BILL ANALYSIS
SB 1040
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Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1040 (Padilla) - As Amended: June 23, 2010
Policy Committee: UtilitiesVote:9-3
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases, by $125 million, the amount the Public
Utilities Commission (PUC) is authorized to collect, through a
surcharge on telephone customers, for the purpose of deploying
broadband facilities in un-served and under-served areas of the
state. Specifically, this bill:
1)Authorizes the commission-in addition to the $100 million
already authorized for collection prior to January 1, 2011-to
collect up to $25 million annually from 2011 through 2015, and
to deposit these moneys in the following new accounts within
the California Advances Services Fund (CASF):
a) Broadband Infrastructure Account ($100 million).
b) Rural and Urban Regional Broadband Consortia Grant
Account ($10 million), for broadband activities other than
capital costs.
c) Broadband Infrastructure Revolving Loan Account ($15
million), for broadband facilities not funded by a grant
from the Broadband Infrastructure Account.
2)Allows the PUC to exceed the $25 million annual collection
limit in (1) if the commission determines that collecting a
higher amount in any year will not increase total surcharges
collected from telephone customers.
3)Requires the PUC to conduct final financial audit of the CASF
program and report its findings by April 1, 2017, including
data on the types and numbers of jobs created through the
program.
SB 1040
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FISCAL EFFECT
1)Up to $125 million in additional special fund program
expenditures over six years, and possibly longer.
2)Administrative costs to the PUC will be as follows: current
annual costs of $175,000 for two positions will be extended at
least five more years; one-time costs of $110,000 for one
position in 2011-12 associated with a rule-making for the
consortia grant program and the revolving loan program;
ongoing costs of $350,000 beginning in 2011-12 and continuing
for at least five years for three positions associated with
the new grant and loan programs.
COMMENTS
1)Background . In September 2007, the PUC completed a proceeding
to reform the California High Cost Fund-B (CHCF-B) program.
(The California High Cost Fund-A (CHCF-A) and CHCF-B programs
subsidize the cost of providing telephone service to rural and
other high-cost areas through surcharges on telephone bills.)
As a result, the PUC reduced the annual allocation of money to
the CHCF-B by $315.4 million (74%) and implemented a phased-in
reduction in the ratepayer surcharge from 1.3% on all
intrastate calls to .25%. In the same decision, the commission
announced it would create the CASF to fund deployment of
broadband infrastructure in unserved areas of the state.
The PUC created this program and assessed a surcharge on
telephone ratepayers to fund the program, but the commission
did not have clear legislative authority to assess the
surcharge or to expend the funds. SB 1193 (Padilla)/Chapter
393 of 2008, provided statutory authority for the CASF, but
prohibited the PUC from collecting more than $100 million.
Following enactment of the federal American Reinvestment and
Recovery Act of 2009 (ARRA), the PUC revised the CASF program
to allow California companies to use CASF grants as a match
for ARRA broadband grants. AB 1555 (Perez)/Chapter 24 of
2009, expanded CASF eligibility to any entity applying for
CASF funding in conjunction with an ARRA funding request.
2)Purpose . The commission indicates there will be increased
demand for CASF funds due to the matching requirements of ARRA
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grants. To date, the PUC has awarded about $54 million in
grants, and is reviewing an additional 13 grants estimated at
$30 million. The commission believes that the remaining
authorized funds will be insufficient to provide the matching
grants. SB 1040 allows for the collection of an additional
$125 million for the program, but spreads the collection over
five years in order to minimize the impact of telephone
customers.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081