On April 14, 2011, the California Public Utilities Commission held its regularly scheduled agenda meeting. There was a lengthy public comment period, mostly addressing the possible relicensing of Pacific Gas and Electric Company’s Diablo Canyon nuclear power plant located within 3 miles of two earthquake faults. On the telecommunications front, the Commission had an extensive discussion regarding the need for Memorandum Accounts to track the benefits of bonus depreciation under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This and other items of interest on the Commission’s public agenda are discussed in further detail below.
REGULAR AND CONSENT AGENDA ITEMS
- Commission Adopts Resolution Establishing a Memorandum Account for Cost-Of-Service Rate Regulated Utilities Subject to Refund Under Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Excepting Small LECs
(Item 49, adopted 4-1 on regular agenda, Commissioner Simon opposed) – After circulating two revisions within 24 hours of the meeting, the Commission adopted Resolution L-411 which establishes a one-way memorandum account for cost-of-service, rate-regulated utilities other than specified small energy utilities, Class C and D water and sewer utilities, and small local exchange carriers. The memorandum account would track the impacts of the tax benefits for 100% and 50% bonus depreciation that the utilities may realize from the recently-signed federal Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “New Tax Law”). Utilities that address the New Tax Law in a general rate case with a 2011 or 2012 test year do not need to establish the memorandum account. According to the Resolution, the purpose of the memorandum account is to allow the Commission to determine at a future date whether rates should be changed, without having to be concerned with issues of retroactive ratemaking.
In its draft form, the Resolution generated several rounds of written comments and an all-party meeting in which the carriers argued that the proposal was inconsistent with future test year cost-of-service ratemaking and contrary to the public interest in promoting infrastructure development. Some also sought exemptions from the memorandum account requirement based on their size or aspects of their operations which made application of the requirement unnecessary or unwise.
At the Commission meeting, there was extensive questioning of former Administrative Law Judge Michael Galvin and Commission General Counsel Frank Lindh about the need for the Resolution, with the Commissioners actively engaged in discussion about the extent of the affected carriers’ agreement with the memorandum account process. Commissioner Simon, who ultimately voted against the item, had great concerns regarding the Resolution, questioning the need to add to add state requirements to the New Tax Laws and whether the Resolution runs contrary to the intent of the legislation to stimulate job growth. Commissioner Sandoval provided extensive comments in support of the Resolution, explaining how it balances the need to preserve the right to flow through the tax benefits to ratepayers with the need to promote job creation.
The Draft Resolution associated with this item is available here.
- CPUC Comments Authorized in FCC Proceeding Regarding Universal Service Fund and Intercarrier Compensation System
(Item 52, adopted on consent agenda) – This item authorizes the Commission’s Legal Division to provide comments to the FCC on comprehensive reform and modernization of the federal Universal Service Fund and intercarrier compensation system in order to make affordable broadband available to all Americans and accelerate the transition from circuit switched to Internet Protocol networks. The staff memorandum regarding the comments filed at the FCC by the Commission is available here.
- NobelBiz VoIP Services, Inc. Granted Certificate of Public Convenience and Necessity
(Item 18, adopted on consent agenda) – This Decision grants NobelBiz VoIP Services, Inc. (NobelBiz) a Certificate of Public Convenience and Necessity (CPCN) to provide limited facilities-based and resold competitive local exchange services within the California service areas of Pacific Bell Telephone Company d/b/a AT&T California (AT&T), Verizon, SureWest Telephone and Citizens Telecommunications Company of California, Inc., d/b/a Frontier Communication Company of California (Frontier). NobelBiz proposes to provide voice and data communications services, mainly to business customers. The Decision adopts a settlement agreement between the Commission’s Consumer Protection and Safety Division (CPSD) pursuant to which NobelBiz filed an amended application, agreed to pay a penalty of $12,000 to the General Fund, and is required to comply with all applicable regulatory and legal requirements. CPSD found that NobelBiz obscured a relationship with an affiliate that had been sanctioned by the FCC. The Proposed Decision associated with this item is available here.
- American Broadband, Inc. Granted CPCN
(Item 27, adopted on consent agenda) – This Decision grants American Broadband, Inc.’s request for a CPCN for authority to provide limited facilities-based and resold competitive local exchange intraLATA and interLATA interexchange telecommunications services in the California service territories of AT&T, Verizon, SureWest, and Frontier. The Proposed Decision associated with this item is available here.
