816-830

PUBLIC UTILITIES CODE
SECTION 816-830




816.  The power of public utilities to issue stocks and stock
certificates or other evidence of interest or ownership and bonds,
notes, and other evidences of indebtedness and to create liens on
their property situated within this State is a special privilege, the
right of supervision, regulation, restriction, and control of which
is vested in the State, and such power shall be exercised as provided
by law under such rules as the commission prescribes.



816.5.  Nothing in this article or in Article 6 (commencing with
Section 851) requires a common carrier by railroad subject to the
Interstate Commerce Act (49 U.S.C. Sec. 10101 et seq.) or passenger
stage corporation to secure from the commission authority to execute
any conditional sales contract for the purchase of motor vehicle or
railroad equipment or any note or chattel mortgage on that equipment
securing the payment of all, or any part, of the purchase price.



817.  A public utility may issue stocks and stock certificates or
other evidence of interest or ownership, and bonds, notes, and other
evidences of indebtedness payable at periods of more than 12 months
after the date thereof, for any one or more of the following purposes
and no others:
   (a) For the acquisition of property.
   (b) For the construction, completion, extension, or improvement of
its facilities.
   (c) For the improvement or maintenance of its service.
   (d) For the discharge or lawful refunding of its obligations.
   (e) For the financing of the acquisition and installation of
electrical and plumbing appliances and agricultural equipment which
are sold by other than a public utility, for use within the service
area of the public utility.
   (f) For the reorganization or readjustment of its indebtedness or
capitalization upon a merger, consolidation, or other reorganization.
   (g) For the retirement of or in exchange for one or more
outstanding stocks or stock certificates or other evidence of
interest or ownership of such public utility, or bonds, notes, or
other evidence of indebtedness of such public utility, with or
without the payment of cash.
   (h) For the reimbursement of moneys actually expended from income
or from any other money in the treasury of the public utility not
secured by or obtained from the issue of stocks or stock certificates
or other evidence of interest or ownership, or bonds, notes, or
other evidences of indebtedness of the public utility, for any of the
aforesaid purposes except maintenance of service and replacements,
in cases where the applicant has kept its accounts and vouchers for
such expenditures in such manner as to enable the commission to
ascertain the amount of money so expended and the purposes for which
such expenditure was made.


818.  No public utility may issue stocks and stock certificates, or
other evidence of interest or ownership, or bonds, notes, or other
evidences of indebtedness payable at periods of more than 12 months
after the date thereof unless, in addition to the other requirements
of law it shall first have secured from the commission an order
authorizing the issue, stating the amount thereof and the purposes to
which the issue or the proceeds thereof are to be applied, and that,
in the opinion of the commission, the money, property, or labor to
be procured or paid for by the issue is reasonably required for the
purposes specified in the order, and that, except as otherwise
permitted in the order in the case of bonds, notes, or other
evidences of indebtedness, such purposes are not, in whole or in
part, reasonably chargeable to operating expenses or to income.



819.  To enable it to determine whether it will issue the order, the
commission may hold a hearing and may make such additional inquiry
or investigation, examine such witnesses, books, papers, documents,
and contracts, and require the filing of such data as it deems of
assistance. The commission may by its order grant permission for the
issue of such stocks or stock certificates or other evidence of
interest or ownership, or bonds, notes, or other evidences of
indebtedness in the amount applied for, or in a lesser amount, or
refuse such permission, or grant it subject to such conditions as it
deems reasonable and necessary. The commission may authorize issues
of bonds, notes, or other evidences of indebtedness, less than,
equivalent to or greater than the authorized or subscribed capital
stock of a public utility corporation.



820.  The commission shall have no power to authorize the
capitalization of the right to be a corporation, or the
capitalization of any franchise or permit, or the right to own,
operate, or enjoy any such franchise or permit, in excess of the
amount (exclusive of any tax or annual charge) actually paid to the
State or to a political subdivision thereof as the consideration for
the grant of such franchise, permit, or right. No contract for
consolidation or lease shall be capitalized, nor shall any public
utility issue any bonds, notes, or other evidences of indebtedness
against or as a lien upon any contract for consolidation or merger.




