BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1693 (Perea) - Small independent telephone corporations:
rates.
Amended: June 25, 2014 Policy Vote: EU&C 10-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1693 would require the California Public
Utilities Commission (CPUC) to complete a general rate case
(GRC) of a small independent telephone corporation within 330
days. If the deadline is not met, this bill would establish
procedures for interim rates.
Fiscal Impact: Ongoing annual costs estimated at $450,000 from
the Public Utilities Reimbursement Account (special) to the CPUC
to decrease the time to complete GRCs for small independent
telephone companies.
Background: Public Utilities Code ��1701.2 and 1701.5 require
the CPUC to resolve adjudication cases within 12 months of
initiation and GRCs within 18 months unless the CPUC makes
findings as to why that deadline cannot be met and issues and
order to extend that deadline.
Public Utilities Code �455.2 requires the CPUC to issue a final
decision on a GRC application of a large water corporation
within one year and requires interim rates to take effect if the
CPUC misses the deadline.
There are thirteen small independent telephone corporations, ten
of which can file for rate cases.
Proposed Law: This bill would require the CPUC to issue its
final decision on a GRC of a small independent telephone
corporation no later than 330 days after the rate case is
initiated. If final action is not taken within 330 days, the
small telephone corporation may adopt the rate design in its
application on an interim basis, subject to an accounting
AB 1693 (Perea)
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true-up at the conclusion of the rate case. If final action is
not taken within 540 days, the interim rate design would become
final until the CPUC concludes the GRC without any true-up
accounting.
This bill would allow the deadlines imposed by this bill to be
waived by mutual consent of the CPUC's executive director and a
small independent telephone corporation.
This bill would establish specific deadlines for a general rate
case that is pending on January 1, 2015.
Staff Comments: The median completion time for the last nine
general rate cases submitted by small independent telephone
corporations is 395 days (13.1 months). If the CPUC's GRC
completion times stay the same, then under this bill, staff
believes that a majority of rate cases are likely to result in
the use of interim rate designs absent additional resources to
decrease GRC completion times. Staff notes that if the CPUC
misses the deadline, the CPUC would incur additional staff costs
to perform the true-up accounting. To meet the deadlines
established in this bill, the CPUC is likely to need
approximately $450,000 in additional staff resources annually.
This cost is based on the assumption that the workload in each
GRC is more or less constant. A number of pending issues
involving small telephone companies may change the workload
involved a single GRC. For example, a proceeding regarding High
Cost Fund A subsidies is currently underway. It is anticipated
that this proceeding will result in the establishment of a
uniform rate of return for small telephone companies. Should
this occur, it would reduce the workload for a GRC. On the other
hand, the recent expansion of the High Cost Fund A subsidies to
include broadband services arguably complicates GRCs and
increases the necessary workload. Inevitably there will be other
future federal and state actions will influence the complexity
of GRCs. These issues and actions are not caused by this bill,
though they will influence the likelihood that the CPUC will
meet given deadlines. Given future uncertainty of the workload
involved in a GRC, there is some uncertainty in the staff's
estimate of additional resources needed by the CPUC to comply
with this bill. However, staff believes there is insufficient
evidence to be able to assume that the average workload for a
GRC will likely be more or less in the near future.
AB 1693 (Perea)
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The costs associated by this bill also assumes that the CPUC
will have some ability to control the number of GRCs filed by
small telephone companies each year to three or four a year,
similar to the rate case plan that exists for large water
corporations. While there is no rate case plan for small
telephone companies currently, there is nothing in this bill
that would prohibit the CPUC from establishing one to spread out
the rate cases. However, before such a rate case plan is
adopted, it is possible for the CPUC to receive more than three
or four GRCs in a year. The likelihood of this happening is
unknown, but should it happen, it could create a temporary spike
in CPUC's costs to complete multiple GRCs simultaneously.