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On March 10, 2011, the California Public Utilities Commission held its regularly scheduled agenda meeting.  Once again, the Commission auditorium was crawling with public speakers from the Marin County area who had come to rail against PG&E’s installation of smart meters in their communities.  In anticipation of their pleas, President Peevey led off the meeting by saying that although the current science does not support the conclusion that smart grids are harmful, he had talked to PG&E’s management, and had asked them to come forward with a reasonable proposal to allow individual consumers to “opt out” of smart grid installation.  This did not placate the angry crowd, and several of the public speakers had to be escorted away from the podium by the police.  
  
The pending ETC requests for Nexus Communications and Virgin Mobile were held, as was the Draft Resolution to make utility rates subject to refund to account for impacts of recent tax legislation.  These items of interest and other matters addressed during the meeting are discussed below.
 


REGULAR AND CONSENT AGENDA ITEMS


  • Order Instituting Rulemaking (OIR) Issued to Address Competitive Bidding Rule Associated with Issuance of Debt and Equity Securities(Item 48, adopted 4-0 on regular agenda) – This item initiates a proceeding to “determine the effectiveness and adequacy” of the Commission’s competitive bidding rules as applied to the issuance of debt and equity securities, and to consider the associated impacts on Commission General Order (G.O.) 156, the source of the Commission’s supplier diversity rules.  The proceeding will also involve an examination of G.O. 24, which outlines reporting requirements regarding the amounts of debt and stock issued by a utility.  All “investor owned utilities that are required to obtain Commission approval for their long-term financing needs” will be impacted by this proceeding.  All energy companies, Class A water utilities, and local exchange carriers are specifically made respondents to the rulemaking.  
     
    In introducing this item, Commissioner Simon emphasized the importance of the Commission’s oversight authority as to the approval of debt and equities.  The OIR states that “the public interest is best served when more than one investment banker is offered the opportunity to underwrite securities.”  Commissioner Simon stressed the importance of broadening the pool of potential underwriting services to include minority-owned firms and other businesses qualifying under the Commission’s supplier diversity rules.  Simon also noted that the rulemaking would look at the financial practices of the IOUs in connection with debt and equity instruments, and involve a “rigorous review” of volume debt enhancement features, hedging transactions, and opportunities for lowering the cost of money to utilities.     

    Commissioner Florio offered comments in support of the OIR, observing that it is “entirely reasonable” to consider this issue, and to evaluate the interaction between the utilities’ access to capital and the connection to G.O. 156’s goals of promoting Women, Minority, and Disabled Veteran-owned Business Enterprises.
     
    Opening comments on this new OIR are due on May 9, 2011, with reply comments to follow on May 27, 2011.  A copy of the OIR is available here. 

  • Deadline Extended for Resolution of Rulemaking Related to Review of CPUC’s Telecommunications Public Policy Programs (Item 28, adopted on consent agenda) – The Commission again extended the statutory deadline for resolution of R.06-05-028, the proceeding to comprehensively review the CPUC’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 new deadline is May 20, 2011.  Commission Decision 08-06-020 addressed four of the five Telecommunications Public Policy Payphone Programs at issue, with the only remaining program under review being the Lifeline Program.  Phase I of the Commission’s reform of the LifeLine program was effectuated in D.10-11-033.  The Commission expects this to be the final extension of the statutory deadline in this proceeding because it intends to open a new rulemaking to implement suggested revisions to the Lifeline Program that have come out of this proceeding.  The Proposed Decision associated with this item is available here
  • Utility Consumers’ Action Network Awarded $4,426 for Contribution to Decision Adopting Revisions to Registration Process for Non-Dominant Interexchange Carriers (Item 34, adopted on consent agenda) – This Decision awards the Utility Consumers’ Action Network (UCAN) $4,426 for substantial contribution to Decision (D.) 10-09-017, adopting revisions to the registration process for non-dominant interexchange carriers (NDIECs) established by D.97-06-107.  The Proposed Decision associated with this item is available here.
  • Further Order Adopted on Rural Telephone Bank Dissolution Matter (Item 45, adopted 4-0 on regular agenda) – This Decision adopts a 10% interest rate on amounts previously ordered returned to ratepayers and related orders in connection with the Rural Telephone Bank dissolution matter.  The Proposed Decision associated with this item is available here


