granted in this order shall become effective upon payment of fees of $93,500 for New Debt Securities and for New Equity Securities as prescribed by Public Utilities Code Sections 1904(b) and 1904.1. Unless additional fees are paid, the authority granted by this decision shall be limited to $113 million in new debt and $62 million in new equity for which fees have not been previously paid.
6. On or before the 25th day of each month, GSWC shall file reports required by Commission General Order 24.
7. The Application is granted as set forth above.
8. Application 06-10-029 is closed.
This order is effective today.
Dated February 15, 2007, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
Commissioners
