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On April 22, 2010, the California Public Utilities Commission held its regularly-scheduled agenda meeting.  The most significant telecommunications-related item on the agenda was the settlement of the Witch/Rice and Guejito Fire Investigations, with San Diego Gas & Electric agreeing to a $14.35 million settlement payment, and CoxCom Inc. and Cox California Telcom LLC agreeing to a $2 million settlement payment.  This and other items of interest on the Commission’s agenda are discussed below.

REGULAR AND CONSENT AGENDA ITEMS


  • San Diego Gas & Electric and Cox Settle Witch/Rice and Guejito Fires Investigation for $16 Million (Item 26, adopted 5-0 on regular agenda) – The Commission approved a multi-million dollar settlement of its investigation into the operations of San Diego Gas & Electric Company (SDG&E), and CoxCom Inc. / Cox California Telcom LLC (collectively, Cox) regarding the utility facilities allegedly linked to the Witch/Rice and Guejito fires of October 2007.  In October 2007, several fires occurred in the San Diego area, with the Rice Fire igniting in Fallbrook, the Witch Fire igniting in southern San Diego County, and the Guejito Fire starting in the San Pasqual area.  The Commission issued investigations to determine whether the utilities violated provisions of the Public Utilities Code, general orders, and other rules or requirements regarding (1) utility facilities purportedly linked to the fires and (2) failure to cooperate with CPSD.
     
    These fires are also part of the basis for the Joint Pole Safety proceeding that has been ongoing in front of the Commission since 2008.  Significantly, while SDG&E admits to certain non-compliance with CPSD requests in connection with the subsequent investigation, the decision makes no findings regarding any responsibility of the parties for the fire ignitions themselves.  Commissioner Simon noted the safety dangers presented by high wind and low humidity, and commended SDG&E and Cox for committing to process improvements in vegetation management, facilities inspection training, and safety hazard repair.  Under the settlement, SDG&E would make a settlement payment of $14.35 million to the General Fund, Cox would make a $2 million settlement payment.  In addition, SDG&E will reimburse the Consumer Protection and Safety Division (CPSD) up to an additional $400,000 to implement a computer work module that will assist CPSD in future utility safety audits and investigations.  The proposed decision recommending approval of the settlement is available here.
  • CPUC Comments to FCC Regarding Jurisdictional Separations (Item 41, adopted 5-0 on regular agenda) – By this item, the Commission directed its staff to file comments with the FCC on jurisdictional separations issues.  Part 36 jurisdictional separations category relationships and jurisdictional cost allocation factors for price cap carriers and allocation factors for rate-of-return carriers have been “frozen” since May 22, 2001.  The FCC intended the initial freeze to give parties an opportunity to create comprehensive, permanent reforms of the separations process, and the FCC has indicated it will extend the freeze for another year.  There is a Federal-State Joint Board on Separations (Joint Board) that reviews policies and develops recommendations for reforms to the separations process.  The CPUC’s Legal Division requests authority to (1) file in support of interim-only reform proposals by the State Members of the Joint Board because current cost allocation is still being governed by nine-year old separations studies, and (2) urge the Joint Board to issue a recommendation for permanent reform by the end of the year.  The draft memorandum containing the Legal Division recommendations is available here.
  • CPCN Granted to CENIC Broadband Initiatives (Item 17, adopted on consent agenda) – This Decision grants a CPCN to CENIC Broadband Initiatives LLC (CENIC) to provide (1) limited facilities-based and resold competitive local exchange services in California, throughout the service territories of AT&T, Verizon California, Inc., SureWest Telephone and Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications Company of California, Inc. (Citizens), and (2) resold and facilities-based interexchange service statewide.  CENIC intends to facilitate availability of broadband and broadband-related services via a 10 gigabyte Ethernet circuit that connects a ring of California cities.  The Proposed Decision associated with this item is located here.  
  • CPCN Granted to SnowCrest Telephone (Item 11, adopted on consent agenda) – This Decision grants a certificate of public convenience and necessity (CPCN) to SnowCrest Telephone, Inc. (SnowCrest) to provide full facilities-based and resold competitive local exchange services in California, throughout the service territory of Pacific Bell Telephone Company d/b/a AT&T California (AT&T).  The Proposed Decision associated with this item is located here.
  • CPCN Granted to Cincinnati Bell Any Distance, Inc. to Provide Resold Local Exchange Service (Item 29, adopted on consent agenda) – This Decision grants a CPCN to Cincinnati Bell Any Distance, Inc. a CPCN to provide resold local exchange services in California, throughout the service territories of AT&T, Verizon California, Inc., SureWest Telephone and Citizens.  The Proposed Decision associated with this item is located here.  
  • MCImetro Access Transmission Services LLC to Discontinue Local Exchange Services (Item 27, adopted on consent agenda) – The Commission here grants the request of Transmission Services LLC d/b/a Verizon Access Transmission Services MCI Communications Services, Inc. d/b/a Verizon Business Services and Teleconnect Long Distance Services and Systems Company d/b/a Telecom*USA’s (MCImetro) to discontinue service in Verizon California Inc.’s service territory and to migrate any remaining customers to Verizon California Inc.  The Proposed Decision associated with this item is located here.  

