Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2395

Introduced by Assembly Member Low

February 18, 2016

An act to begin delete amend Section 372 of end delete begin insert add Section 711 to end insert the Public Utilities Code, relating to begin delete electrical restructuring. end delete begin insert telecommunications. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2395, as amended, Low. begin delete Electrical restructuring: cogeneration. end delete begin insert Telecommunications: replacement of public switched telephone network. end insert

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Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law, until January 1, 2020, prohibits the commission from regulating Voice over Internet Protocol and Internet Protocol enabled service (IP enabled service), as defined, except as required or delegated by federal law or expressly provided otherwise in statute.

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This bill would require a telephone corporation that is transitioning to IP enabled services and networks to complete a customer education and outreach program explaining the transition from legacy public switched telephone network services regulated by the commission to IP enabled services, the benefits and advantages of IP enabled services, a description of the advanced services available to consumers, and information regarding the projected timeframes for the transition, including that withdrawal of any voice grade single-line telephone service will not take place prior to January 1, 2020. The bill would prohibit a telephone corporation from withdrawing any voice grade single-line telephone services without first giving prior notice to the commission certifying (1) that the telephone corporation has completed the education and outreach program, and (2) that an alternative voice service is available for the affected customers in the affected area. The bill would require the commission to conduct a technical review to confirm that the replacement service has specified elements. Upon completion of these steps, but no sooner than January 1, 2020, the bill would authorize a telephone corporation to elect to discontinue legacy telephone service upon providing not less than 90-days’ notice to the affected customers and to the commission, as specified. The bill would authorize a customer of the telephone corporation, within 30 days after receipt of the notice of withdrawal of legacy voice service to petition the commission to review the availability of the alternative service at the customer’s location. The bill would require the commission to issue an order disposing of the petition not later than 60 days after its filing. The bill would authorize the commission, if it determines after investigation that no alternative service is available to that customer at the customer’s location, to attempt to identify a willing provider of voice service to serve the customer, and if no willing provider is identified, to order the withdrawing telephone corporation to provide voice service to the customer for a period no longer than 12 months after withdrawal. The bill would require the commission to establish a universal connectivity program by September 1, 2019, to ensure that those customers for whom the commission has ordered the withdrawing telephone corporation to provide voice services for the 12-month period will continue to have voice service available after that period.

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Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

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Because the provisions of this bill are within the act and require action by the commission to implement its requirements, a violation of these provisions would impose a state-mandated local program by creating a new crime.

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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.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Provisions of the Public Utilities Act restructuring the electrical services industry state the policy of the state to encourage and support the development of cogeneration as an efficient, environmentally beneficial, competitive energy resource that will enhance the reliability of local generation supply, and promote local business growth.

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This bill would make nonsubstantive changes to the policy of the state relative to cogeneration.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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The Legislature finds and declares all of the
following:

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(a) California continues to be the world’s advanced technology
leader, the center of the innovation economy, and a pioneer in
clean and sustainable technology. The state must adopt a strategy
to build our digital infrastructure while retiring outdated
technology. The transition from 20th century traditional
circuit-switched and other legacy telephone services to 21st century
next-generation Internet Protocol (IP) networks and services is
taking place at an extraordinary pace. A significant majority of
Californians have already transitioned to upgraded
communications services such as high-speed Internet, Voice over
Internet Protocol (VoIP), and mobile telephony services.

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(b) Between 1999 and 2015, California witnessed an estimated
85 percent decline in landlines providing legacy telephone services
and relying on dated technology. At the same time, consumer
adoption of advanced services over IP-based networks has
continued to grow. Californians have quickly adopted new
technologies to communicate. More than 9 out of 10 Californians
use a smartphone or other mobile devices, 86 percent use the
Internet, and there are over 5.7 million VoIP subscriptions. As of
2014, approximately 6 percent of Californians resided in
households with only a landline, a 44 percent decline from 2010.

