On December 1, 2011, the California Public Utilities Commission held its most recent regularly-scheduled agenda meeting. The Commission addressed several significant telecommunications-related matters. The Commission approved California High Cost Fund-A 2012 funding disbursements for the Small LECs, opening a rulemaking to further evaluate telecommunications service quality, and granted $1.670 million in Rural and Urban Regional Broadband Consortia funding to seven identified Consortia. The Commission also endorsed a settlement of the Foresthill rate case, designated SureWest TeleVideo as a “LifeLine only” ETC, and authorized certain corrections to the 2009 rate case decision for Ponderosa Telephone. These and other items of interest on the Commission’s agenda are addressed below.
REGULAR AND CONSENT AGENDA ITEMS
- California High Cost Fund A 2012 Funding Resolution Adopted
(Item 18, adopted on consent agenda) – This Resolution adopts California High Cost Fund-A (CHCF-A) support for each of the 10 small incumbent local exchange carriers who requested support for calendar year 2012. The funding total amount for these carriers is $36,550,929.74. The 14 small ILECs made their annual CHCF-A advice letter filings in October 2011, and the 10 companies requesting calendar year 2012 CHCF-A support sought approximately $37.502 million. No protests to the advice letter filings were received. The Resolution clarifies that CHCF-A funding will be adjusted going forward as necessary to address the annulled Rural Telephone Bank decisions and adjustments acknowledged for Ponderosa Telephone (as discussed below). The allocation of funding to each of these carriers is more specifically delineated in the Resolution, which is available here.
- New Rulemaking Opened to Evaluate Telecommunications Corporations’ Service Quality Performance and Consider Modification to Service Quality Rules
(Item 45, adopted on consent agenda) – This Order Instituting Rulemaking (OIR) opens a new proceeding to review recent telecommunications service quality performance and to consider modifications to existing standards and rules, citing the Commission’s statutory duty to ensure that telephone corporations provide customer service that includes reasonable statewide service quality standards. Public Utilities Code Section 451 requires that telecommunications carriers provide a level of service “as necessary to promote the safety, health, comfort, and convenience of its patrons . . . and the public.” General Order (G.O.) 133-C adopted a minimum set of service quality standards and measures for installation, maintenance and operator services for local exchange telephone services.
In March 2011, the Communications Division (CD) issued an informal report (posted to the Commission’s website) suggesting that: (1) substandard service quality results in G.O. 133-C service quality reports were filed by the carriers in 2010; (2) certain outages were not reported because current rules exempted carriers from reporting outages caused by catastrophic events; (3) different carriers had different interpretations of calculation measures in the reports; and (4) the underlying raw data provided in such reports were incomplete or not in an appropriate form. The CD therefore recommended opening an OIR to address these compliance issues and re-evaluate existing service quality measures.
The stated goals of the Commission’s OIR are: (1) to review telecommunications carriers’ performance in meeting G.O. 133-C service quality performance standards in 2010; (2) to assess whether the existing G.O. 133-C service quality standards and measures meet the Commission’s goals and are relevant to the current regulatory environment and market; and (3) to consider whether there is a need to establish a penalty mechanism for substandard service quality performance. The draft OIR associated with this item is available here.
- Foresthill Rate Case Resolved
(Item 9, adopted on consent agenda)– This Proposed Decision resolves the General Rate Case (GRC) of Foresthill Telephone Company following an all-party Settlement Agreement, resulting in an overall increase in test year 2012 intrastate revenues of $891,110 (18.8%) effective January 1, 2012. The increase will be funded through the CHCF-A only. The Proposed Decision associated with this item is available here.
