BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2213 (Fuentes)
Hearing Date: 08/02/2010 Amended: 06/22/2010
Consultant: Brendan McCarthy Policy Vote: EU&C 8-0
AB 2213 (Fuentes), Page 2
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BILL SUMMARY: AB 2213 requires that every household in the state
be given access to lifeline telephone service, rather than every
individual. The bill authorizes the Public Utilities Commission
to determine what is considered lifeline service.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Regulatory costs Absorbable within existing
resourcesSpecial *
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS:
Under current law, telephone corporations are required to
provide discounted basic telephone service to low income
customers. This is referred to as "lifeline" service. The Public
Utilities Commission has defined basic telephone service as
having 17 service elements, such as access to all toll carriers,
access to 911 services, free telephone directory listing, and
others.
Under current law and Public Utilities Commission practice, low
income telephone subscribers are eligible for lifeline service
that is set at 50 percent of the cost of basic telephone service
provided by AT&T. Under the current regulation of telephone
service, the Public Utilities Commission regulates telephone
rates for what are known as the incumbent carriers (such as
AT&T). However, pursuant to deregulation of the telephone
industry, beginning on January 1, 2011, telephone rates will no
longer be regulated by the Commission. One impact of the pending
deregulation of rates will be that lifeline service rates may
increase with basic service rates. To avoid significant
increases in lifeline rates, the Commission has opened a
proceeding to determine how to provide lifeline service under
deregulation. That proceeding is also considering whether to
broaden lifeline service beyond fixed, wireline service to other
technologies. The cost of providing lifeline service is
subsidized by non-lifeline telephone customers.
AB 2213 (Fuentes), Page 2
AB 2213 makes definitional changes to the lifeline program.
Specifically, the bill replaces citizen or person in several
places with household and defines household as a residential
dwelling, but not a business. The bill also changes current law
to require that the Commission ensure that lifeline service
subscribers be provided one lifeline subscription, rather than a
single party line (i.e. a fixed telephone line). The bill
provides that the Commission has the authority to define what is
considered lifeline service.
The Commission indicates that any costs under the bill can be
absorbed within existing resources.
Staff notes that changes to the lifeline program have the
potential to have significant impacts on ratepayers. If the
lifeline program is expanded to services beyond basic fixed line
phone service (such as mobile phones or other technologies) that
are more expensive than basic service, ratepayers could see
increased costs to subsidize expanded service. The impact on
ratepayers is unknown, but could be significant.
The bill makes definitional changes that clarify the Public
Utilities Commission's authority to expand the lifeline program
to alternative technologies. However, staff at Legislative
Counsel has informally indicated that the Commission has broad
authority under the Constitution and the Public Utilities Code
to manage the lifeline program - including the authority to
expand the program to alternative technologies. Because this
bill does not require the Commission to expand lifeline service
and because the Commission has existing authority to do so, this
bill will does not impose additional costs on ratepayers beyond
what is allowed under current law.