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On September 10, 2009, the California Public Utilities Commission (“CPUC”) held its regularly scheduled agenda meeting. The meeting was well attended, with the Commission’s decision approving the Smart Grid project review process overshadowed in large part by the Commission’s rejection of Commissioner Simon’s proposed decision on San Diego Gas & Electric’s (SDG&E) proposal to implement an emergency power shut-off plan in high fire zones, and the adoption of a parallel decision by ALJ Kenney rejecting SDG&E’s proposal.

Significantly, Commissioner Chong noted that NTIA has been “overrun” by broadband applications. According to Chong, the new process for ARRA review will be that the states will review and rank all broadband ARRA applications and submit recommendations back to NTIA for final award decisions. Given this change in process, Chong encouraged stimulus funding applicants to immediately send confidential copies of applications to the California Chief Information Officer (CIO). In addition, NTIA recently indicated that there will likely be only one more broadband ARRA application round, so all potential applicants should be ready by the next application deadline (which has yet to be solidified). This and other telecommunications-related items of significance on the Commission’s agenda are discussed in further detail below.


REGULAR AND CONSENT AGENDA ITEMS

  • Third Party Notice Procedure Adopted as Resolution in Raw Bandwith Communications, Inc. Complaint Against SBC California and SBC Advanced Solutions (Item 27, adopted on consent agenda) – This modified presiding officer’s decision addressed Internet Service Provider Raw Bandwith Communication, Inc.’s allegation that the lack of advance notice before disconnection of its Digital Subscriber Line (DSL) Transport Service purchased by Raw’s ISP customers from AT&T Advanced Solutions, Inc. violated AT&T California’s duty to provide just and reasonable service. By this proposed decision, the Commission declined to make the finding urged by the Complainant, but reaffirmed its earlier conclusion that public policy considerations support reasonable advance notice to the ISP of the disconnection of DSL Transport Service. Accordingly, the Commission found that AT&T’s proposal to adopt a third-party notice to be sent to a customer-selected designee of late payment of basic service charges provides reasonable advance notice of the disconnection of DSL Transport Services. This item also closes the proceeding. This proposed modified decision is available here.
  • Decision Adopted Establishing Processes and Criteria for Review of Smart Grid Projects and Investments by Investor-Owned Utilities Seeking Recovery Act Funding from Department of Energy (Item 43, adopted 5-0 on regular agenda) – The Commission was unanimous in its approval of Commissioner Chong’s proposed decision establishing processes and criteria for review of Smart Grid Projects, viewing it as a great opportunity to both accelerate modernization of California’s electric grid and continue California’s goal of reducing greenhouse gas emissions. This decision would align the timeline of the Commission’s review of investor-owned utility Smart Grid projects with the U.S. Department of Energy’s (DOE) rapid timeline for reviewing and granting awards for projects under the American Recovery and Reinvestment Act of 2009 (ARRA). The processes planned for adoption are in some respects faster than typical Commission review processes, however, the Commission has included a significant opportunity for review by the Commission and intervenors so that additional utility investments in Smart Grid projects are consistent with state policy and in the interest of ratepayers. Commissioner Bohn emphasized that this decision was carefully crafted to maintain the requisite oversight of the process while maximizing the benefit California ratepayers would get from DOE awards for Smart Grid Projects. The proposed decision further adopts an expedited Tier-3 advice letter process for review of those projects that have received a DOE award. In addition, investor-owned utilities have the option to seek contingent approval for a Smart Grid project from the Commission in advance of the project being selected by the DOE for an award. The proposed decision associated with this item is available here.
  • Indirect Transfer of Control Approved for Alliance Group Services, Inc. On a Prospective Basis Under Public Utilities Code Section 854 (Item 9, adopted on consent agenda) – Alliance Group Services Inc. (AGS) is a Delaware corporation that provides limited facilities-based and resold interexchange services in California on a wholesale basis to other long distance companies. This proposed decision (PD) grants AGS’s application for an indirect transfer of control to Jess M. DiPasquale (DiPasquale), President and CEO of AGS on a prospective basis only. The PD denies AGS’s application for retroactive approval of the transaction because the transfer was previously consummated without Commission approval, as required by Public Utilities Code Section 854. The PD does not impose a penalty for the previous unlawful indirect transfer of control because of the unique circumstances surrounding transfer of ownership between various entities, which were eventually resolved by the transfer of control of AGS to DiPasquale as required by a settlement agreement approved in a previous decision. However, the PD imposes a $2,500 fine on AGS for failure to file a status report as required by that settlement agreement. The proposed decision associated with this item is available here.