SIGNIFICANT HELD AND WITHDRAWN ITEMS


  • Determination of Ratemaking Treatment for Rural Telephone Bank Stock Redemption Proceeds (Item 4, held by Bohn for further review until 5/20/10) – This Proposed Decision would resolve the Small LECs’ application, prompted by previous Commission directives in certain Small LEC rate cases, to address “gain on sale” implications of the recent stock redemption associated with the dissolution of the Rural Telephone Bank.  The Proposed Decisions issued in this proceeding would depart from the Commission’s “gain on sale” rules by allocating the full value of redeemed RTB stock to ratepayers, including the value of patronage shares received by RTB borrowers.  The revised Proposed Decision is available here.
  • Funding for Audeamus’ Last Mile Project from the California Advanced Services Fund (Item 10, held by staff until 5/6/10) – This item would approve broadband funding of $1.15 million from the CASF for Audeamus, LLC’s Last Mile Project in Fresno.  Audeamus is a wholly-owned subsidiary of Sebastian Enterprises, Inc, which is the parent company of Kerman Telephone Company and Foresthill Telephone Company.  The funding would be used to provide fiber optic cable to consumers, businesses, and community anchor institutions in rural areas close to Sebastian’s local exchange areas that are currently unserved and underserved.  Audeamus was awarded a 50% American Recovery and Reinvestment Act (ARRA) for the project, and this CASF funding is meant to bridge the gap between the 50% ARRA grant and their initial 80% request . A recent draft of the resolution adopted by the Commission is available here.
  • Audeamus’s Petition to Transfer Census Groups to Audeamus’ CASF Application (Item 28, held by staff until 5/6/10) – This item would grant Audeamus’ request to remove certain census block groups (CBG) from California Valley Broadband’s (CVB) approved unserved and underserved areas and transfer those CBG’s to its CASF application in order to obtain CASF funding to match a recent ARRA grant.  Audeamus submitted two requests for CASF funding based on two projects, one for the San Joaquin and Tranquillity areas of Fresno County and other areas in Fresno, and the other in unserved and underserved areas of West Fresno County.  Audeamus received ARRA funding for a portion of each project, and therefore wants to remove CBGs from their applications and consolidate the remaining CBGs into one CASF application.  The Proposed Decision recommended for adoption by the Commission is available here
  • Exemption for Certain Telecommunications Carriers from Compliance with Public Utilities Code Section 851 for Uniform Regulatory Framework and Other Competitive Carriers (Item 39, held by Peevey until 5/6/10 for further review) – This proposed decision would grant Uniform Regulatory Framework (URF) carriers (except incumbent local exchange carriers that must still file general rate cases) and other competitive carriers a limited four-year exemption from Public Utilities Code Section 851, which requires Commission pre-approval of the disposition or encumbrance of any “necessary or useful” utility property. Section 853(b) of the Public Utilities Code allows the Commission to exempt any public utility from section 851 if applying those procedures is not necessary in the public interest. The underlying rulemaking is scoped to consider whether granting a full exemption from section 851 would be appropriate for URF carriers that lack market power, which would allow them to complete on a level playing field with non-URF competitors.  The proposed exemption would continue past 2014 if no party to the proceeding requests re-examination of the exemption.  This proposed decision would close Phase I of this rulemaking proceeding, leaving for Phase II the issues of whether an exemption should be granted in connection with more controversial assets, such as those used to provide collocation, unbundled network elements, or other wholesale services.  A current version of the proposed decision for Phase I is available here.   
  • Legislative Subcommittee Recommendation Approved Supporting Bill to Extend California Advanced Services Fund Program for 5 years and $125 Million (Item 49, held until 4/22/10 for further review) – By approving this item, the Commission officially endorsed CASF Legislation, SB 1040.  SB 1040 (Padilla) would extend the sunset date of the California Advanced Services Fund (CASF) from January 1, 2013 to January 1, 2018.  The Bill would set up three subfunds, with the expected $25 million to be deposited as follows per year:  (1) a Broadband Infrastructure Grant Account ($20 Million), (2) a Rural and Urban Regional Broadband Consortia Account ($2 Million), and (3) a Broadband Infrastructure Revolving Loan Funds Facility Account ($3 Million).  The memorandum recommending CPUC support/co-sponsorship for the Bill is available here 
  • 0.16% California Teleconnect Fund Surcharge Rate Adopted Effective May 15, 2010 (Item 40, withdrawn) – This item would have set the California Teleconnect Fund (CTF) program surcharge rate at 0.16% effective May 15, 2010, requiring all telephone corporations to assess that rate on surchargeable revenues collected from intrastate telecommunications services.  However, the item was withdrawn based on information that the surcharge change was not necessary to provide CTF funding for the foreseeable future.  The Proposed Decision associated with this item is available here.

NOTES AND COMMISSIONER REPORTS


  • Commissioner Ryan spoke at a broadband conference, “Minorities Leading the Broadband Revolution,” in Los Angeles.  She addressed the current status of broadband in the nation and California, as well as the FCC’s National Broadband Plan.  She indicated that the National Broadband Plan findings are consistent with California findings, and that while there is near-universal access to broadband in California, only 65% of Californians actually use broadband with age, income and race certainly contributing to the differences in levels of broadband use.   
  • Commissioner Peevey was in Washington, D.C. earlier this week and “made the rounds” with Senators Boxer and Feinstein, Congressmen Pelosi and Waxman, and others, including FCC Commissioners with a simple plea – California’s Round 1 ARRA funding was 2.54% of the total granted funds in the United States.  Commissioner Peevey called this number “atrociously low,” especially in rural areas because the definition of “rural” is being 50 miles or more away from communities of 20,000 people or more.  While that definition may work in some Midwest states, Commissioner Peevey noted, it does not work in California.  Commissioner Peevey indicated that the good news was that California will do significantly better in Round 2. 

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