Golden State Energy Regulation And Oversight - Golden State Energy Act - CA Public Utilities

Section § 3430

This section clarifies that Golden State Energy, while operating as a nonprofit public benefit corporation, is governed by two rules. First, they're subject to both the specific rules outlined here and general nonprofit rules from the Corporations Code - but if there's a conflict, these specific rules take precedence. Second, they're treated like any other electrical or gas corporation under state regulation, unless this section says otherwise. Lastly, if there's any confusion about regulatory authority, the commission's authority will outrank the Attorney General's oversight.

(a) Except as otherwise provided in this division, the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code) shall apply to Golden State Energy, and Golden State Energy shall have all the powers of a nonprofit public benefit corporation formed pursuant to that part.

(b) Golden State Energy is an electrical corporation and gas corporation subject to all statutory provisions and the regulatory authority of the commission applicable to electrical or gas corporations, except as otherwise provided in this division.

(c) Insofar as this division is inconsistent with any other law, including the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), this division shall prevail.

(d) Insofar as there is overlap in the application of oversight authority over Golden State Energy, including between the commission and the Attorney General, the commission’s authority shall prevail.

Golden State Energy nonprofit public benefit corporation electrical corporation gas corporation regulatory authority commission authority Attorney General statutory provisions power precedence rule conflict corporations code commission oversight energy regulations nonprofit law

(Added by Stats. 2020, Ch. 27, Sec. 12. (SB 350) Effective January 1, 2021.)

Section § 3432

This section states that Golden State Energy does not have to follow certain rules that give the California Attorney General's office supervisory authority. Specifically, it lists several sections of the Corporations Code and a Government Code relating to this exemption. Additionally, Golden State Energy isn't required to provide notice to the Attorney General under the Nonprofit Public Benefit Corporation Law.

(a) Golden State Energy shall be exempt from the Attorney General’s supervisory authority described in each of the following provisions:

(1) Paragraph (5) of subdivision (a) of Section 5142 of the Corporations Code.

(2) Section 5250 of the Corporations Code.

(3) Section 5813.5 of the Corporations Code.

(4) Section 5913 of the Corporations Code.

(5) Section 6010 of the Corporations Code.

(6) Chapter 15 (commencing with Section 6510) of Part 2 of Division 2 of Title 1 of the Corporations Code.

(7) Chapter 16 (commencing with Section 6610) of Part 2 of Division 2 of Title 1 of the Corporations Code.

(8) The Supervision of Trustees and Fundraisers for Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code).

(b) Golden State Energy shall not be required to give notice to the Attorney General pursuant to the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code).

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(Added by Stats. 2020, Ch. 27, Sec. 12. (SB 350) Effective January 1, 2021.)

Section § 3433

If someone has the right to vote on major decisions like electing directors or approving mergers for Golden State Energy, that doesn't automatically make them a member under nonprofit laws unless Golden State Energy’s rules specifically say so.

A person who, pursuant to a specific provision of Golden State Energy’s articles or bylaws, has the right to vote for the election of a director, on a disposition of all or substantially all of the assets of a corporation, on a merger, or on a dissolution, shall not be a member of Golden State Energy for purposes of the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), unless the articles or bylaws designate the person as a member.

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(Added by Stats. 2020, Ch. 27, Sec. 12. (SB 350) Effective January 1, 2021.)

Section § 3434

This law permits Golden State Energy to issue debt specifically to acquire Pacific Gas and Electric Company. It allows them to promise their debt holders that revenue will be used to cover operational costs and debt obligations. Before issuing such debt, they must get permission from the commission within specific timeframes.

Golden State Energy needs to ensure they apply for a revenue plan covering all necessary expenses, such as operations, maintenance, debt service, capital projects, and financial reserves. They must submit a forecast for debt issuance and retirement with their rate case applications.

If certain bankruptcy events occur or if Pacific Gas and Electric's operations are altered significantly, the commission is required to adapt regulations to manage the transition to Golden State Energy's ownership.

After Golden State Energy acquires Pacific Gas and Electric, the pre-existing revenue requirements stay until a new rate case modifies them, which won’t happen until at least three years after the acquisition. In the meantime, they can adjust revenue requirements as needed with commission oversight.

(a) In addition to the purposes described in Section 817, Golden State Energy may issue debt to facilitate the acquisition of Pacific Gas and Electric Company consistent with this section.

(b) Golden State Energy may provide a rate covenant to all of its debt holders, including holders of debt issued to facilitate the acquisition of Pacific Gas and Electric Company.

(c) Before issuing debt pursuant to this section, Golden State Energy shall submit an application to the commission for the authority to do so pursuant to Section 818. Notwithstanding Section 819, with respect to debt issued to facilitate the acquisition of Pacific Gas and Electric Company, the commission shall issue an order resolving the application within 100 days of the application’s submittal. Notwithstanding subdivision (d) of Section 311 and any other law, with respect to debt issued to facilitate the acquisition of Pacific Gas and Electric Company, the commission may issue an order resolving the application not sooner than 15 days following the filing and service of the proposed decision by the assigned commissioner or the administrative law judge or the filing of any alternate decision pursuant to Section 311.

(d) Pursuant to the rate covenant, in each general rate case or attrition year adjustment application, Golden State Energy shall apply for a revenue requirement sufficient to do all of the following:

(1) Pay for operations and maintenance costs, and administrative and general expenses.

(2) Service debt and satisfy any debt service coverage margin associated with the rate covenant’s requirements for debt, or for the refinancing of that debt, (A) issued to fund the formation of Golden State Energy and to acquire Pacific Gas and Electric Company, (B) issued by Golden State Energy between the acquisition of Pacific Gas and Electric Company and the approval of Golden State Energy’s first general rate case application, and (C) approved by the commission pursuant to a general rate case application filed by Golden State Energy, including for compliance with the regulatory requirements described in subdivision (f).