- California Advanced Services Fund Rural and Urban Broadband Consortia Grants Approved for $1.670 Million
(Item 47a, adopted 5-0 on regular agenda) – This Resolution approves seven Consortia grants under the California Advanced Services Fund (CASF) program, totaling $1.670 million for calendar year 2012. The seven approved Consortia applicants cover a wide California area and represent a diverse group of organizations including local and regional governments, educational, health care, public safety, other community-based organizations, and individual businesses and residents in the areas. They include Central Coast Broadband Consortium ($150,000), East Bay Broadband Consortium ($150,000), Los Angeles County Regional Broadband Consortium ($448,843), Northeastern California Connect Consortium ($149,997), Redwood Coast Connect ($150,000), San Joaquin Valley Regional Broadband Consortium($150,000), and Upstate California Connect Consortium ($149,898). The monies will be used to encourage broadband infrastructure deployment and to help stimulate, access, adoption and training programs. Commissioners Simon and Sandoval were particularly focused on the benefits of the grants for the Los Angeles County area. Commissioner Simon emphasized that 68% of the Los Angeles area used the internet compared with 87% in California overall. Commissioner Sandoval noted the diversity of the consumers to be served, both in terms of size and education level. Commissioner Ferron also observed that the focus on Los Angeles should bring up the area’s per capita broadband access to the equivalent of the rest of the state. The Draft Resolution associated with this item is available here.
- Resolution Granting Limited Increase in CHCF-A Funding to The Ponderosa Telephone Company
(Item 12, adopted on consent agenda) – This Resolution follows a limited rehearing of The Ponderosa Telephone Company’s General Rate Case with respect to the total salary and benefits for Ponderosa’s president and vice president. This Draft Resolution approves an adjusted increase in total salary and benefits of $92,464, which will result in total CHCF-A support of $3,792,252 for test year 2009. The Resolution is available here.
- SureWest TeleVideo Designated as a “LifeLine Only” Eligible Telecommunications Carrier
(Item 14, adopted on consent agenda) – This Resolution grants SureWest TeleVideo’s request to be designated as an Eligible Telecommunications Carrier (ETC) to provide Lifeline and Link-Up services in Sacramento County (Sacramento and Elk Grove) and Placer County (Lincoln). SureWest is not requesting federal high-cost fund designation or support. The Draft Resolution associated with this item is available here.
- California Broadband Cooperative, Inc. Granted Certificate of Public Convenience and Necessity
(Item 58, adopted on consent agenda) – This Proposed Decision grants California Broadband Cooperative, Inc. a certificate of public convenience and necessity (CPCN) to provide full facilities-based local exchange service in territories currently served by Pacific Bell Telephone Company, d/b/a AT&T California (AT&T), Verizon California, Inc. (Verizon), SureWest Telephone (SureWest) and Frontier Communications of California, and as a non-dominant interexchange carrier in the entire State. The Proposed Decision associated with this item is available here.
- U.S. Telecom Long Distance, Inc.’s Motion to Withdraw Application for Certificate of Public Convenience and Necessity Granted
(Item 16, adopted on consent agenda) – This Decision grants U.S. Telecom Long Distance, Inc.’s application to withdraw its application for a CPCN for authority to provide resold local exchange and interexchange services in the service territories of AT&T, and dismisses this application on the condition that U.S. Telecom and its officers, directors or owners reference this Decision in any application that they file with the Commission in the future for authorization to provide telecommunications services in California. The Proposed Decision associated with this item is available here.
- Consumer Telecom, Inc.’s Motion to Withdraw Application for CPCN Granted
(Item 23, adopted on consent agenda) – This Decision approves Consumer Telecom, Inc.’s motion to withdraw its application for a CPCN to provide resold commercial local exchange and interexchange services in AT&T service territories, on the condition that U.S. Telecom and its officers, directors or owners reference this Decision in any application that they file with the Commission in the future for authorization to provide telecommunications services in California. Consumer Telecom sought to provide specialized discretionary intra-exchange dedicated point-to-point broadband services for commercial subscribers and competitive local exchange services on a non-facilities-based resold basis. The Commission’s Consumer Protection and Safety Division (CPSD) filed a protest claiming that Consumer Telecom failed in its application to disclose three FCC slamming violations or that its prior license as an interexchange carrier had been revoked in 2004 for failure to comply with certain Commission-ordered requirements. Consumer Telecom responded to the allegations, but then withdrew the application. A copy of the Proposed Decision associated with this item is available here.
