On March 24, 2011, the California Public Utilities Commission held its regularly scheduled agenda meeting. President Peevey started the meeting by introducing Mark Ferron, who was appointed to the Commission by Governor Brown earlier in the week. Commissioner Ferron is a senior partner at Silicon Valley Social Ventures and is a board fellow of the New Teacher Center. From 2001 to 2009, he worked as chief operating officer for the Global Markets Division of Deutsche Bank in London, where he had responsibility for all operational activities globally across fixed income, currency, commodity and equity markets. Before joining Deutsche Bank, Commissioner Ferron was a vice president at Salomon Brothers from 1994 to 1996, and was a vice president at Bank of America from 1986 to 1994. Commissioner Ferron holds a B.A. in mathematics from the University of Notre Dame and a master’s degree in economics from Stanford University.

Again, most of the meeting was devoted to hearing from the public. President Peevey noted that the 87 members of the public who addressed the Commission for about three hours was unprecedented. He compared the opportunity for public comment at the Commission favorably to other legislative bodies. Commissioner Sandoval thanked the members of the public, some of whom had traveled great distances, for their comments and noted later in the meeting that she favors increasing opportunities for public participation. The primary topic addressed during public comment was the deployment of smart meters by PG&E. In addition, members of the comment addressed a connection moratorium by Cal-Am Water in Monterey, the San Bruno explosion, and nuclear plant safety. With respect to the smart meter issue, President Peevey noted that PG&E was expected later that day to present a proposal to allow subscribers to opt-out of the wireless data transmission aspects of the program.

Items of interest from the meeting are discussed in further detail below.