- Common Point LLC Granted CPCN
(Item 28, adopted on consent agenda) – This Decision grants Common Point LLC a CPCN to provide limited facilities-based and resold competitive local exchange, access, and interexchange telecommunications services in the California service territories of AT&T, Verizon, SureWest and Frontier. The Proposed Decision associated with this item is available here.
- Order Extending Statutory Deadline in Billing Dispute Between Pac-West Telecomm and PNG Telecommunications
(Item 30, adopted on consent agenda) – This Decision extends the statutory deadline for resolving consolidated proceedings in a billing dispute between Pac-West Telecomm, Inc. (Pac-West) and PNG Telecommunications, Inc. (PNG) regarding the obligations of the parties pursuant to a Master Services Agreement. The parties are engaged in settlement discussions, therefore the Commission has granted an extension until November 15, 2011 to resolve the matter. The Proposed Decision associated with this item is available here.
- The Greenlining Institute Awarded $13,905 for its Contributions to Rulemaking Proceeding on Telecommunications Public Policy Programs
(Item 39, adopted on consent agenda, Commissioner Florio abstaining) – By this Decision, the Commission awards Greenlining Institute $13,905.75 for substantial contribution to R.06-05-028, the proceeding to comprehensively review the Commission’s Telecommunications Public Policy Programs, including the Universal Lifeline Telephone Service (Lifeline), Payphone Program, Deaf and Disabled Telecommunications Program, and the California Teleconnect Fund. The Proposed Decision associated with this item is available here.
- Consumer Complaint Against Verizon Dismissed for Failure to Appear at a Hearing
(Item 24, adopted on consent agenda) – This Decision dismisses a consumer complaint against Verizon for lack of prosecution and failure to appear at a noticed hearing. The consumer complained that Verizon unlawfully charged for landline services. The Proposed Decision associated with this item is available here.
SIGNIFICANT HELD OR WITHDRAWN TELECOMMUNICATION ITEMS
- Legislative Subcommittee to Address Commission Positions on Various Telecommunications Bills
(Items 63, 69, held to May 5, 2011 by Staff) – The Commission’s Legislative Subcommittee will take positions on various telecommunications matters at the May 5, 2011 agenda meeting. SB 3 (Padilla) is a bill to repeal the date of the California High Cost Fund Program until January 1, 2013. SB 379 (Fuller) is a bill to continue universal service rate support for the small local exchange carriers. There are no memoranda associated with these items yet.
- Virgin Mobile USA LLC Request for ETC Status in California
(Item 5, held to May 5, 2011 by Staff) – This Proposed Decision would grant a request for limited eligible telecommunications carrier status to Virgin Mobile USA LLC (Virgin) in California. Virgin would be permitted to offer Federal-only LifeLine services to qualifying end-user customers, via a program offering 1,000 minutes for a $20.00 LifeLine plan. The Proposed Decision associated with this item is available here.
- Verizon California Inc.’s Automatic Delivery of Residential White Pages Telephone Directories
(Item 47, held to May 5, 2011 by Staff) – This Draft Resolution would approve Verizon California’s request to end automatic delivery of white page directories containing residential listings. Instead, customers would be offered the option of printed white pages directory or electronic white page listings on a CD-ROM, in addition to online white pages listings. Verizon would continue to distribute white page business listings, government listings, yellow pages and consumer guides automatically. Citing “material, positive effects” on the environment, Verizon estimates that the change would eliminate use of approximately 1,870 tons of paper per year, and result in a reduction of 7,293 tons of carbon dioxide. The Draft Resolution associated with this item is available here.
- Removal of Suspension of AT&T California’s Advice Letter No. 38241
(Item 48, held to May 5, 2011 by Staff) – This Draft Resolution would lift the suspension of AT&T California’s (AT&T) Advice Letter No. 38241, Amendment for 2011 Modified UNE Rates. The Advice Letter was filed pursuant to a settlement agreement between AT&T and the California Association of Competitive Telecommunications Companies (CALTEL), whereby AT&T agreed to calculate the unbundled network element (UNE) recurring rate index and include the new UNE rate in annual advice letter filings. CALTEL disputed AT&T’s attempt to limit the UNE recurring rates to which the advice letter pertained, but the Commission would find here that the settlement agreement did have the more limited rate applicability. The Draft Resolution associated with this item is available here.
