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On Thursday, November 9, 2006, the Commission held its regularly-scheduled agenda meeting. The meeting was generally swift and lively, although it began with a barrage of negative public comments from residents of Felton, California, in connection with proposed rate hikes by their current water company, California American Water. After some initial moments of intensity, the Commission moved forward with its agenda, which included a decision suspending the ULTS income verification procedures, and a proposal by the CPUC to offer comments in the FCC jurisdictional separations docket. A number of significant telecommunications-related items were also on the hold list.

A further discussion of noteworthy items from the November 9th meeting is provided below.


REGULAR AND CONSENT AGENDA ITEMS

  • Full Commission Ratifies Grueneich ACR Suspending ULTS Income Verification Procedures (Item 26, adopted 5-0) – Based on concerns about inadequacies in the ULTS income verification process administered by the third-party certifying agenda, Solix, Inc., Commissioner Grueneich issued an Assigned Commissioner’s Ruling on November 1, 2006 suspending the verification procedures pending efforts to correct the problems with the current formulation of the program. By a unanimous 5-0 vote, the Commission ratified the Grueneich ACR, thereby paving the way for workshops and other proceedings to address the issues that have been raised regarding the ULTS income verification / certification processes.

    Commissioner Grueneich introduced this item, emphasizing that the results under the new ULTS program have been “alarming.” In the first two months of the program, Solix reported that customers were returning ULTS verification documents at a very low rate. During August, only 29% of customers returned the verification notice issued by Solix, and during September, the rate of return was only 48%. According to Grueneich, these rates are far lower than the approximate 70% response rate that carriers had been experiencing under the previous ULTS program.

    Grueneich observed that these figures point to “serious problems” that will take some time to resolve. The Commission will be holding a workshop on Monday and Tuesday of next week to take inventory of the problems, and craft appropriate solutions. The first proposed solution is to modify the envelope in which the verification forms are provided. Grueneich reported that Solix had being using a plain white envelope, designed only with the Lifeline logo. Based on the new Lifeline logo (which reflects a pair of human figures), some customers apparently concluded that Lifeline was a dating service. To avoid this perception, and the general perception that the verification documents are some form of junk mail, the envelope will be augmented with some red lettering clearly delineating that Lifeline relates to telephone service, and that immediate action is required.

    In comments on the ACR, carriers also raised a number of other issues with the new certification / verification program, including database issues, data transfer issues, and problems regarding Solix’s systems and protocols. These issues will be discussed during the upcoming workshops, along with the immediate concerns regarding the rigidity of the verification process.

  • CPUC Comments on Jurisdictional Separations Issues at FCC (Item 38, adopted on consent agenda) – On May 16, 2006, the FCC released a Further Notice of Proposed Rulemaking addressing jurisdictional separations issues. By this item, the Commission directed staff to file reply comments on that FNPRM on November 20, 2006.

    The FNPRM extended the FCC-imposed freeze on the types of carrier relationships that implicate jurisdictional separations issues, and sought comment on various separations reform proposals. The FNPRM also seeks input on whether to issue separations-related data requests to affected carriers, how to separate costs associated with new technologies, and about the possible interplays between jurisdictional separations issues and other issues under consideration at the FCC, including universal service, local competition, and special access.

    As reflected in a Legal Division memorandum provided at the meeting, the CPUC’s comments will support the extension of the separations freeze, and endorse the issuance of data requests to further examine separations reform. The CPUC comments will emphasize that “[s]eparations reform directly affects the small rate-of-return carriers in California, and has the potential to affect funding of California’s Universal Service programs.” The CPUC also speculates that separations issues could be impacted by ongoing state and federal efforts to reform access charges and universal service. The CPUC did not submit opening comments in this FCC docket, so these comments will be the Commission’s first formal statements on the subject at the FCC.

  • Consumer Complaint Against AT&T Results in Finding that AT&T Failed to Provide Adequate Service (Item 13, adopted on consent agenda) – This decision resolves a complaint case between an AT&T customer and AT&T regarding allegations that the customer’s dial-up access number changed without his consent from a local number to a toll number, thereby generating more than $350.00 in unexpected charges for the customer. Based on the customer’s statements that he did not program his modem to dial the toll number, the Commission ruled in favor of the customer, and ordered that his disputed payments be refunded. As the Commission noted, “[t]his case is the latest in what is now a long line of cases in which an internet dial-up number somehow changes from local to toll, apparently without deliberate act by the customer.” Following the precedent from the Higginbotham v. Pacific Bell case, the Commission found that AT&T had failed to provide “just and reasonable service” by failing to provide a reasonable mechanism for customers to obtain toll pricing information.

  • Intervenor Compensation Awarded in Consumer Protection Proceeding (Item 16, adopted on consent agenda) – This decision awards more than $429,000 in intervenor compensation to a variety of intervenors in connection with their work in the consumer protection docket, leading to the issuance of D.06-03-013. The intervenors receiving compensation include the California Small Business Roundtable, Disability Rights Advocates, Greenlining Institute, Latino Issues Forum, National Consumer Law Center, Inc.; and The Utility Reform Network.

