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On Thursday, August 21, 2008, the California Public Utilities Commission held its regularly-scheduled agenda meeting. Of particular note was the adoption of a decision adding a pre-qualification requirement to the enrollment process for the California LifeLine program. After implementation of this decision, customers will not receive LifeLine discounts until after their eligibility for the program is confirmed. This and other telecommunications-related items addressed during the meeting are summarized below.


REGULAR AND CONSENT AGENDA ITEMS

  • Pre-Qualification Procedure Adopted for LifeLine Program ((Item 44, adopted 5-0) – This decision adopts a pre-qualification system for handling discounts under the California LifeLine Program. Under the new procedure, an applicant must be determined to be eligible by Solix, the Certifying Agent, before he or she receives the discounted LifeLine service rate. Carriers will be required to implement this change by July 1, 2009. Currently, applicants receive the LifeLine discount immediately upon enrolling in the program. The decision expresses concern that the pre-qualification process could cause a hardship on applicants because they must pay regular rates for phone service until they are approved. In order to mitigate this side effect of the process change, the decision mandates that carriers offer payment plans to LifeLine applicants, and that carriers inform applicants of the availability of payment plans Applicants who are ultimately enrolled in the program will be entitled to a refund of the difference between LifeLine rates and their initial full-rate payments. If the application of LifeLine discounts results in a credit balance of $10.00 or greater on the customer’s bill, the customer may request a refund check for the amount of the balance. Several changes to General Order 153 were made in order to implement the pre-qualification requirement.

    The decision also rejects a proposal to eliminate eligibility for the program based on income. Current enrollment in the program is based on both income and participation in low-income programs. It had been suggested that California, like some other states, base its enrollment solely on low-income program participation. The Commission decided not to alter the eligibility methods since doing so would mean that a substantial number of current customers would no longer be able to enroll because they do not participate in any of the qualifying programs.

    Commissioner Grueneich introduced this item, noting that the decision represents a balance between the harm to LifeLine applicants who fail the certification process and the harms associated with delays in LifeLine discounts to certified individuals. While this solution is not perfect, Commissioner Grueneich characterized it as the best that the Commission can do under the circumstances. Commissioners Simon, Bohn, and Chong also offered support for the decision. Simon emphasized the “human factor” underlying the LifeLine issue, and predicted that the shaky economy will produce even more LifeLine-eligible individuals. Commissioner Bohn praised the efforts of the Consumer Affairs Branch in dealing with LifeLine-related complaints, and expressed hope that this decision would alleviate the burden on CAB. Commissioner Chong observed that California has a very successful LifeLine program, but that the burden on the fund needs to be reduced, and that this decision represents a desirable step in shoring up the controls on the certification process. The Commission plans to keep this proceeding open for the next few months, but anticipates that the two LifeLine Working Groups should be able to operate the program from now on. An implementation workshop will also be scheduled within 30 days to facilitate the move to pre-qualification. The following is a link to the adopted version of the resolution: http://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/87063.doc.

  • Annual 2009-2010 Budget for High Cost Fund-B Program Adopted, Res. T-17160 (Item 45, adopted 5-0) – The Commission adopted Resolution T-17160, which sets forth an expense budget of $51.515 million for Fiscal Year 2009-10 for the California High Cost Fund-B program. This budget represents a decrease of more than 87% from the amount allocated to the CHCF-B for Fiscal Year 2008-09. A draft copy of the resolution is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA/85378.doc.

  • Annual 2009-2010 Budget for California Teleconnect Fund (CTF) Program Adopted, Res. T-17162 (Item 46, adopted 5-0) – The Commission approved Resolution T-17162, which grants a budget of $60.340 million for Fiscal Year 2009-10 to the CTF Program, along with a supplemental budget of $13.352 million for Fiscal Year 2008-09, and expands the annual program budget cap from $55 million to $80 million. The budget represents an increase of approximately 82%. The resolution finds that this increase is reasonable to accommodate expansion of the program to cover the community college system and the California Telehealth Network. The final version of the resolution is available at the following link: http://docs.cpuc.ca.gov/word_pdf/FINAL_RESOLUTION/86992.doc.

  • Annual 2009-2010 Budget for the Deaf and Disabled Telecommunications Equipment and Relay Service Program Adopted, Res. T-17156 (Item 4, moved from consent agenda to regular agenda, adopted 5-0) – The Commission adopted Resolution T-17156, which set the budget for Fiscal Year 2009-10 at $69.03 million. This budget is the same as that adopted for Fiscal Year 2008-09. The final version of the resolution is available at the following link: http://docs.cpuc.ca.gov/word_pdf/FINAL_RESOLUTION/86981.doc.

  • Annual 2009-2010 Budget for California LifeLine Program Adopted, Res. T-17161 (Item 7, moved from consent agenda to regular agenda, adopted 5-0) – Resolution T-17161 sets the budget for Fiscal Year 2009-10 at $331.303 million, which represents a 7.1% increase over the prior year’s budget. Most of this increase reflects anticipated increases in carrier claims. A recent draft of the resolution is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/86655.doc.