821.  Subject to the provisions of this article, any public utility
may issue bonds, or other interest bearing securities maturing at
periods of more than 12 months after the date thereof, and may issue
one or more classes of preferred stock which may have attached
thereto warrants entitling the holder to subscribe for shares of
common stock in such amounts, at such future dates, at such prices
and on such terms and conditions as may be specified in the warrants.
Such bonds, or other interest bearing obligations and such preferred
stock also may be issued with provision therein that they may be
converted into shares of common stock in such amounts, at such future
dates, at such prices, and on such terms and conditions as may be
specified therein.



822.  Pursuant to this part the commission may, upon an application
for an order to issue stocks, bonds, debentures, notes, or other
securities or to deliver other consideration in exchange for one or
more bona fide outstanding stocks, bonds, debentures, notes, or other
securities, claims or property interests, or partly in such exchange
and partly for cash, approve the terms and conditions of such
issuance and exchange or such delivery and exchange and the fairness
of such terms and conditions, after a hearing upon the fairness
thereof. All persons to whom it is proposed to issue stocks, bonds,
debentures, notes or other securities or to deliver such other
consideration in such exchange may appear at such hearing.




823.  (a) No public utility shall, without the consent of the
commission, apply any part of the issue of any stock or stock
certificate or other evidence of interest or ownership, or bond,
note, or other evidence of indebtedness, or any proceeds thereof, to
any purpose not specified in the commission's order, or to any
purpose specified in the order in excess of the amount authorized for
such purpose, or issue or dispose thereof on any terms less
favorable than those specified in the order, or a modification
thereof.
   (b) A public utility may issue notes, for proper purposes and not
in violation of any provision of law, payable at periods of not more
than 12 months after the date of issuance of the notes without the
consent of the commission.
   (c) Notwithstanding the provisions of subdivision (b), no public
utility as defined in Section 201(e) of the Federal Power Act (49
Stat. 847, 16 U.S.C. 824) shall, without the consent of the
commission, issue notes payable at periods of not more than 12 months
after the date of issuance of the notes if such notes and all other
notes payable at periods of not more than 12 months after the date of
issuance of such notes on which such public utility is primarily or
secondarily liable would exceed in aggregate amount 5 percent of the
par value of the other securities then outstanding. In the case of
securities having no par value, the par value for the purposes of
this subsection shall be the fair market value as of the date of
issue.
   (d) No note payable at a period of not more than 12 months after
the date of issuance of such note shall, in whole or in part, be
refunded by any issue of stocks or stock certificates or other
evidence of interest or ownership, or of bonds, notes of any term or
character, or any other evidence of indebtedness, without the consent
of the commission.



824.  The commission may require public utilities to account for the
disposition of the proceeds of all sales of stocks and stock
certificates or other evidence of interest or ownership, and bonds,
notes, and other evidences of indebtedness, in such form and detail
as it deems advisable, and may establish such rules as it deems
reasonable and necessary to insure the disposition of such proceeds
for the purposes specified in its order.



825.  All stock and every stock certificate or other evidence of
interest or ownership, and every bond, note, or other evidence of
indebtedness, of a public utility, issued without an order of the
commission authorizing the issue thereof then in effect or not
conforming in its provisions to any of the provisions which it is
required by the order of authorization to contain, is void. No
failure in any other respect to comply with the terms or conditions
of the order of authorization of the commission shall render void any
stock or stock certificate or other evidence of interest or
ownership, or any bond, note, or other evidence of indebtedness,
except as to a corporation or person taking it otherwise than in good
faith and for value and without actual notice.



826.  Every public utility which, directly or indirectly issues or
causes to be issued, any stock or stock certificate or other evidence
of interest or ownership, or bond, note, or other evidence of
indebtedness, in nonconformity with the order of the commission
authorizing the issue, or contrary to the provisions of this part, or
of the Constitution of this State, or which applies any part of the
proceeds from the sale thereof, to any purpose other than the purpose
or purposes specified in the commission's order or in an amount in
excess of the amount authorized for a specified purpose in the order,
is subject to a penalty of not less than five hundred dollars
($500), nor more than twenty thousand dollars ($20,000) for each
offense.