  • Intervenor Compensation Awarded in Triennial Review Order Proceeding (Item 17, adopted on consent agenda) – By this decision, the Commission awarded more than $275,000 in intervenor compensation to The Utility Reform Network in compensation for its contributions to D.05-07-043, the decision resolving the Commission’s implementation of the FCC’s Triennial Review Order.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Adopting Changes to Affiliate Transaction Rules and G.O. 77-L for Energy Utilities (Item 29, held by staff until 11/30) – The proposed decision presented by this item would adopt affiliate transaction rules and modifications to G.O. 77 for gas and electric utilities. The proposed decision has been held to allow for further revisions to the proposed G.O. 77-M to take place. As reflected in a November 7, 2006 Assigned Commissioner’s Ruling in that docket, the changes are intended to clarify that the additional elements of G.O. 77 are intended to apply only to Respondent to the proceeding, all of whom are energy utilities.

  • Decision Adopting Amendments to Rules Governing the Attachment of Wireless Antennas on Jointly Used Utility Poles and Towers (Item 30, held by staff until 12/14 for compliance with Pub. Util. Code Section 311(e)) – The proposed decision presented by this item would modify Rule 94 of General Order 95, and thereby adopt revised rules for attaching wireless antennas on jointly used utility poles and towers. This matter was originally submitted for the Commission’s consideration at the May 25, 2006 agenda meeting. However, in July 2006, a group of interested parties requested that the proceeding be reopened so that the parties could pursue a settlement. That request was granted, and the Commission held a hearing on September 12, 2006 to give proponents of settlement an opportunity to be heard on the subject. As a result of that proceeding, a settlement was reached, which is now reflected in a revised proposed decision. The revised proposed decision was held to complete the notice and comment process for alternate proposed decisions, as reflected in Public Utilities Code Section 311(e).

  • Decision on Petitions for Modification of Batch Hot Cut Decision Withdrawn (Item 36, withdrawn) – This item would have resolved Petitions for Modification filed by Verizon and SBC with respect to the decision concluding the Triennial Review Order, 9-month phase. In particular, the large ILECs sought to reverse the requirement that batch hot cut process and pricing disputes be submitted to arbitration. The draft decision in this case would have deferred these issues to a pair of pre-hearing conferences in the consolidated arbitration proceedings for Verizon and SBC. Following a series of ex parte meetings between the interested parties and Commissioner advisors (including Verizon, AT&T, and Covad), this item has been withdrawn.

  • Decision on VNXX Issues Affecting Small LECs (Item 37, held by Peevey until 11/30 for further consideration) – This proposed decision would clarify the proper intercarrier compensation treatment of calls with disparate rating and routing points (often called “Virtual NXX” or “VNXX” calls), where those calls are rated as local calls in Small LEC service territories.

  • Decision Eliminating Intervenor Compensation Fund in Quasi-Legislative Proceedings (Item 39, held by staff until 11/30) – This proposed decision would modify the Commission’s intervenor compensation protocols in certain respects, most notably by removing the intervenor compensation fund that is relied on to compensate intervenors for their contributions in quasi-legislative proceedings. Rather than paying intervenors in this manner, the proposed decision would shift intervenor costs to carriers. In telecommunications-related proceedings, carriers with more than $50 million in annual revenue would be responsible for dividing up intervenor payments.


NOTES AND COMMISSIONER REPORTS

  • Commission Celebrates Defeat of Eminent Domain Initiative (Proposition 90) – Commissioner Peevey briefly mentioned in a Commissioner report that Proposition 90 had been defeated in the California general election on Tuesday, November 7, 2006.

    Several months ago, the Commission had taken an “oppose” position on Prop. 90, emphasizing that it would have exposed utilities to significant costs and burdens in connection with their use of public rights-of-way, and their exercise of eminent domain. The legislation would have permitted a jury trial on the question of whether eminent domain had been exercised for a “public use,” a change that could have transformed condemnation actions into drawn-out, subjective, fact-intensive inquiries. Prop. 90 also would have expanded the range of damages that could be collected in condemnation actions, based on a broader definition of “just compensation” than exists in current law. Much to the Commission’s delight, Prop. 90 was narrowly defeated by a 5% margin. Commissioner Peevey commended the staff for their work in preparing the opposition materials, and expressed relief that this potential burden on utilities and their customers was avoided.

  • Public Participation Hearings in Public Policy Fund Proceeding Completed – Commissioner Chong proudly announced that the public participation proceedings in the public policy fund proceeding (R.06-05-28) are now complete, and that they provided some significant and useful input from consumers regarding their priorities relative to the public programs. Over the past two months, the Commission has held three public participation hearings with regard to the public purpose programs. These hearings were held in San Diego, Oxnard, and Sacramento. Commissioner Chong described the hearings as a great success, and announced that she would be meeting with her advisors and with the ALJ to determine the next steps for the proceeding.

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