  • Order Instituting Rulemaking on the Commission’s Own Motion to Adopt New Safety and Reliability Regulations for Natural Gas Transmission and Distribution Pipelines and Related Ratemaking Mechanisms (Item 63, adopted 5-0 on regular agenda)— The Commission adopted an Order to Show Cause directing PG&E to appear at a hearing the following Monday to show why it should not be found in contempt and fined for failing to comply with a previously-issued pipeline records request sent after the San Bruno explosion. The Commission found PG&E’s response, filed March 15, 2011, inadequate in that it did not compare installed pipe to as-built drawings and other records in order to confirm the proper maximum pressure has been established for pipelines. Instead, PG&E apparently relied on determinations of maximum pressure based on historical operating pressure data. After the Commission adopted the Order to Show Cause, Executive Director Clanon described a stipulated resolution of the dispute that has been reached by Commission staff with the utility that will be discussed at the hearing on Monday. The stipulated outcome would fine PG&E $6 million in shareholder funds for failure to comply with the Commission’s order and require PG&E to operate under a compliance plan to complete the directives regarding establishing the maximum proper pressure for its pipeline facilities. Of the $6 million fine, $3 million would be paid immediately to the state’s General Fund and $3 million would be suspended if PG&E meets the detailed requirements in the compliance plan. In their comments, the commissioners expressed reproval of PG&E’s response to date and stated that it is not acceptable to rely on past pipeline pressure measurements to determine what would be safe for future operations. The Order to Show Cause adopted by the Commission is available here. Documents related to PG&E’s pipeline explosion in San Bruno are available here on the Commission’s website.
  • Order Instituting Rulemaking to Address Electric Utility Cost and Revenue Issues Associated with Greenhouse Gas Emissions (Item 23, adopted 5-0 on regular agenda) — This Decision opens a rulemaking proceeding to address electric utility cost and revenue issues associated with compliance with rules adopted by the California Air Resources Board for greenhouse gas emissions. These rules were scheduled to go into effect on January 1, 2012, but have been enjoined in a Superior Court lawsuit. President Peevey explained that the rulemaking has been opened to prepare for the “cap and trade” program if the injunction is lifted and the program goes into effect. The purpose of the rulemaking is to broadly examine impacts of cap and trade on utilities. Commissioner Simon expressed concern about the potential impact of such programs on communities of color. The Order Instituting Rulemaking is available here.
  • Order Instituting Rulemaking Regarding Revisions to the California Universal Telephone Service (LifeLine) Program (Item 31, adopted 5-0 on regular agenda) — This new Order Instituting Rulemaking addresses implementation issues and areas for clarification left open by D. 10-11-033 in R. 06-05-028, such as the participation of non-traditional carriers, such as wireless carriers, in the LifeLine program. The assigned commissioner will issue a scoping memo setting forth the specific issues to be resolved in the new rulemaking and the schedule for resolving them. In addition, the new OIR addresses the need for clarification of what was adopted in D. 10-11-033 with respect to the definition of the “transition period” used in connection with implementation of the Specific Support Amount program, carrier reimbursement practices pursuant to General Order 153, and the treatment of LifeLine measured rate service. The Communications Division will hold workshops on these topics and and prepare proposed revisions to General Order 153 for consideration by the Commission in June to become effective in September, ninety days after their adoption. A recent draft of the Order Instituting Rulemaking is available here.
  • Pac-West Telecomm, Inc. v. Sprint Spectrum, L.P. et al. (Item 3, adopted on consent agenda) — This Decision dismisses without prejudice complaints against commercial mobile radio service (CMRS) providers for failure to pay compensation for terminating traffic pending resolution of an appeal before the United States Court of Appeals for the District of Columbia Circuit of the FCC decision on which the complaint is based. The proposed decision voted upon by the Commission is available here.
  • Determination of Ratemaking Treatment for Rural Telephone Bank Stock Redemption Proceeds (Item 8, adopted on consent agenda) — This Decision denies a request of three small local exchange carriers to defer issuing customer refunds ordered in D. 10-06-029 pending judicial review. The proposed decision associated with this item is available here.
  • Resolution Adopting Intervenor Rates for 2011 (Res. ALJ-267, Item 10, adopted on consent agenda) — This Decision maintains current intervenor compensation rates without a cost-of-living adjustment for 2011. The rates for 2011 remain unchanged from those adopted in 2008 in D. 08-04-010. The resolution adopted by the Commission is available here.
  • Revise California High Cost Fund-B Surcharge Rate to 0.30% Effective May 1, 2011 and Thereafter (Res. T-17311, Item 12, adopted on consent agenda) — This Resolution reduces the California High Cost Fund-B (CHCF-B) surcharge from 0.45% to 0.30%, effective May 1, 2011. The draft resolution considered by the Commission is available here.
  • California-American Water Company to Comply With 2009 State Water Resources Control Board Cease and Desist Order Imposing Moratorium on New Connections and Increased Use (Item 32, adopted 5-0 on regular agenda) — This Decision directs California-American Water Company to comply with a 2009 State Water Resources Control Board moratorium order in the Monterey District. President Peevey stated that the Commission is powerless to stop the moratorium on connections ordered by the State Water Resources Control Board. A recent draft of the order adopted by the Commission is available here.
  • Southern California Edison Company Request for Permission to Lease Unused Fiber Optic Cables to County of Los Angeles (Item 19, adopted on consent agenda) — This Decision grants the request of Southern California Edison (SCE) to lease 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.
  • Comments Before the Federal Communications Commission in the Matter of Connect America Fund (Item 35, adopted on consent agenda) — The Commission granted a staff request to file comments recommending that (1) interconnected Voice-over-Internet-Protocol providers be integrated into the intercarrier compensation rules to be adopted by the FCC (without specifically endorsing any of the various alternatives set forth in the pending FCC proceeding); (2) supporting proposed revisions to the call signaling rules to reduce phantom traffic by prohibiting alteration of a calling party’s number; and (3) urging the FCC to adopt rules to address access stimulation. The Legal Division memo setting forth its recommendations is available here.


  • 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 (Res. L-411, Item 33, held by Commissioner Sandoval to 4/14/11) — This Draft Resolution proposes establishment, for each cost-of-service rate-regulated utility with the exception of Class C and D water and sewer utilities, a memorandum account to reflect, on a CPUC-jurisdictional, revenue requirement basis, impacts from the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 (“the “2010 Tax Law”). This memorandum account would track on a revenue requirement basis the impacts of the 2010 Tax Law not otherwise reflected in rates during the period starting on the effective date of the resolution if adopted until the effective date of revenue requirement changes in each utility’s next general rate case. This memorandum account would be used in determining whether any future rate reduction is appropriate to reflect impacts of the 2010 Tax Law. The draft resolution associated with this item is available here.
  • Virgin Mobile USA, LLC for a Limited Eligible Telecommunications Carrier Status (Res. T-17284, Item 7 held by staff to 3/10/11) — This Draft Resolution would grant a request for limited eligible telecommunications carrier status. The Draft Resolution associated with this item is available here.


  • Commissioner Sandoval announced that Ditas Katague has been appointed as her new chief of staff. She was previously Chief Deputy Commissioner of the California Department of Corporations.
  • Commissioner Ferron announced that former administrative law judge Mark Wetzell would serve as his interim chief of staff.
  • Executive Director Clanon introduced presentations regarding the investigation into a recent BART derailment and nuclear safety.

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