SB 1122, as amended, Cannella. Telecommunications:begin insert small independent telephone corporations: rates:end insert universal service: California High-Cost Fund-A.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law authorizes the commission to fix just and reasonable rates andbegin delete charges.end deletebegin insert charges for every public utility. Existing law, with certain exceptions, prohibits a public utility from changing any rate, except upon a showing before the commission and a finding by the commission that the new rate is justified.end insert Existing law requires the commission to exercise its regulatory authority to maintain the California High-Cost Fund-A Program (CHCF-A program) to provide universal service rate support to small independent telephone corporations, as defined, in amounts
sufficient to meet the revenuebegin delete requirementsend deletebegin insert requirement, as defined,end insert 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.
This bill wouldbegin delete make a nonsubstantive change toend deletebegin insert reviseend insert the CHCF-A programbegin delete requirements.end deletebegin insert
requirements to provide that the revenue requirement of a small independent telephone corporation includes rate case expenses, as defined, and would require that rate case expenses be separately included in the revenue requirement regardless of any commission determinations regarding the reasonableness of other expenses. The bill would require the commission to issue its final decision on a general rate case of a small independent telephone corporation no later than 390 days following the corporation’s filing of its general rate case application or advice letter initiating the general rate case. If the commission fails to issue a final decision by the 390th day, the bill would provide that the rate design proposed by the small independent telephone corporation in its application or advice letter will take effect on an interim basis, subject to an accounting true-up in a final commission decision or resolution concluding the rate case, if issued within 420 days. If a final decision or resolution
concluding the case has not been issued by the commission within 420 days, the bill would provide that the interim rate design that went into effect on the 390th day following the filing of the general rate case application or advice letter would become final and that rate design would remain in place until the commission issues a final decision or resolution concluding the rate case, without any true-up accounting. The bill would provide that any new rate design adopted in a final decision or resolution issued by the commission after 420 days following the filing of the application or advice letter would take effect on a prospective basis only, as of the effective date of the final decision or resolution. The bill would provide that its provisions may be waived at any time by mutual consent of the executive director of the commission and the small independent telephone corporation.end insert
Vote: majority.
Appropriation: no.
Fiscal committee: begin deleteno end deletebegin insertyesend insert.
State-mandated local program: no.
The people of the State of California do enact as follows:
Section 275.6 of the Public Utilities Code is
2amended to read:
(a) The commission shall exercise its regulatory
4authority to maintain the California High-Cost Fund-A
5Administrative Committee Fund program (CHCF-A program) to
6provide universal service rate support to small independent
7telephone corporations in amounts sufficient to meet the revenue
8begin delete requirementsend deletebegin insert requirementend insert established by the commission through
9rate-of-return regulation in furtherance of the state’s universal
P3 1service commitment to the continued affordability and widespread
2availability of safe, reliable, high-quality communications services
3in rural areas of the state.
4(b) For purposes of this section, the following terms have the
5following meanings:
6(1) “Carrier of last resort” means a telephone corporation that
7is required to fulfill all reasonable requests for service within its
8service territory.
9(2) “Rate base” means the value of a telephone corporation’s
10plant and equipment that is reasonably necessary to provide
11regulated voice services and access to advanced services, and upon
12which the telephone corporation is entitled to a fair opportunity to
13earn a reasonable rate of return.
14
(3) “Rate case expenses” mean the reasonable costs incurred
15by a telephone corporation in preparing, initiating, and
16participating in any commission proceeding or advice letter
17process in which its rates,
rate design, or revenue requirement are
18evaluated or adjusted.
19(3)
end delete
20begin insert(4)end insert “Rate design” means the mix of end-user rates, high-cost
21support, and other revenue sources that are targeted to provide a
22fair opportunity to meet the revenue requirement of the telephone
23corporation.
24(4)
end delete
25begin insert(5)end insert “Rate-of-return regulation” means a
regulatory structure
26whereby the commission establishes a telephone corporation’s
27revenuebegin delete requirements,end deletebegin insert requirement,end insert and then fashions a rate design
28to provide the company a fair opportunity to meet the revenue
29requirement.
30(5)
end delete
31begin insert(6)end insert “Revenue requirement” means the amount that is necessary
32for a telephone corporation to recover its reasonable expenses and
33tax liabilities and earn a reasonable rate of return on its rate base.
34
begin insert
Reasonable expenses include rate case expenses. Rate case
35expenses shall be separately included in the revenue requirement
36regardless of any commission determinations regarding the
37reasonableness of other expenses.end insert
38(6)
end delete
P4 1begin insert(7)end insert “Small independent telephone corporations” are rural
2incumbent local exchange carriers subject to commission
3regulation.