- Statutory Deadline Extended in Consumer Action Against AT&T
(Item 29, adopted on consent agenda) – This Decision extends the statutory deadline to resolve a proceeding filed by Clarence Anthony Bush and Marciana Bush alleging that AT&T has failed to provide adequate telephone service or sufficient facilities in the rural community of Orosi. A copy of the Proposed Decision associated with this item is available here.
- Statutory Deadline Extended to Complete Commission’s Investigation into Telseven, LLC Regarding the Provision of Directory Assistance Services
(Item 31, adopted on consent agenda) – This Decision extends the statutory deadline to complete the Commission’s investigation into the operations, practices, and conduct of Telseven, LLC, Calling 10 LLC dba California Calling 10, and Patrick Hines to determine whether they have violated California law regarding the provision of directory assistance services to California consumers. The Proposed Decision associated with this item is available here.
SIGNIFICANT HELD ITEMS
- Disposition of TelePacific’s Advice Letter 314 (Items 46 and 46A, discussed and held to 1/12/12 by Commissioner Florio for further review) – By far the most contentious item on this meeting’s agenda was the disposition of U.S. TelePacific’s (TelePacific) Advice Letter 314. President Peevey supported an Alternate Draft Resolution approving TelePacific’s Advice Letter 314, while the remaining Commissioners appeared to support opening a proceeding to analyze the proposed acquisition of assets, or at a minimum, taking additional time to evaluate this matter.
U.S. TelePacific filed Advice Letter 314 earlier this year, thereby notifying the Commission of its proposed acquisition of the assets, including the customer base and CPCN, of IXC Holdings, Inc. (IXCH) by TelePacific’s wholly-owned subsidiary, TelePacific Managed Services. Shortly thereafter, Straitshot RC LLC and Straitshot Communications, Inc. (collectively, Straitshot) filed a protest, claiming that TelePacific failed to disclose that it was involved in pending litigation with IXCH, and raising concerns that the proposed acquisition of assets might impair its ability to recover an eventual judgment against IXCH.
The Draft Resolution would suspend the Communications Division’s previous approval of TelePacific’s Advice Letter 314, and direct to the parties to file an application seeking approval of the proposed acquisition. The Draft Resolution would reverse the CD’s written disposition of the Advice Letter on the grounds that the Advice Letter process is meant to be for “ministerial” acts, i.e., non-controversial decisions that do not raise important policy questions and do not require evidentiary hearings. Commissioners Florio and Simon stated that the dispute raised complex issues, and that a deeper investigation would neither create any harm to the transaction itself nor affect the litigation. Commissioner Sandoval voiced strong concern that granting the Advice Letter would remove any assets from possible recovery in the litigation, and that a trial was scheduled in the matter for early January. Therefore, in Sandoval’s view, it makes sense to wait.
The Alternate Draft Resolution would deny the protest and approve the Advice Letter. In support of this item, President Peevey expressed that the Commission should not be micromanaging these “inconsequential” transactions, and raised concern that the parties were using the Commission as a pawn to gain advantage in a court case. He stated that the FCC had already approved the transaction, and that mere allegations of misconduct in litigation should not be enough to provoke a full Commission inquiry. The alternate was also supported by the Commission’s General Counsel, who recommended approval based on the FCC’s similar inquiry into whether the acquiring company was fit to acquire the assets. General Counsel Lindh offered support for Peevey’s views, noting that the FCC’s reasoning “should be persuasive on this Commission.” According to Lindh, the protesting party had not made a prima facie case to challenge TelePacific’s fitness for service following this transaction, so there should be no reason to reject the transaction.
- Proposal to Add New Service Requirements for Telecommunications Industry Advice Letters
(Item 2, held by staff until 12/15/11) – By this Revised Draft Resolution, the Commission would adopt a new protocol governing the service of telecommunications advice letters. The Revised Draft Resolution would require all telecommunications carriers to serve all advice letters on all “adjacent and competing utilities.” In addition, the proposal would encourage utilities to maintain their individual carrier advice letter service lists in six different categories. A group of telecommunications utilities has raised numerous concerns with the proposal in the Revised Draft Resolution, and has offered a proposal that can be more readily and consistently implemented. The Joint Utilities’ proposal would utilize the Commission’s existing information technology resources to allow the Commission to maintain service lists in six advice letter categories and make those lists available to serving parties to fulfill their service obligations. The staff is considering further revisions to the Revised Draft Resolution based on the input from the Joint Utilities. The current version of the Revised Draft Resolution is available here.
