BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1262 (Wood) - Telecommunications: universal service: California Advanced Services Fund. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: February 27, 2015 |Policy Vote: E., U., & C. 10 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: June 29, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 1262 would transfer $5 million within the California Advanced Services Fund from the Broadband Infrastructure Revolving Loan Account to the Rural and Urban Regional Broadband Consortia Grant Account. Fiscal Impact: Annual costs of approximately $130,000 beginning in January 2018 for two or three years to the California Advanced Services Fund (CASF, special fund) to the California Public Utilities Commission (CPUC) for additional grant administration. Background: Existing law establishes the California Advanced Services Fund (CASF), administered by the CPUC, to help fund deployment of broadband infrastructure and bring high-speed Internet access to AB 1262 (Wood) Page 1 of ? all areas of the state. The CASF is funded from a customer surcharge on intrastate communication services. Section 821 of the Public Utilities Code authorizes the collection of $215 million in surcharges from 2011 through 2020, with no more than $25 million to be collected in any one year. This amount is divided amongst the following four programs: Broadband Infrastructure Grant Account ($170 million): This program provides grants to cover the capital costs of expanding broadband infrastructure. Rural and Urban Regional Broadband Consortia Grant Account ($10 million): This program provides grants to eligible voluntary regional consortia to fund the cost of broadband deployment activities other than capital costs of facilities. Eligible consortia include diverse stakeholders from their respective communities, and work to inform the public about broadband, gather data about Internet availability and speeds for CPUC broadband maps, mobilize local governments and employers to aggregate demand to assist the private sector, ensure local broadband providers know about CASF. There are currently over a dozen regional consortia representing every area of the state. While the members of each regional consortia vary, many consortia include representatives from local businesses, community colleges, school districts, community-based organizations and local governments. Broadband Infrastructure Revolving Loan Account ($10 million): This program provides supplemental financing for projects that are also applying for infrastructure grant funding. The loan can cover up to 20% of the project cost up to $500,000. Broadband Public Housing Account ($25 million): This program supports the deployment of broadband infrastructure and adoption programs in eligible publically supported housing communities. Funds for this program were received from the Infrastructure Grant Account and the Revolving Loan Account. Any remaining funds in this program as of December 31, 2016 will be transferred back in proportion to the two accounts. AB 1262 (Wood) Page 2 of ? Proposed Law: This bill would transfer $5 million from the Broadband Infrastructure Revolving Loan Account to the Rural and Urban Regional Broadband Consortia Grant Account. Staff Comments: The CPUC currently has 1.3 PYs staffing the consortia program (1 Public Utilities Regulatory Analyst IV position and 1/3 Staff Service Analyst position) at an annual cost of approximately $130,000 to the CASF. However, these positions were only approved through the end of 2017 as all the money in the account will be granted out by the end of 2016. The additional money provided for the consortia program under this bill would necessitate these positions to be extended, likely for two to three years to make and oversee additional grants. By decreasing the funding available for the revolving loan program, this bill potentially creates cost pressures for that account. However, any cost pressures are unlikely. As discussed in the CPUC's zero-based budget, the Broadband Infrastructure Revolving Loan Account has been undersubscribed. The lack of interest in this program was not explored. Nevertheless, given the lack of demand for this program, this bill is unlikely to cause any cost pressures on the Revolving Loan Account unless the program is modified. This bill would not change the total authorization for the CASF and therefore there will be no impact to the ratepayers. -- END --