- Dismissal of City of Santa Barbara’s Case Against Verizon California, Inc. for Recovery of Undergrounding Costs
(Item 11, held until May 5, 2011 by Commissioner Peevey for further review) – This Proposed Decision would dismiss the City of Santa Barbara’s (City) case against Verizon California, Inc. (Verizon) for reimbursement to the City for the amount paid for undergrounding certain telephone communications facilities required by the City’s creation of a new underground utility district. Verizon’s tariff required it to relocate facilities in conjunction with Southern California Edison’s (SCE) installation of underground conduit and other facilities. The City claimed that Verizon should be required to pay or reimburse an equal share (with the City and SCE) of installing customer connection facilities. The Commission’s Proposed Decision would deny the request on summary judgment, and find that Verizon’s obligation was incremental to SCE’s obligation, not an independent obligation to the City. The Proposed Decision associated with this item is available here.
- CPUC Comments in FCC Proceeding Regarding Reform and Modernization of LifeLine and Link Up Reform
(Item 51, held until May 5, 2011 by Staff) – This item would authorize the Commission’s Legal Division to provide the Federal Communications Commission (FCC) comments in a proceeding regarding comprehensive reform and modernization of the federal Lifeline and Link Up program, in relation to proposals under the National Broadband Plan, from the Federal-State Joint Board on Universal Service, and the Government Accountability Office (GAO), specifically, to: (1) bolster protections against waste, fraud and abuse; (2) control the size of the program; (3) strengthen program administration and accountability; (4) improve enrollment and outreach efforts; and (5) support pilot projects to assist the FCC in assessing strategies to increase broadband adoption, while not increasing overall program size.
SIGNIFICANT ENERGY ITEMS
- Commission Approves State Investor-Owned Utilities’ Renewable Energy Plans
(Item 17, adopted 5-0 on the regular agenda) – This Decision approves the renewable energy plans of the state’s investor-owned utilities Southern California Edison (SCE), Pacific Gas & Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E). California’s Renewables Portfolio Standard (RPS) required investor-owned utilities, electric service providers, and community choice aggregators to procure 20% of their power from renewable sources by 2010. Senate Bill 2 signed into law earlier this week extends that goal to 33% by December 31, 2020. Commissioner Simon advocated active balancing of California’s environmental goals with a healthy economy. Commissioner Peevey noted that a 40% RPS standard was certainly possible. The Decision associated with this item is available here.
MANAGEMENT AND COMMISSIONER REPORTS
- Commissioner Florio spoke about his continued “listening tour” of California, noting discussions in San Bernardino, as well as the April 5, 2011 public hearing in San Bruno on the gas pipeline safety rulemaking. He noted upcoming public hearings on the rulemaking, taking place on May 12th in Los Angeles and May 16th in Santa Rosa.
- Commissioner Simon also participated in the April 5th public hearing in San Bruno, noting the difficult impact the explosion had on the local community. On April 6th, he participated along with Deputy Executive Director and former Commissioner Nancy Ryan in the Wireless Internet and Mobile Enterprise Consortium regarding smart grid technologies at U.C. Los Angeles. Commissioner Simon noted that Christian Escobar will be taking over as interim Chief of Staff, noting his “amazing” work in the telecommunications area.
- Commissioner Sandoval discussed her participation in the on-going work regarding the San Bruno gas pipeline explosion and visit to the site, noting the scale of the devastation. Commissioner Sandoval also met with the Silicon Valley Leadership Institute, an organization of a wide variety of utilities, interest groups, and low-income housing organizations regarding energy efficiency incentives.
- Commissioner Ferron announced that his staff would include former Administrative Law Judge Mark Wetzel as interim chief of staff, as well as advisors Rob Wullenjohn, Sarah Thomas, and Michael Galvin.
- Commissioner Peevey commended PG&E on its diversity efforts, noting that 32.7% ($1.1 billion) of its spending goes to minority, veteran and women-owned businesses.