  • Overcharge Complaint Against AT&T Corp. dba Advanced Solutions Dismissed (Item 11, adopted on consent agenda) – The Commission dismissed a complaint by an individual William Hinckley for an alleged $181.77 overcharge. AT&T denied the overcharge but credited the account in the interest of customer relations, and moved to dismiss the complaint as there is no issue left to resolve. This proposed decision is available here
  • Funding for MCC Telephony of the West’s Kernville Interconnect Project Approved (Item 24, adopted on consent agenda) – This Resolution adopts California Advanced Services Fund (CASF) funding support of $285,992 for the Kernville Interconnect project proposed by MCC Telephony of the West, LLC (MCC). MCC is a subsidiary of Mediacom Communications Corporation, which has constructed a local hybrid fiber-coaxial (HFC) network connecting a group of communities in the southern Sierra Nevada mountain communities around Lake Isabella, California, including Kernville, Onyx, Weldon and Wofford Heights. MCC’s project would provide underground fiber optic cable along State Highway 178 between its Ridgecrest and Lake Isabella systems in Kern County, designated as an unserved area, and the amount granted represents 40% of the total project cost. The project is still pending California Environmental Quality Act (CEQA) review by the Commission. This draft resolution is available here.
  • Transfer of CLC Certificate to New Horizons Communications Corporation Approved (Item 35, adopted on consent agenda) – New Horizons Communications Corporation is a Delaware corporation that provides telecommunications services in multiple states and is authorized to provide inter Local Access Transport Area (LATA) and intraLATA services in California. A related entity, New Horizons California (NH-California), is authorized to provide limited facilities-based and resold competitive local exchange services pursuant to a CPCN, but has not yet started providing such services. The entities determined that having a separately-owned but related entity providing intrastate service in California is not practical, and have applied to transfer NH-California’s Competitive Local Carrier (CLC) CPCN to New Horizons. Following transfer of the CLC Certificate to New Horizons, New Horizons will begin to provide local exchange services in California and NH-California will dissolve The proposed decision underlying this item is available here.  
  • Compensation Granted to Disability Rights Advocates (DRA) for Substantial Contributions to Decision 06-08-030, Decision 07-09-019, Decision 07-09-018, Decision 08-04-057, and Decision 08-09-015 (Item 38, adopted on consent agenda) – The Commission granted DRA’s request for compensation of $104,697.30 (a reduction of 35% from the amount requested) for its substantial contributions to: (1) Decision 06-08-030, which evaluates both statutory guidance and market conditions in determining whether the Commission may rely more heavily on competitive forces to produce just and reasonable rates for California’s telephone consumers; (2) Decision 07-09-019 adopting Telecommunications Industry Rules as part of GO 96-B related to Rulemaking (R.) 05-04-005, the Uniform Regulatory Framework (“URF”) proceeding regarding regulation of large and mid-sized Incumbent Local Exchange Carriers; (3) Decision 07-09-018 consolidating proceedings, clarifying rules for advice letters under the URF, and adopting procedures for detariffing related to the URF proceeding; (4) Decision 08-04-057 approving Pacific Bell Telephone Co. Advice letters related to Phase I of the Rulemaking related to the URF Rulemaking; and (5) Decision 08-09-015 adopting no additional monitoring reports as required by any carrier subject to Commission jurisdiction, no changes in the Commission’s pricing regulations for retail special access services, and no additional consumer protection disclosures at this time. The proposed decision associated with this item is available here.  
  • Decision Adopted Denying San Diego Gas & Electric Company’s Proposal to Shut Off Power to Certain San Diego Areas During Periods of High Fire Danger (Item 44a, approved 4-1 on regular agenda) – San Diego Gas & Electric Company’s (SDG&E) proposal to shut off power to high-risk fire areas during extreme fire-hazard weather and approving proposed changes to SDG&E’s Tariff Rule 14 addressing liability for losses from power interruptions, was the big ticket item on the Commission’s agenda. Firefighters and a local politician began the meeting by speaking in strong support of the proposal. At issue were competing, simultaneously-released proposed decisions from Commissioner Simon and ALJ Kenney. While both proposed decisions denied SDG&E’s proposal based on SDG&E’s failure to meet its burden of demonstrating that the benefits of shutting off power outweigh the significant costs, burdens, and risks that would be imposed on customers and communities in the areas where the power is shut off, ALJ Kenney’s proposed decision simply directed SDG&E to make a “good faith effort” to develop a fire prevention program in collaboration with all stakeholders (including telecommunications providers) and closed the proceeding. Commissioner Simon’s proposed decision, on the other hand, would have gone further by: (1) directing the parties to use a collaborative process to consider issues identified in a subsequent ruling; (2) keeping the proceeding open; (3) requiring SDG&E to file an Advice Letter by November 1, 2009 containing a schedule for upgrading the lines and the closure policy in high-fire areas; (4) requiring the parties to file a status update by December 10, 2009 on progress made in the collaborative process; and (5) leaving open the issue of whether revisions to Tariff Rule 14 are appropriate.