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(c) So many California consumers have made this transition so
quickly because IP-based services offer greater functionality than
legacy phone service. The gap will only widen with the continuing
integration of IP networks with cloud computing and the Internet
of Things. The policy of the state is to help all Californians
transition to advanced and clean technologies and services so that
everyone, including low-income, senior, and rural communities,
can benefit from and participate fully in 21st century modern life.

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(d) The legacy telephone network is outdated, underutilized,
and carbon-unfriendly when compared to the IP network. Vital
economic, educational, health, and civic opportunities, including
online learning, telemedicine, remote working, e-government
services, and public safety, are not optimized on the outdated
network. The transition from older, dated technologies to newer,
more advanced technologies is nearly complete, and at some point
in the not-too-distant future it will no longer be economically
viable or environmentally sound to maintain legacy networks and
services. The consumer demand will not be there, the economics
will not support it, and the associated environmental burden will
be disproportionate to its long past benefits.

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(e) Recent studies show that transitioning from a legacy switched
network to an all IP network can reduce energy costs by as much
as 70 percent, reduce water use for cooling by as much as 70
percent, and reduce emissions of greenhouse gases by as much as
40 percent. IP services themselves provide even further benefits,
including reduced fuel and electricity use through smart logistics
and telematics for efficient traffic and route management, and
automated monitoring of energy use related to lighting and climate
control. IP-based technologies, including remote water leakage
detection and control and smart irrigation solutions for agriculture,
may also serve to enable efficient use of water by consumers.

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(f) (1) This act will provide a path for the telecommunications
industry to make significant contributions toward the state’s goals
for energy use and emissions of greenhouse gases, as set forth in
the California Global Warming Solutions Act of 2006 (Division
25.5 (commencing with Section 38500) of the Health and Safety
Code) and the Clean Energy and Pollution Reduction Act of 2015
(Chapter 547 of the Statutes of 2015).

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(2) This act will establish state policy for a clearly
communicated, planned, and orderly transition from outdated
technology to cleaner advanced technologies, so that continuity
of service for consumers and businesses is ensured, while
maintaining safeguards to preserve universal connectivity.

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(3) This act will ensure that the advanced services replacing
legacy services provide quality voice service and access to
emergency communications as part of a 21st century policy
framework.

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(4) This act will ensure that advanced services are available to
replace legacy services before the transition, so that all
Californians are able to benefit from the opportunities presented
by advanced technologies and services.

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begin insert SEC. 2. end insert   

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begin insert Section 711 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

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begin insert 711. end insert   

(a) A telephone corporation transitioning to IP-enabled
services and networks shall complete a customer education and
outreach program explaining the IP transition, its benefits and
advantages, including the environmental benefits and advantages,
and a description of the advanced services available to consumers.
The customer education and outreach program shall also include
information regarding the projected timeframes for the transition,
including the fact that the withdrawal of any voice grade single-line
telephone service will not take place prior to January 1, 2020.

(b) A telephone corporation planning to discontinue any voice
grade single-line telephone service shall first give prior notice to
the commission certifying both of the following:

(1) The telephone corporation has completed the education and
outreach program prescribed in subdivision (a).

(2) An alternative voice service is available for the affected
customers in the affected area.

(c) Upon receipt of the notice to withdraw, the commission shall
conduct a technical review to confirm that the alternative service
has all of the following elements:

(1) Voice grade access to the public switched telephone network
or its successor.

(2) Real-time, two-way voice communications.

(3) Access for end users of those services to the local emergency
telephone systems described in the Warren-911-Emergency
Assistance Act (Article 6 (commencing with Section 53100) of
Chapter 1 of Part 1 of Division 2 of Title 5 of the Government
Code), and where available, enhanced 911 access.

(4) Alternative services that require a residential power supply
to operate shall also provide backup-battery capability consistent
with the standard established by the Federal Communications
Commission.

(d) The commission’s technical review shall be limited to the
determination of whether the alternative service has the elements
set forth in subdivision (c) and shall be completed within 120 days
from receipt of notice from the telephone corporation pursuant to
subdivision (b). If the commission fails to complete its technical
review within 120 days from receipt of notice, the telephone
corporation will be conclusively presumed to have complied with
the requirements of subdivisions (b) and (c).

