BILL NUMBER: SB 1364 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Fuller
(Coauthors: Senators Berryhill, Evans, Gaines, Nielsen, Padilla,
and Vidak)
(Coauthors: Assembly Members Conway, Dahle, Beth Gaines, Gray,
Grove, Logue, Olsen, Pan, Perea, and Yamada)
FEBRUARY 21, 2014
An act to amend Sections 275.6 and 739.3 of the Public Utilities
Code, relating to telecommunications, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 1364, as introduced, Fuller. Telecommunications universal
service programs: California High-Cost Fund-A program.
Existing law, the federal Telecommunications Act of 1996,
establishes a program of cooperative federalism for the regulation of
telecommunications to attain the goal of local competition, while
implementing specific, predictable, and sufficient federal and state
mechanisms to preserve and advance universal service, consistent with
certain universal service principles. The universal service
principles include the principle that consumers in all regions of the
nation, including low-income consumers and those in rural, insular,
and high cost areas, should have access to telecommunications and
information services, including interexchange services and advanced
telecommunications and information services, that are reasonably
comparable to those services provided in urban areas and that are
available at rates that are reasonably comparable to rates charged
for similar services in urban areas.
Existing law authorizes the Public Utilities Commission to
supervise and regulate every public utility in the state, including
telephone corporations, and to fix just and reasonable rates and
charges for the public utility. Existing law establishes the state's
universal service funds in the State Treasury, including the
California High-Cost Fund-A Administrative Committee Fund and the
California High-Cost Fund-B Administrative Committee Fund, and
provides that moneys in each of the state's universal service funds
are the proceeds of rates and are held in trust for the benefit of
ratepayers and to compensate telephone corporations for their costs
of providing universal service. Moneys in the funds may only be
expended to accomplish specified telecommunications universal service
programs, upon appropriation in the annual Budget Act or upon
supplemental appropriation. Existing law, until January 1, 2015,
requires the commission to develop, implement, and maintain a
suitable program to establish a fair and equitable local rate
structure aided by universal service rate support to small
independent telephone corporations that serve rural areas and are
subject to rate-of-return regulation by the commission (the CHCF-A
program). Existing law, until January 1, 2015, requires the
commission to develop, implement, and maintain a suitable,
competitively neutral, and broadbased program to establish a fair and
equitable local rate support structure aided by universal service
rate support to telephone corporations serving areas where the cost
of providing services exceeds rates charged by providers, as
determined by the commission (the CHCF-B program).
This bill would extend the repeal date of the CHCF-A program and
CHCF-B program requirements until January 1, 2019.
Under existing law, a violation of the Public Utilities Act or an
order or direction of the commission is a crime.
Because the CHCF-A program and CHCF-B program, that are extended
under the provisions of this bill, are within the act and a decision
or order of the commission implements the programs' requirements, the
bill would impose a state-mandated local program by expanding the
definition of a crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 275.6 of the Public Utilities Code is amended
to read:
275.6. (a) The commission shall exercise its regulatory authority
to maintain the California High-Cost Fund-A Program to provide
universal service rate support to small independent telephone
corporations in amounts sufficient to meet the revenue requirements
established by the commission through rate-of-return regulation in
furtherance of the state's universal service commitment to the
continued affordability and widespread availability of safe,
reliable, high-quality communications services in rural areas of the
state.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Carrier of last resort" means a telephone corporation that is
required to fulfill all reasonable requests for service within its
service territory.
(2) "Rate base" means the value of a telephone corporation's plant
and equipment that is reasonably necessary to provide regulated
voice services and access to advanced services, and upon which the
telephone corporation is entitled to a fair opportunity to earn a
reasonable rate of return.
(3) "Rate design" means the mix of end user rates, high-cost
support, and other revenue sources that are targeted to provide a
fair opportunity to meet the revenue requirement of the telephone
corporation.
(4) "Rate-of-return regulation" means a regulatory structure
whereby the commission establishes a telephone corporation's revenue
requirements, and then fashions a rate design to provide the company
a fair opportunity to meet the revenue requirement.
(5) "Revenue requirement" means the amount that is necessary for a
telephone corporation to recover its reasonable expenses and tax
liabilities and earn a reasonable rate of return on its rate base.
(6) "Small independent telephone corporations" are rural incumbent
local exchange carriers subject to commission regulation.
(c) In administering the California High-Cost Fund-A Program, the
commission shall do all of the following:
(1) Continue to set rates to be charged by the small independent
telephone corporations in accordance with Sections 451, 454, 455, and
728.