    SIGNIFICANT HELD OR WITHDRAWN TELECOMMUNICATION ITEMS


  • Resolution Making the Rates of Cost-Of-Service Rate Regulated Utilities Subject to Refund Under Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Draft Res. L-411)(Item 49, held by Commissioner Simon until March 24, 2011 for further review) – This Draft Resolution, a recapitulation of an earlier draft resolution released by the Commission’s Water Division, would open a proceeding to determine whether the Commission should adjust the rates of cost-of-service rate-regulated utilities to more fully reflect the tax benefits that the utilities will realize from the recently signed federal Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (New Tax Law).  It would also make utilities’ rates subject to refund for the purpose addressing the impacts of the New Tax Law.  The New Tax Law provides for 100% accelerated bonus depreciation on certain business property put into service after September 8, 2010, therefore by this Draft Resolution the Commission would grant authority to the Utility, Audit, Finance & Compliance Branch of the Division of Water and Audits (Branch) to address: (1) what impact the New Tax Law is likely to have on the various classes of cost-of-service rate-regulated utilities; (2) the extent to which the benefits of the New Tax Law will accrue to ratepayers under existing ratemaking mechanisms; and (3) what, if anything, the Commission should do to further address the impact of the New Tax Law on utilities’ cost of service and their rates.  Although this Draft Resolution would direct the Branch to hold workshops to address these questions, those workshops do not to be held if the Branch determines it already has sufficient information to make recommendations to the Commission on these issues.  The Draft Resolution associated with this item is available here.
  • Virgin Mobile USA, LLC Request for “LifeLine Only” Eligible Telecommunications Carrier Status (Item 10, held until March 24, 2011 by Staff) – This Draft Resolution would grant Virgin Mobile USA LLC’s request for limited eligible telecommunications carrier (ETC) status in California for purposes of offering federally-subsidized LifeLine services statewide to qualifying end-user customers.  The Draft Resolution associated with this item is available here.
  • Nexus Communications Inc. Application for “LifeLine Only” Eligible Telecommunications Carrier Status Withdrawn (Item 11, withdrawn)ThisDraft Resolution would have denied Nexus Communications Inc.’s request to be granted limited ETC status in California for the purposes of offering Federal-only LifeLine and Linkup services statewide to qualifying end-user customers. The Commission’s Draft Resolution would have found that the Nexus proposed LifeLine offerings were more expensive than “off-the-shelf” non-LifeLine pre-paid wireless, and that it was not in the public interest to grant this request because a LifeLine customer with average usage could purchase a non-LifeLine pre-paid wireless plan for less than Nexus’s proposed LifeLine plans.  This draft resolution has been withdrawn, most likely because Nexus updated its proposed set of service offerings to match what the Commission has tentatively endorsed for Virgin Mobile and other prospective “LifeLine only” ETCs.  Nexus has also filed a joint set of reply comments with the Small LECs noting that it supports the limitation of its ETC designation to non-Small LEC territories.  The Draft Resolution associated with this item is available here.
  • Pac-West Telecomm, Inc.’s Complaint Against Various Carriers for Failure to Pay Termination Fees – Request for Dismissal (Item 4, held to March 24, 2011 by Staff) – This Proposed Decision would dismiss Pac-West Telecomm, Inc.’s (Pac-West) consolidated action alleging that four defendants – carriers that provide Commercial Mobile Radio Service (CMRS) and transmit CMRS traffic to Pac-West for termination – wrongfully refused to pay Pac-West for termination services, and that defendants be required to pay an amount equal to the termination rate in Pac-West’s intrastate tariff.  The Proposed Decision would dismiss the complaints due to the pendency of an appeal of a Federal Communications Commission (FCC) decision upon which the complaints are based, on the grounds that the conduct that Pac-West challenges appears to be permitted under current federal law, and that the complaints fail to state causes of action under California law for undue discrimination, unreasonable utility practices, or unjust enrichment.  The Proposed Decision would also authorize Pac-West to file a petition to reopen the proceeding if the FCC appeal is resolved in its favor.  The Proposed Decision associated with this item is available here.
  • Southern California Edison Company Request for Permission to Lease Unused Fiber Optic Cables to County of Los Angeles (Item 21, held to March 24, 2011 by Staff) – This Draft Resolution would grant Southern California Edison Company’s (SCE) request to lease certain unused fiber optic cables on SCE’s fiber optic system to the County of Los Angeles, which would be used to form a redundant fiber optic network ring.  The dark fiber that would be leased to the County is classified as “active” under a previous settlement agreement, and the revenue from the leases would be shared between SCE shareholders and ratepayers using a 90/10 split.  The Proposed Decision associated with this item is available here.
  • Verizon California Inc. Request to Discontinue Automatic Delivery of Residential White Pages Telephone Directories (Item 46, held by Commissioner Sandoval until April 14, 2011 for further review) – 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 will 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
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