(e) Upon completion of the requirements of subdivisions (b),
(c), and (d) for voice grade single-line services, but no sooner than
January 1, 2020, a telephone corporation may elect to discontinue
any legacy telephone service, upon giving no less than 90-days’
prior notice to the affected customers and to the commission. If
the discontinuance of legacy telephone service includes voice grade
single-line services, the notice shall include information regarding
the availability of an alternative service as verified by the
commission in the technical review, how to petition the commission
for review of the availability of the alternative service at the
customer’s location, and any environmental benefit that will come
with the discontinuance of legacy services and the migration to
alternative services. During the notice period, the telephone
corporation shall continue to provide the legacy telephone service
to the affected customers, except a customer that disconnects or
changes the features of the service, but shall have no obligation
to provide the legacy telephone service to any new customers in
the affected area.

(f) Notwithstanding Section 710, within 30 days after receipt of
a telephone corporation’s notice of withdrawal of legacy voice
service, a customer may petition the commission to review the
availability of the alternative service at the customer’s location.
The commission shall issue an order disposing of the petition not
later than 60 days after the filing of the petition. If the commission
determines after an investigation that no alternative service is
available to the customer at the customer’s location, the
commission shall attempt to identify a willing provider of voice
service to serve the customer. If no willing provider is identified,
the commission may order the withdrawing telephone corporation
to provide voice service to the customer at the customer’s location
for a period no longer than 12 months after withdrawal. The willing
provider or the withdrawing telephone corporation may utilize
any technology or service arrangement to provide the voice
services as long as it meets the requirements of subdivision (c).

(g) By September 1, 2019, the commission shall establish a
universal connectivity program to ensure that those customers for
whom the commission has ordered the withdrawing telephone
corporation to provide voice services for the 12-month period in
subdivision (f) will continue to receive voice service.

(h) Nothing in this section grants the commission jurisdiction
or control over an alternative service except as specifically set
forth in this section.

(i) Nothing in this section affects a telephone corporation’s
ability to withdraw services under any other law.

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begin insert SEC. 3. end insert   

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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.

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SECTION 1.  

Section 372 of the Public Utilities Code is
amended to read:

372.  

(a) It is the policy of the state to encourage and support
the development of cogeneration as an efficient, environmentally
beneficial, competitive energy resource that will enhance the
reliability of local generation supply, and promote local business
growth. Subject to the specific conditions provided in this section,
the commission shall determine the applicability to customers of
uneconomic costs as specified in Sections 367, 368, 375, and 376.
Consistent with this state policy, the commission shall provide
that these costs shall not apply to any of the following:

(1) To load served onsite or under an over-the-fence arrangement
by a nonmobile self-cogeneration or cogeneration facility that was
operational on or before December 20, 1995, or by increases in
the capacity of a facility to the extent that the increased capacity
was constructed by an entity holding an ownership interest in or
operating the facility and does not exceed 120 percent of the
installed capacity as of December 20, 1995, provided that before
June 30, 2000, the costs shall apply to over-the-fence arrangements
entered into after December 20, 1995, between unaffiliated parties.
For the purposes of this subdivision, “affiliated” means a person
or entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with another specified entity. “Control” means either of
the following:

(A) The possession, directly or indirectly, of the power to direct
or to cause the direction of the management or policies of a person
or entity, whether through an ownership, beneficial, contractual,
or equitable interest.

(B) Direct or indirect ownership of at least 25 percent of an
entity, whether through an ownership, beneficial, or equitable
interest.

(2) To load served by onsite or under an over-the-fence
arrangement by a nonmobile self-cogeneration or cogeneration
facility for which the customer was committed to construction as
of December 20, 1995, provided that the facility was substantially
operational on or before January 1, 1998, or by increases in the
capacity of a facility to the extent that the increased capacity was
constructed by an entity holding an ownership interest in or
operating the facility and does not exceed 120 percent of the
installed capacity as of January 1, 1998, provided that before June
30, 2000, the costs shall apply to over-the-fence arrangements
entered into after December 20, 1995, between unaffiliated parties.

