Relates to the transfer of franchises or stocks by certain public service corporations

BILL NUMBER:A4904

Title of bill

An act to amend the public service law, in relation to transfer of franchises or stocks

Purpose of the bill

This bill would expand the types of business entities that must obtain Public Service Commission (PSC) approval for the transfer of franchises or stocks of electric, gas, water, steam and telephone corporations.

Summary of provisions

Sections 1, 2, 3 and 4 of this bill amend Public Service Law (PSL) §§ 70 (gas corporations and electric corporations), 83 (steam corporations), 89-h (water corporations) and 100 (telephone corporations), respective- ly, to expand the PSC's jurisdiction over transfers of franchises or stocks to include companies, associations, partnerships and other busi- ness entities that propose to acquire such franchises or stocks.

Section 5 of this bill provides for an immediate effective date.

Existing law

PSL §§70, 83, 89-h and 100 establish requirements for the transfer of franchises and stocks of electric, gas, steam, water or telephone corpo- rations, respectively. Such provisions generally prohibit the transfer or lease of franchises or stocks to stock corporations without PSC review and approval.

Prior legislative history

This is a new proposal.

Statement in support

The PSL provides that the PSC must approve any transfer of franchises or stock of electric, gas, steam, water or telephone corporations to stock corporations. However, entities formed as partnerships, limited liabil- ity companies and associations, as well as other business entities that are not stock corporations, do not fall within the purview of the franchise/stock acquisition provisions of the PSL. Therefore, the PSC does not have jurisdiction over acquisitions of stock by and transfers of franchises to such entities as they are not "stock corporations."

This lack of jurisdiction could result in a transfer of control of a utility company, and possibly detrimental consequences to the utility and its customers, particularly where the interests of shareholders, partners or members might not coincide with those of the utility and utility customers. The reliability of the various utility systems is integral to the personal and economic needs of the residential and commercial utility customers in this State. It is essential that the PSC

continue to review proposals to transfer stock or franchises to ensure that purchasers have the experience and ability to maintain utility systems in a safe and reliable manner and provide service at just and reasonable rates.

This bill closes this loophole by providing PSC with jurisdiction to review and determine whether stock acquisitions over a ten per centum threshold by all business entities should be approved. This expanded jurisdiction is thus consistent with PSC's mandate to ensure that such transfer is in the public interest and that safe and reliable utility service is provided at just and reasonable rates.

Budget implications

None.

Effective date

This bill takes effect upon enactment.