4(c) In administering the CHCF-A program the commission shall
5do all of the following:
6(1) Continue to set rates to be charged by the small independent
7telephone
corporations in accordance with Sections 451, 454, 455,
8and 728.
9(2) Employ rate-of-return regulation to determine a small
10independent telephone corporation’s revenue requirement in a
11manner that provides revenues and earnings sufficient to allow the
12telephone corporation to deliver safe, reliable, high-quality voice
13communication service and fulfill its obligations as a carrier of
14last resort in its service territory, and to afford the telephone
15corporation a fair opportunity to earn a reasonable return on its
16investments, attract capital for investment on reasonable terms,
17and ensure the financial integrity of the telephone corporation.
18(3) Ensure that the rates charged to customers of small
19independent telephone corporations are just and reasonable and
20are reasonably comparable to rates charged to customers of urban
21telephone corporations.
22(4) Provide universal service rate support from the California
23High-Cost Fund-A Administrative Committee Fund to small
24independent telephone corporations in an amount sufficient to
25supply the portion of the revenue requirement that cannot
26reasonably be provided by the customers of each small independent
27telephone corporation after receipt of federal universal service rate
28support.
29(5) Promote customer access to advanced services and
30deployment of broadband-capable facilities in rural areas that is
31reasonably comparable to that in urban areas, consistent with
32national communications policy.
33(6) Include all reasonable investments necessary to provide for
34the delivery of high-quality voice communication services and the
35deployment of broadband-capable facilities in the rate base of
36small independent telephone
corporations.
37(7) Ensure that support is not excessive so that the burden on
38all contributors to the CHCF-A program is limited.
P5 1(d) In order to participate in the CHCF-A program, a small
2independent telephone corporation shall meet all of the following
3requirements:
4(1) Be subject to rate-of-return regulation.
5(2) Be subject to the commission’s regulation of telephone
6corporations pursuant to this division.
7(3) Be a carrier of last resort in their service territory.
8(4) Qualify as a rural telephone company under federal law (47
9U.S.C. Sec. 153(44)).
10(e) Upon
request from the commission, a small independent
11telephone corporation that receives support from the CHCF-A
12program shall provide information regarding revenues derived
13from the provision of unregulated Internet access service by that
14corporation or its affiliate within that corporation’s telephone
15service territory. The commission shall treat as confidential any
16information provided pursuant to this subdivision.
17(f) The commission shall structure the CHCF-A program so
18that any charge imposed to promote the goals of universal service
19reasonably equals the value of the benefits of universal service to
20contributing entities and their subscribers.
21(g) This section shall remain in effect only until January 1, 2019,
22and as of that date is repealed, unless a later enacted statute, that
23is enacted before January 1, 2019, deletes or extends that
date.
begin insertSection 455.4 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert, to
25read:end insert
(a) For purposes of this section, “small independent
27telephone corporation” has the same meaning as in Section 275.6.
28
(b) A small independent telephone corporation may file its
29general rate case application or advice letter initiating a general
30rate case any time up to and including December 1 of the second
31year preceding the test year used in its rate case.
32
(c) The commission shall issue its final decision on a general
33rate case of a small independent telephone corporation no later
34than 390 days following the corporation’s filing of its general rate
35case application or advice letter initiating the general rate case.
36
(d) Notwithstanding Section 454, if the commission fails to issue
37a final decision as required by subdivision (c), the rate design
38proposed by the small independent telephone corporation in its
39application or advice letter shall take effect on an interim basis
40beginning 390 days following the filing of the application or advice
P6 1letter. That rate design shall be subject to an accounting true-up
2if a final commission decision or resolution concluding the rate
3case is issued within 420 days of the filing. The rate design adopted
4in a commission decision or resolution within 420 days shall be
5made effective as of the 390th day and the accounting true-up shall
6eliminate any revenue differences between the interim rate design
7and the rate design in the commission decision or resolution. If a
8final decision or resolution concluding the case has not been issued
9by the commission within 420 days of the filing, the interim rate
10design that took effect on the 390th day following the filing of the
11general
rate case application or advice letter shall become final
12and that rate design shall remain in place until the commission
13issues a final decision or resolution concluding the rate case,
14without any true-up accounting. Any new rate design adopted in
15a final decision or resolution issued by the commission after 420
16days following the filing of the application or advice letter shall
17take effect on a prospective basis only, as of the effective date of
18the final decision or resolution.
19
(e) The requirements of subdivisions (c) and (d) may be waived
20at any time by mutual consent of the executive director of the
21commission and the small independent telephone corporation.
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