(3) To load served by existing, new, or portable emergency
generation equipment used to serve the customer’s load
requirements during periods when utility service is unavailable,
provided the emergency generation is not operated in parallel with
the integrated electric grid, except on a momentary parallel basis.

(4) After June 30, 2000, to a load served onsite or under an
over-the-fence arrangement by a nonmobile self-cogeneration or
cogeneration facility.

(b) Further, consistent with state policy, with respect to
self-cogeneration or cogeneration deferral agreements, the
commission shall do the following:

(1) Provide that a utility shall execute a final self-cogeneration
or cogeneration deferral agreement with a customer that, on or
before December 20, 1995, had executed a letter of intent (or
similar documentation) to enter into the agreement with the utility,
provided that the final agreement shall be consistent with the terms
and conditions set forth in the letter of intent and the commission
shall review and approve the final agreement.

(2) Provide that a customer that holds a self-cogeneration or
cogeneration deferral agreement that was in place on or before
December 20, 1995, or that was executed pursuant to paragraph
(1) in the event the agreement expires, or is terminated, may do
any of the following:

(A) Continue through December 31, 2001, to receive utility
service at the rate and under terms and conditions applicable to
the customer under the deferral agreement that, as executed,
includes an allocation of uneconomic costs consistent with
subdivision (e) of Section 367.

(B) Engage in a direct transaction for the purchase of electricity
and pay uneconomic costs consistent with Sections 367, 368, 375,
and 376.

(C) Construct a self-cogeneration or cogeneration facility of
approximately the same capacity as the facility previously deferred,
provided that the costs provided in Sections 367, 368, 375, and
376 shall apply consistent with subdivision (e) of Section 367,
unless otherwise authorized by the commission pursuant to
subdivision (c).

(3) Subject to the firewall described in subdivision (e) of Section
367, provide that the ratemaking treatment for self-cogeneration
or cogeneration deferral agreements executed before December
20, 1995, or executed pursuant to paragraph (1) shall be consistent
with the ratemaking treatment for the contracts approved before
January 1995.

(c) The commission shall authorize, within 60 days of the receipt
of a joint application from the serving utility and one or more
interested parties, applicability conditions as follows:

(1) The costs identified in Sections 367, 368, 375, and 376 shall
not, before June 30, 2000, apply to load served onsite by a
nonmobile self-cogeneration or cogeneration facility that became
operational on or after December 20, 1995.

(2) The costs identified in Sections 367, 368, 375, and 376 shall
not, before June 30, 2000, apply to a load served under
over-the-fence arrangements entered into after December 20, 1995,
between unaffiliated entities.

(d) For the purposes of this subdivision, all onsite or
over-the-fence arrangements shall be consistent with Section 218
as it existed on December 20, 1995.

(e) To facilitate the development of new microcogeneration
applications, electrical corporations may apply to the commission
for a financing order to finance the transition costs to be recovered
from customers employing the applications.

(f) To encourage the continued development, installation, and
interconnection of clean and efficient self-generation and
cogeneration resources, to improve system reliability for consumers
by retaining existing generation and encouraging new generation
to connect to the electric grid, and to increase self-sufficiency of
consumers of electricity through the deployment of self-generation
and cogeneration, both of the following shall occur:

(1) The commission and the Electricity Oversight Board shall
determine if a policy or action undertaken by the Independent
System Operator, directly or indirectly, unreasonably discourages
the connection of existing self-generation or cogeneration or new
self-generation or cogeneration to the grid.

(2) If the commission and the Electricity Oversight Board find
that a policy or action of the Independent System Operator
unreasonably discourages the connection of existing self-generation
or cogeneration or new self-generation or cogeneration to the grid,
the commission and the Electricity Oversight Board shall undertake
all necessary efforts to revise, mitigate, or eliminate that policy or
action of the Independent System Operator.

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