COM/LYN/mak ALTERNATE DRAFT Item H-14a

8/3/2000

Decision ALTERNATE DRAFT DECISION OF PRESIDENT LYNCH

(Mailed 7/20/00)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application for Authority to Transfer Control of StormTel, Inc., F/K/A Z-Tel, Inc., (U-5842-C) to CCC Merger Corporation.

Application 99-08-052 (Filed August 24, 1999)

OPINION

1. Summary

This decision denies the application jointly filed by StormTel, Inc. (StormTel), and CCC Merger Corporation (CCC Merger) for the retroactive approval of a merger and transfer of control. Public Utilities Code section 854 prohibits any corporation from merging with a regulated California utility such as StormTel until the merger has been approved by this Commission. Section 854 also prohibits a corporation from acquiring control of a California utility without advance approval-directly or indirectly. Similarly, section 851 prohibits a regulated California utility such as StormTel from completing a merger or surrendering control of it utility facilities without advance Commission approval. "Any merger, acquisition, or control without that prior authorization shall be void and of no effect." (Pub. Util. Code § 854.) Because these statutes explicitly prohibit CCC Merger and StromTel from merging, and renders the transactions void, we are without authority to approve this application. We also note that the statute may prohibit the ultimate result of this merger transaction: the effective acquisition of control of StormTel by CCC Merger's parent company.