- Proposed Decision Adopting New Fire Safety Regulations Applicable to Joint Utility Poles
(Item 39, held until 12/15/11 by Commissioner Simon for further review) – This Proposed Decision would adopt regulations to address concerns about fire hazards associated power lines and aerial communication facilities located in close proximity to power lines. It would also: (1) establish a Phase 3 to provide a forum for the Consumer Protection and Safety Division to develop and submit a plan to collect data on power-line fires, analyze the data, and use the information to formulate measures to reduce the number of fires ignited by power lines, and develop and adopt fire threat maps; (2) identify the regulatory mechanisms cost-of-service utilities should use to seek recovery of costs incurred in complying the regulations; and (3) deny parties’ requests to make undergrounding of power-line facilities part of a new rulemaking proceeding rather than addressing the issue in utilities’ general rate cases. The current version of the Proposed Decision underlying this item is available at the following link.
SIGNIFICANT ENERGY ITEMS
- Commission Fines PG&E $38 Million for Rancho Cordova Natural Gas Explosion (Item 44, adopted 5-0 on regular agenda) – By this Decision, the Commission affirmed a $38 million penalty against Pacific Gas and Electric Company (PG&E) resulting from the natural gas explosion and fire that occurred on December 24, 2008 in Rancho Cordova. Pursuant to a stipulation between the parties, PG&E will not seek to recover from customers in rates any portion of the penalty or other costs associated with the Decision. The Proposed Decision associated with this Item is available here.
- Commission Establishes State Utility Procurement Amounts to Meet 33% Renewable Energy Target by 2020 (Item 43, adopted on regular agenda 5-0) – By this Decision, the Commission established interim procurement quantity requirements that energy utilities must meet on the path to achieving 33% renewable energy retail sales – 20% during 2011-2013, 25% during 2014-2016, and 33% by 2020. The Proposed Decision associated with this item is available here.
- Commission Approves Contracts for Combined Heat and Power Feed-In Tariff (Item 3, adopted on consent agenda) – By this Resolution, the Commission approved two standard offer power purchase agreements by Pacific Gas and Electric Company, San Diego Gas and Electric Company and Southern California Edison Company for the purchase of excess power from eligible Combined Heat and Power facilities. The Draft Resolution associated with this Item is available here.
- Commission Augments Solar Program Budget (Item 42, adopted on regular agenda) This Resolution increases the budget for the California Solar Initiative Program by $200 million in order to cover a budget shortfall. A copy of the Proposed Decision associated with this Item is available here.
NOTES AND COMMISSIONER REPORTS
- Commissioner Florio noted that the Commission will hold a workshop on December 14, 2011 in San Francisco with CPUC staff and a survey consultant to review a survey performed to address the challenges facing consumers with limited English skills in the telecommunications marketplace. The meeting will provide an opportunity for the public to comment on the scope, design, parameters and specifications of that survey.
- Commissioner Simon participated in the National Association of Regulatory Utilities Commissioners’ Annual meeting in St. Louis, Missouri, and chaired the Utility and Market Access Meeting. He also participated on a panel on diversity in legal services.
- Commissioner Sandoval attended the November 14, 2011 California Small Business Roundtable regarding energy and telecommunications issues. On November 15, she visited the AT&T “Foundry” in Palo Alto, where AT&T works with application developers with knowledge of AT&T’s network, to run applications more quickly and better on the network (for example, real-time diabetes monitoring). Verizon has a similar Foundry in San Francisco. She also attended the Federal Communications Commission’s Bar Association event in San Francisco, and heard about recent FCC initiatives. She noted that she and her staff are in the midst of reviewing the FCC’s Universal Services order and evaluating its impact on California. She also congratulated AT&T on the FCC’s approval of its application to acquire Qualcomm’s 700 MHz licenses through several states including California. She also noted that there is a hearing on the Department of Justice’s case regarding the AT&T/T-Mobile proposed merger, and that she awaits further developments.