827.  Every officer, agent, or employee of a public utility, and
every other person is guilty of a felony who does any of the
following acts:
   (a) Knowingly authorizes, directs, aids in, issues, or executes,
or causes to be issued or executed, any stock or stock certificate or
other evidence of interest or ownership, or bond, note, or other
evidence of indebtedness, in nonconformity with the order of the
commission authorizing the issue, or contrary to the provisions of
this part or of the Constitution of this State.
   (b) Knowingly makes any false statement or representation in any
proceeding before the commission or with knowledge of its falsity
files or causes to be filed with the commission any false statement
or representation which tends in any way to influence the commission
to make an order authorizing the issue of any stock or stock
certificate or other evidence of interest or ownership, or any bond,
note, or other evidence of indebtedness, or which results in
procuring from the commission the making of any such order.
   (c) With knowledge that any false statement or representation was
made to the commission, in any proceeding, tending in any way to
influence the commission to make such order, issues or executes or
negotiates, or causes to be issued, executed, or negotiated any such
stock or stock certificate or other evidence of interest or
ownership, or bond, note, or other evidence of indebtedness.
   (d) Directly or indirectly, knowingly applies, or causes or
assists to be applied any part of the proceeds from the sale of any
stock or stock certificate or other evidence of interest or
ownership, or bond, note, or other evidence of indebtedness, to any
purpose not specified in the commission's order, or to any purpose
specified in the commission's order in excess of the amount
authorized for such purpose.
   (e) With knowledge that any stock or stock certificate or other
evidence of interest or ownership, or bond, note, or other evidence
of indebtedness, has been issued or executed in violation of any of
the provisions of this part, negotiates, or causes the same to be
negotiated.


828.  No provision of this part, and no act done or performed under
or in connection therewith, shall obligate the State to pay or
guarantee, in any manner whatsoever, any stock or stock certificate
or other evidence of interest or ownership, or bond, note, or other
evidence of indebtedness, authorized, issued, or executed under the
provisions of this part.



829.  (a) This article shall not apply to any person or corporation
which transacts no business subject to regulation under this part,
except performing services or delivering commodities for or to public
utilities or municipal or other public corporations primarily for
resale or use in serving the public or any portion thereof. This
article shall apply to any public utility if the commission finds, in
a proceeding to which the public utility is or may become a party,
that the application of this article is required by the public
interest.
   (b) (1) Except for Section 828, a telephone corporation that is
not regulated under a rate-of-return regulatory structure is exempt
from this article. This subdivision does not exempt a telephone
corporation that is also an electrical corporation or a gas
corporation, unless the commission determines the telephone
corporation is exempt pursuant to subdivision (c). As used in this
subdivision, a "rate-of-return regulatory structure" means a system
under which the rates and charges of the telephone corporation are
limited by a maximum permissible price that may be charged for a
specific service. Telephone corporations regulated by a framework
under which they may exercise pricing flexibility for all or most of
the services offered are not regulated under a rate-of-return
regulatory structure.
   (2) Notwithstanding paragraph (1), the commission may impose any
requirement of this article on a telephone corporation if the
commission finds, in a proceeding in which the telephone corporation
is or may become a party, that the application of any provision of
this article is required by the public interest.
   (c) The commission may from time to time by order or rule, and
subject to such terms and conditions as may be prescribed therein,
exempt any public utility or class of public utility from this
article if it finds that the application thereof to such public
utility or class of public utility is not necessary in the public
interest.



830.  No public utility shall assume any obligation or liability as
guarantor, endorser, surety, or otherwise in respect of the
securities of any other person, firm, or corporation, when such
securities are payable at periods of more than 12 months after the
date thereof, without having first secured from the commission an
order authorizing it so to do. Every such assumption made other than
in accordance with the order of the commission authorizing it is
void.