(2) Employ rate-of-return regulation to determine a small
independent telephone corporation's revenue requirement in a manner
that provides revenues and earnings sufficient to allow the telephone
corporation to deliver safe, reliable, high-quality voice
communication service and fulfill its obligations as a carrier of
last resort in its service territory, and to afford the telephone
corporation a fair opportunity to earn a reasonable return on its
investments, attract capital for investment on reasonable terms, and
ensure the financial integrity of the telephone corporation.
(3) Ensure that rates charged to customers of small independent
telephone corporations are just and reasonable and are reasonably
comparable to rates charged to customers of urban telephone
corporations.
(4) Provide universal service rate support from the California
High-Cost Fund-A Administrative Committee Fund to small independent
telephone corporations in an amount sufficient to supply the portion
of the revenue requirement that cannot reasonably be provided by the
customers of each small independent telephone corporation after
receipt of federal universal service rate support.
(5) Promote customer access to advanced services and deployment of
broadband-capable facilities in rural areas that is reasonably
comparable to that in urban areas, consistent with national
communications policy.
(6) Include all reasonable investments necessary to provide for
the delivery of high-quality voice communication services and the
deployment of broadband-capable facilities in the rate base of small
independent telephone corporations.
(7) Ensure that support is not excessive so that the burden on all
contributors to the California High-Cost Fund-A Program is limited.
(d) In order to participate in the California High-Cost Fund-A
Program, a small independent telephone corporation shall meet all of
the following requirements:
(1) Be subject to rate-of-return regulation.
(2) Be subject to the commission's regulation of telephone
corporations pursuant to this division.
(3) Be a carrier of last resort in their service territory.
(4) Qualify as a rural telephone company under federal law (47
U.S.C. Section 153(44)).
(e) Upon request from the commission, a small independent
telephone corporation that receives support from the California
High-Cost Fund-A Program shall provide information regarding revenues
derived from the provision of unregulated internet access service by
that corporation or its affiliate within that corporation's
telephone service territory. The commission shall treat as
confidential any information provided pursuant to this subdivision.
(f) The commission shall structure the programs required by this
section so that any charge imposed to promote the goals of universal
service reasonably equals the value of the benefits of universal
service to contributing entities and their subscribers.
(g) This section shall remain in effect only until January 1,
2015, 2019, and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2015, 2019, deletes or
extends that date.
SEC. 2. Section 739.3 of the Public Utilities Code is amended to
read:
739.3. (a) The commission shall develop, implement, and maintain
a suitable program to establish a fair and equitable local rate
structure aided by universal service rate support to small
independent telephone corporations serving rural and small
metropolitan areas. The purpose of the program shall be to promote
the goals of universal telephone service and to reduce any disparity
in the rates charged by those companies.
(b) For purposes of this section, small independent telephone
corporations means those independent telephone corporations serving
rural areas, as determined by the commission.
(c) The commission shall develop, implement, and maintain a
suitable, competitively neutral, and broadbased program to establish
a fair and equitable local rate support structure aided by universal
service rate support to telephone corporations serving areas where
the cost of providing services exceeds rates charged by providers, as
determined by the commission. The commission shall develop and
implement the program on or before October 1, 1996. The purpose of
the program shall be to promote the goals of universal telephone
service and to reduce any disparity in the rates charged by those
companies. Except as otherwise explicitly provided, this subdivision
does not limit the manner in which the commission collects and
disburses funds, and does not limit the manner in which it may
include or exclude the revenue of contributing entities in
structuring the program.
(d) The commission shall structure the programs required by this
section so that any charge imposed to promote the goals of universal
service reasonably equals the value of the benefits of universal
service to contributing entities and their subscribers.
(e) The commission shall investigate reducing the level of
universal service rate support, or elimination of universal service
rate support in service areas with demonstrated competition.
(f) By July 1, 2010, the commission shall prepare and submit to
the Legislature a report on the affordability of basic telephone
service in areas funded by the California High-Cost Fund-B
Administrative Committee Fund. The report, among other things, shall
provide information on prices and costs of basic telephone service,
and penetration and utilization rates of basic telephone service by
income, ethnicity, age, and other demographic characteristics, using
surveys and other methods of identifying the factors affecting
affordability of basic telephone service for customers and
noncustomers. The report shall describe the characteristics of
noncustomers and their reasons for not having telephone service. The
report shall identify those persons most at risk of losing basic
telephone service. The report shall be funded out of the California
High-Cost Fund-B Administrative Committee Fund.
(g) This section shall only apply to the California High-Cost
Fund-B Administrative Committee Fund program.
(h) This section shall remain in effect only until January 1,
2015, 2019, and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2015, 2019, deletes or
extends that date.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 4. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to ensure that the Public Utilities Commission has the
necessary statutory direction to fund the state's universal service
programs at the earliest possible time, it is necessary for this act
to take effect immediately.