Limited Use Transfers

Pub. Util. Code § 851 requires Commission authorization before a utility may lease or transfer utility property. The purpose of the section is to enable the Commission, before any transfer of public utility property is consummated, to review the situation and to take such action as a condition of the transfer as the public interest may require.⁵

Here, Pacific has already made all of the leases and transfers for which approval is sought in this application. It has done so through short-term license agreements, relying on this Commission's G.O. 69-C,⁶ which states in pertinent part:

[A]ll public utilities covered by the provisions of Section 851 of the Public Utilities Code of this State...are hereby authorized to grant easements, licenses or permits for use or occupancy on, over or under any portion of the operative property of said utilities for rights of way, private roads, agricultural purposes, or other limited uses of their several properties without further special authorization by this Commission whenever it shall appear that the exercise of such easement, license or permit will not interfere with the operations, practices and service of such public utilities to and for their several patrons or consumers.

Pacific's witness explained at hearing that review of this Section 851 application was taking longer than anticipated, and the company decided to proceed on the basis of revocable licenses in order to avoid "a fairly significant cost" of not proceeding by January 1, 2000.⁷ Asked why the Commission could not simply dismiss this application and permit these transactions to continue under revocable licenses, Pacific's witness stated that the company seeks permanency in transferring the support functions.

On brief, only Greenlining objects to the manner in which Pacific was carrying out the requested transfers, and its complaint goes primarily to the unilateral transfer of virtually all of Pacific's billing department employees. Pacific argues that employee transfers have never been subject to Section 851 review because employees are not "property" covered by the statute. At hearing, ORA's witness saw no conflict in Pacific's proceeding under G.O. 69-C so long as the leases and transfers were the subject of revocable licenses. TURN's witness urged the Commission not to forgo Section 851 review in light of the revocable licenses, since Section 851 permits imposition of conditions on the transfers.

Nonetheless, we are troubled that so massive a transfer of employees, space and assets (roughly 10% of Pacific's total workforce and close to $1 billion in assets) took place prior to Commission review. G.O. 69-C contemplates "limited uses" of utility property without advance authorization. While, arguably, each license granted here is limited and revocable, the transactions under G.O. 69-C in total constitute a transfer far more expansive than we have seen in the past. Most Commission cases involving G.O. 69-C involve more limited transactions.⁸

Pacific may have had its own misgivings about the use of G.O. 69-C for so substantial a transfer, since it did not publicly acknowledge that the transfer had already taken place until its witnesses were cross-examined at the evidentiary hearing in March 2000.⁹ Pacific's application, last amended on February 3, 2000, continues to address the transfer of assets and the lease of space to an unregulated affiliate as something that will occur after Commission review. Technically, of course, that is correct, since formal approval of a "permanent" transfer will not take place until this Section 851 application is decided. As a practical matter, however, as Greenlining puts it, the application "seems now to be asking for some ex post facto benediction" of what already has been done.¹⁰

With that said, it is clear that all parties except Greenlining appear to concede that Pacific has acted within permissible boundaries in carrying out its Project 2000 transfers and leases. Greenlining's assertion that the employee transfers may not comply with Commission reporting rules is unpersuasive, since in fact the rules in question require an annual report which Pacific states that it will make in a timely manner. Our own research discloses no specific dollar limitation on the use that a utility may make of G.O. 69-C, so long as the use is arguably limited and revocable. We conclude that no remedial action related to the use of G.O. 69-C is warranted on this record. We place Pacific on notice, however, that so expansive a use of the general order procedure is questionable and may prompt us to reexamine and restrict such use in the future.¹¹

⁵ Re Pacific Bell, D.98-07-006, slip op. at 5, citing San Jose Water Co. (1916) 10 CRC 56.

⁶ Easements on Property of Public Utilities Resolution No. L-230, adopted July 10, 1985; effective July 10, 1985.

⁷ Transcript, at 171.

⁸ See, e.g., In re Pacific Gas and Electric Company, D.00-01-014, 2000 Cal. PUC LEXIS 41 (January 6, 2000) (use of transmission poles for fiber optic equipment); In re Pacific Gas and Electric Company, D.99-04-014, Cal. PUC LEXIS 229 (April 1, 1999) (shared use of underground conduit); In re Southern California Edison Company (1996) 69 CPUC2d 30 (shared use of fiber optic cables.)

⁹ Transcript, at 169-71.

¹⁰ Concurrent Post-Hearing Brief of Greenlining at 1.

¹¹ Grenlining cites D.93-02-019, Re Reporting Requirements for Electric, Gas and Telephone Utilities Regarding Their Affiliate Transactions (1993) 48 CPUC2d 163, App. A. Pacific makes annual reports each May 1 on reassignment of employees to affiliated entities during the prior calendar year pursuant to D.93-02-019 and Rulemaking (R.) 92-08-008. Reports on the transfers here will be due on May 1, 2001.