  • Petition by NextG Networks of California to expand its existing Certificate of Public Convenience and Necessity (Item 3, adopted on consent agenda) – This decision dismissed without prejudice NextG’s petition to modify its existing certificate of public convenience and necessity to alleviate the burdens of the Notice of Proposed Construction process that the Commission inserted into NextG’s CPCN. The Commission rejected NextG’s proposal that a more streamlined advice letter process be used, and also rejected a similar proposal from a group of cities in their own petition for modification The Commission found that these issues were best resolved in the California Environmental Quality Act rulemaking for telecommunications carriers, R.06-10-006. A link to the a recent draft of the decision is provided below: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/86573.doc .

  • AB 140 Rural Telecommunications Infrastructure Grant Adopted in Favor of Channel Islands Telephone Company, Res. T-17151 (Item 6, adopted on consent agenda) – Resolution T-17151 grants approval of $325,000 in CHCF-A funds for a rural infrastructure project proposed by Channel Islands Telephone Company’s Rural Telecommunications Infrastructure Grant Project. The grant will be used to help bring high speed internet access to various of the Channel Islands where there is limited or no internet access. The final version of the decision approving this outcome is available at the following link: http://docs.cpuc.ca.gov/word_pdf/FINAL_RESOLUTION/86985.doc.

  • Appeal of Decision in AT&T Warmline Dispute Denied (Item 21, adopted on consent agenda) – The Commission adopted the Modified Presiding Officer’s Decision, which denied the appeal in Utility Consumer’s Action Network v. SBC Communications, a dispute between UCAN and now-AT&T over the company’s methods for providing 911 warmline service in compliance with Public Utilities Code Section 2883. With the rejection of this appeal, AT&T will remain liable for a penalty of $1,691,000, and the standards articulated in the decision for how to interpret Section 2883 remain the Commission’s warmline policy. A draft of Modified Presiding Officer’s Decision authorizing this outcome can be found at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/86820.doc.

  • Certificate of Public Convenience and Necessity Granted for TeleCentris Communications, Despite Initial CPSD Protest (Item 23, adopted on consent agenda) – This decision grants a certificate of public convenience and necessity to TeleCentris Communications, LLC to provide limited facilities-based and resold competitive local exchange and interexchange services. The Consumer Protection and Safety Division had filed a protest on various grounds, including an allegation that the applicant had not shown sufficient financial qualifications to receive a CPCN, and that applicant had misrepresented that it had never been sanctioned for misrepresentations to consumers. This protest prompted further discussions between the applicant and CPSD, which ultimately resulted in an amended application and a withdrawal of the protest. A draft of the decision can be found can be found at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/86157.doc.


SIGNIFICANT HELD ITEMS

  • Decision and Alternate Decision Regarding Backup Power and Emergency Notification Issues (Items 41, 41a, held by Chong until 9/4 for further review) – Commissioners Simon and Chong are still discussing possible changes to their proposed decision and alternate in the backup power/emergency notification proceeding. Commissioner Peevey expressed some displeasure that this matter must be held once again, but Commissioner Simon assured the President that the hold was necessary to help arrive at an appropriate result.

  • URF Monitoring Decision (Item 42, held by Simon until 9/4 for further review) – This proposed decision would resolve the remaining issues in Phase II of the Uniform Regulatory Framework proceeding, including the questions regarding the need for additional monitoring reports, and the extent to which pricing flexibility should be permitted on special access offerings.

  • Decision Addressing Basic Service Rate Transition (Item 43, held by Grueneich until 9/4 for further review) – This decision would authorize transitional rate increases for basic exchange service provided by the URF ILECs leading up to the full pricing flexibility transition date of January 1, 2009.

  • Approval of Transaction between Warburg Pincus, Electric Lightwave (ELI), and Eschelon Telecom (Item 5, held by Simon until 9/4 for further review) – This proposed decision would approve the request of the involved parties for a transaction in which Warburg Pincus Private Equity X acquires an indirect control of ELI and Eschelon. However, the proposed decision would deny a request to approve the transaction on a retroactive basis, on the grounds that the parties violated Public Utilities Code Section 854 by not seeking advance approval of the transaction.


NOTES AND COMMISSIONER REPORTS

  • Peevey and Chong comment on public policy program budget items — After adopting items 4, 7, 45, and 46 – the four budget items – President Peevey noted that they added up to more than half a billion dollars altogether, an amount which he understatedly concluded was “not small change.” In retort, Commissioner Chong pointed out that this was still 317 million less than the same programs had cost last year, and that, accordingly, the surcharge level should go down from about 4.5% to approximately 2%.

  • Simon and Bohn address small business issues — Commissioners Simon and Bohn both spoke about conferences they had recently attended where a major theme was how the Commission can help small businesses. Both Commissioners applauded the efforts of small business liaisons and the Small Business Expos in helping to bring greater focus and understanding to these issues.

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