The California Public Utilities Commission (CPUC) Thursday unanimously agreed to oppose a November statewide ballot measure (Proposition 90) to curb eminent domain seizures of private property because it could cost utilities and their customers tens of millions of dollars. New electric transmission line projects, and other infrastructure upgrades, could be delayed or halted, the five-member CPUC said.

Prop 90 would amend the California constitution to limit government authority to take ownership of private property by using the power of eminent domain, the CPUC legal analysis concluded. “It would also expand the circumstances in which government must compensate [nearby] property owners for reduction in property value.” The CPUC falls within Prop 90’s definition of “government.”

CPUC President Michael Peevey called Prop 90 “unnecessary,” and if enacted, “it will almost certainly result in real harm to ratepayers of investor-owned utilities.”

The state measure is a reaction to a recent U.S. Supreme Court decision upholding a Connecticut city’s use of eminent domain to acquire private property for economic development purposes (see Daily GPI, Sept. 11). Organized opposition to the ballot measure describes Prop 90 as one that is “disguised as an eminent domain” proposition, but will actually result in billions of dollars of higher taxes for Californians.

Utilities generally have broad eminent domain powers, although the California law is “quite different” than what was at stake in the Connecticut case, CPUC Chief Counsel Randy Wu said. In California, eminent domain can be used for economic development in a blighted area, but not in a more general way as it was in Connecticut, he said.

The CPUC legal division’s analysis concluded that Prop 90 has “potential significant impacts on the cost of utility infrastructure,” Wu told the five-member CPUC, which agreed to wait until its Sept. 21 meeting to vote on whether to take an active position opposing the measure and encouraging the private-sector utilities to do the same. The ballot measure is “complex and not altogether clear what it intends to accomplish,” he said.

Among the issues that Prop 90 raises is the question of how the property being taken is valued, and the use of other criteria than the common “fair market value” test. Thus, the CPUC’s analysis concluded the cost of acquiring property through eminent domain could go up for utilities. There also may be related costs of damages that would be claimed by adjoining private property owners if they can prove “substantial economic harm,” Wu said.

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