USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Timothy Lee, Buchalter LLP
The ability to obtain an amendment or relaxation of a term or condition of approval depends on the approv- ing entity (see 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities ). 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities In California, a proponent for the construction and operation of electric distribution facilities may exercise eminent domain powers to obtain surface rights for a project. However, these powers are not automatic. Pursuant to California Public Utilities Code Section 610, IOUs must seek CPUC approval to exercise the power of eminent domain to acquire property neces- sary to carry out their functions. The IOU must dem- onstrate that the taking of the property is: • for a public use; • necessary; and • in compliance with relevant CPUC approvals. Further, the IOUs must comply with California eminent domain law, pursuant to the Code of Civil Procedure Sections 1230.010 et seq, which requires: • providing adequate notice; • making a good faith offer of compensation; and • following court proceedings if the property owners do not agree to sell. POUs generally have eminent domain authority under their own charters or statutes. Private developers or joint power authorities must either act under contract with a utility or agency that has eminent domain authority, or must receive special authorisation through legislation, which is rare. 5.5 Monopoly Rights for Electricity Distribution Entities In California, electric distribution entities generally operate as regulated monopolies with exclusive rights within defined service territories. The legal framework differs for IOUs and POUs, but in both cases the deliv- ery of electricity over local distribution infrastructure is
typically performed by a single utility provider within a given area. For IOUs, exclusive service rights are established through a combination of CPUC authorisation and local franchise rights. A CPCN effectively defines the utility’s authorised service area. An electrical corporation must obtain a CPCN from the CPUC before beginning the construc- tion of a new distribution line, plant or system, or any extension thereof. Although the CPUC regulates the utility’s operations and service obligations, the right to place poles, wires, and other distribution facilities in public streets and rights of way generally depends on local franchise authority. For POUs, service territory rights generally arise from local governmental authority rather than CPUC cer- tification. While the CPUC does not regulate POU rates, it does have safety jurisdiction over certain POU operations. Notably, though the distribution of electricity remains a largely monopolistic function, California has intro- duced competition in other segments of the electricity market, such as generation and retail electricity sup- ply (through mechanisms including community choice aggregation and limited direct access). 5.6 Electricity Distribution System Charges and Terms of Service In California, the CPUC is responsible for oversee- ing and establishing the IOUs’ electricity distribution charges and terms of service. POUs establish their charges and terms through their respective govern- ing bodies. Regulatory Principles and Process Under California Public Utilities Code Section 451, the CPUC must ensure that all utility charges and rules pertaining to utility service are “just and reasonable”. This includes ensuring adequate, efficient and safe service. Section 453 requires that a public utility’s rates and terms of service must also be non-discrim- inatory, meaning customers receive service under similar terms and conditions without undue preference or prejudice.
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