    The comments from the Commissioners on this item were extensive and various. Commissioner Grueneich warned SDG&E that they need to carefully think through development of an adequate fire prevention program consistent with their obligations to provide adequate electric supply in San Diego. Commissioner Bohn observed that SDG&E has the same responsibility to exercise its best judgment when the fire danger exceeds an acceptable level, and that the Commission would be watching how SDG&E proceeds. Commissioner Chong reiterated the importance of electric power to California citizens, and suggested a further analysis of the costs and benefits of the proposal was necessary, and reserved her right to file a concurrence.  An earlier version of the adopted ALJ Kenney proposed decision is available here.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Resolving All Outstanding Issues and Providing for Closure of Reparations Funds Resulting From 2002 Investigation of Cingular Wireless
  • (Item 7, initially held from 8/20/09, held again to 9/24/09 by Commissioner Chong for further review) – In D.04-09-062, the Commission fined Cingular Wireless (Cingular) $12.14 million for its unlawful early termination fee (ETF) policies and other corporate practices. Cingular was also ordered to pay reparations of $18,467,220.38 to affected customers, with any unpaid reparations distributed to the State of California General Fund. Following extensive litigation, Cingular (now known as AT&T Mobility (AT&T)), the Utility Consumers Action Network (UCAN), and the Commission’s Consumer Protection and Safety Division (CPSD) entered into an all-party settlement resolving the litigation, requiring Cingular to pay the $12.4 million penalty as well as customer reparations through two different funds. This proposed decision would resolve all issues related to this proceeding and would close the reparations funds by: (1) revising the Decision requiring payment of a second intervenor compensation award to UCAN because that amount had previously been paid to UCAN directly; (2) refunding to AT&T the balance remaining on the original amount deposited for notice and claims administration; and (3) distributing the residual balance of $1.9 million in the two funds to the Telecommunications Consumer Protection Fund. The proposed decision associated with this item is available here


    COMMISSIONER REPORTS

    • Commissioner Chong provided an update on the NTIA ARRA broadband application process. Apparently NTIA was bombarded with applications during the first round, with approximately 2000 applications filed requesting $28 billion in assistance (only $4.2 billion is available in the first round). Approximately 200 California-based applications were filed for a total exceeding $2 billion. Given the number of applications, NTIA recently announced that the states (including California) will be expected to review and rank all applications and send rankings back to NTIA within 20 days after some point in the future not yet specified. This is a change from the original process, whereby the states would see the applications after they had been considered by the NTIA. California’s CIO is charged with primary responsibility for coordinating these grants and therefore requires confidential copies of the applications. According to Chong, many applicants have not provided the CIO with such confidential copies. Commissioner Chong advised that the copies can be transmitted to the CIO through the California Economic Recovery Portal, or they can be provided directly to Mr. Camicia of the California CIO’s office. In addition, Commissioner Chong indicated that NTIA officials have indicated that there will be only one more round of broadband ARRA filings because of the amounts already requested. That “second round” deadline has not yet been announced. Commissioner Chong warned that anyone still interested in filing an application should be ready for the next round deadline because there may not be a third.
    • Commissioner Peevey noted the availability of a new free DVD for consumers that provides information about the CPUC and its programs, including how to file complaints, and how to participate in CPUC proceedings. The DVD can be accessed online through the CPUC’s News Room

    MANAGEMENT REPORTS & MISCELLANEOUS

    • California’s LifeLine Awareness Week runs from September 14-20, 2009. This is part of the National Telephone Discount LifeLine Awareness Week – a state and federal campaign to encourage consumers to take advantage of LifeLine discounted home phone service. A series of events are planned for September around the state. Further information can be found at the California LifeLine Awareness Week website.  
    • The Commission also tested a live video feed from Los Angeles, as part of its continuing attempts to expand accessibility to Commission meetings. If this is successful, travel to Northern California to participate in agenda meetings may no longer be necessary. The Commission is also testing new agenda formats that will include additional information about the costs associated with agenda items, as well as reformatted bullet-point information detailing the specifics of the items.
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