(3) Pay the costs of commission approved capital expenditures not funded from debt.

(4) Fund and maintain necessary financial and operating reserves.

(e) Concurrent with each general rate case or attrition year application, Golden State Energy shall file with the commission a debt issuance and retirement forecast summarizing the prospective estimated necessary debt issuance and estimated debt repayment during the term of the general rate case and the additional revenue requirement necessary to meet the rate covenant’s requirements taking into account any additional debt issuance and repayment.

(f) In each Golden State Energy general rate case or attrition year adjustment, the commission shall do both of the following:

(1) Consider, modify if necessary, and adopt a revenue requirement adequate to furnish and maintain efficient, just and reasonable service, instrumentalities, equipment, and facilities to promote the safety, health, comfort, and convenience of its customers, employees, and the public. The commission shall only approve just and reasonable rates; however, in no event shall the commission set the revenue requirement below the amount necessary to satisfy the rate covenant’s requirements.

(2) Authorize Golden State Energy to issue debt as necessary to maintain and operate its assets consistent with the revenue requirement approved by the commission for the applicable period of the general rate case.

(g)

(1) No later than 45 days after (A) the earliest occurrence of a material bankruptcy event described in paragraph (2), (B) the commission determines that Pacific Gas and Electric Company’s certificate of public convenience and necessity for the provision of electrical or gas service should be revoked pursuant to any processes or procedures adopted by the commission in its Decision 20-05-053, or (C) the initiation by Pacific Gas and Electric Company of a sale process for its assets or stock, the commission shall initiate a proceeding to modify the rules and processes that apply to Pacific Gas and Electric Company as necessary to reflect the differences in Golden State Energy’s capital structure to ensure continued regulation of rates, electrical and gas safety, wildfire mitigation, climate change mitigation and adaption, public purpose programs, and any other commission requirements applicable to an electrical corporation or gas corporation.

(2) For purposes of this subdivision, each of the following is a material bankruptcy event:

(A) Termination of “Tort Claimants Committee Restructuring Support Agreement” (as amended) (Case 19-30088; Document No. 5143-1 (entered December 16, 2019)).

(B) Termination of “Noteholder Restructuring Support Agreement” (Case 19-30088; Document No. 5519-1 (entered January 27, 2020)).

(C) Denial of confirmation of “Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization Dated March 16, 2020” (Case 19-30088; Document No. 6320 (entered March 16, 2020)).

(D) Failure to confirm on or before June 30, 2020, a plan for Pacific Gas and Electric Company to exit bankruptcy.

(E) Failure of the confirmed plan for Pacific Gas and Electric Company to exit bankruptcy to become effective on or before September 30, 2020.

(F) The termination of plan proposal’s exclusivity period for any party other than the debtors.

(G) The filing of a plan for Pacific Gas and Electric Company to exit bankruptcy by any party other than the debtors.

(H) The appointment of a trustee, conversion to a case under Chapter 7 (commencing with Section 701) of the United State Bankruptcy Code (Title 11 of the United States Code), or dismissal of the bankruptcy cases.

(h)

(1) Following the closing of the acquisition of Pacific Gas and Electric Company by Golden State Energy, the general rate case revenue requirement in effect for Pacific Gas and Electric Company on the date of the closing of the acquisition shall remain in effect until the revenue requirement is modified pursuant to this section.

(2) The test year for the initial general rate case proceeding for Golden State Energy shall occur no sooner than three years from the date of the closing of the acquisition of Pacific Gas and Electric Company.

(3) During the interim period between the closing of the acquisition of Pacific Gas and Electric Company and the commission’s adoption of a new general rate case revenue requirement in a general rate case proceeding pursuant to paragraph (2), both of the following may occur.

(A) The commission shall direct Golden State Energy to file for attrition year adjustment of the existing revenue requirement.

(B) Golden State Energy may make interim modifications to the existing revenue requirement to satisfy the rate covenant, including factoring in capital expenses, debt issuances, operation and maintenance of the utility, funding reserves, and working capital needs and collection of amounts recorded in balancing accounts after the date of the acquisition of Pacific Gas and Electric by Golden State Energy. Any interim modifications to the revenue requirement shall be subject to approval of and prospective modification by the commission consistent with subdivision (f). Golden State Energy shall file an application for review of any interim modifications to its revenue requirement concurrently with the implementation of such modification.

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(Added by Stats. 2020, Ch. 27, Sec. 12. (SB 350) Effective January 1, 2021.)

Section § 3435

Before Golden State Energy can finalize its safety plans, it must follow specific guidelines set by a commission decision if it takes over Pacific Gas and Electric Company. These guidelines include creating positions like a Chief Risk Officer and a Chief Safety Officer at the executive level, appointing an independent safety advisor, naming regional officers to oversee areas they serve, and continuing safety and nuclear oversight committees.

Until Golden State Energy adopts a plan to address organizational and governing issues related to safety that is approved by the commission, upon the acquisition of Pacific Gas and Electric Company, Golden State Energy shall comply with provisions set forth in Decision 20-05-053 related to all of the following:

(a) The establishment of an executive-level Chief Risk Officer and an executive-level Chief Safety Officer.

(b) The appointment of an independent safety adviser.

(c) The appointment of regional executive officers to manage specified regions of the service territory of Golden State Energy.

(d) The continuation of the safety and nuclear oversight committees.

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(Added by Stats. 2020, Ch. 27, Sec. 12. (SB 350) Effective January 1, 2021.)