Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, and authorizes the commission to fix just and reasonable rates. Under that authority, the commission has adopted decisions adopting an incentive-based regulatory framework for telephone corporations, called the new regulatory framework.

The Public Utilities Act generally exempts from provisions of that act governing stocks and security transactions any person or corporation that transacts no business subject to regulation under the act, 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. Notwithstanding that general exemption, those provisions of the act governing stocks and security transactions apply to any public utility if the commission finds that the application of those provisions is required by the public interest. The act authorizes the commission to exempt any public utility or class of public utility from those stock and security transaction provisions if it finds that their application is not necessary in the public interest.

This bill, except as specified, would exempt from those stock and security transaction provisions, a telephone corporation that is regulated under a new regulatory framework that utilizes a price-cap index, price adjustment formula, or substantially similar mechanism established by the commission, unless the corporation secures the financing by pledging a plant or assets. The bill would authorize the commission to reimpose the stock and security transaction provisions if the commission finds, after an evidentiary hearing, that imposition is required in the public interest.