Bill Text: CA SB1122 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Telecommunications: small independent telephone corporations: rates: universal service: California

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2016-11-30 - From Assembly without further action. [SB1122 Detail]

Download: California-2015-SB1122-Amended.html

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BILL NUMBER: SB 1122	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 29, 2016

INTRODUCED BY   Senator Cannella

                        FEBRUARY 17, 2016

   An act to amend Section 275.6  of   of, and
to add Section 455.4 to, the Public Utilities Code, relating to
telecommunications.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1122, as amended, Cannella. Telecommunications:  small
independent telephone corporations: rates:  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 and  charges.   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.  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 revenue  requirements  
requirement, as defined,  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 would  make a nonsubstantive change to 
 revise  the CHCF-A program  requirements.
  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.

   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 275.6 of the Public Utilities Code is amended
to read:
   275.6.  (a) The commission shall exercise its regulatory authority
to maintain the California High-Cost Fund-A Administrative Committee
Fund program (CHCF-A program) to provide universal service rate
support to small independent telephone corporations in amounts
sufficient to meet the revenue  requirements  
requirement  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.
   (b) For purposes of this section, the following terms have the
following meanings:
   (1) "Carrier of last resort" means a telephone corporation that is
required to fulfill all reasonable requests for service within its
service territory.
   (2) "Rate base" means the value of a telephone corporation's plant
and equipment that is reasonably necessary to provide regulated
voice services and access to advanced services, and upon which the
telephone corporation is entitled to a fair opportunity to earn a
reasonable rate of return. 
   (3) "Rate case expenses" mean the reasonable costs incurred by a
telephone corporation in preparing, initiating, and participating in
any commission proceeding or advice letter process in which its
rates, rate design, or revenue requirement are evaluated or adjusted.
 
   (3) 
    (4)  "Rate design" means the mix of end-user rates,
high-cost support, and other revenue sources that are targeted to
provide a fair opportunity to meet the revenue requirement of the
telephone corporation. 
   (4) 
    (5)  "Rate-of-return regulation" means a regulatory
structure whereby the commission establishes a telephone corporation'
s revenue  requirements,   requirement, 
and then fashions a rate design to provide the company a fair
opportunity to meet the revenue requirement. 
   (5) 
    (6)  "Revenue requirement" means the amount that is
necessary for a telephone corporation to recover its reasonable
expenses and tax liabilities and earn a reasonable rate of return on
its rate base.  Reasonable expenses include rate case expenses.
Rate case expenses shall be separately included in the revenue
requirement regardless of any commission determinations regarding the
reasonableness of other expenses.  
   (6) 
    (7)  "Small independent telephone corporations" are
rural incumbent local exchange carriers subject to commission
regulation.
   (c) In administering the CHCF-A program the commission shall do
all of the following:
   (1) Continue to set rates to be charged by the small independent
telephone corporations in accordance with Sections 451, 454, 455, and
728.
   (2) Employ rate-of-return regulation to determine a small
independent telephone corporation's revenue requirement in a manner
that provides revenues and earnings sufficient to allow the telephone
corporation to deliver safe, reliable, high-quality voice
communication service and fulfill its obligations as a carrier of
last resort in its service territory, and to afford the telephone
corporation a fair opportunity to earn a reasonable return on its
investments, attract capital for investment on reasonable terms, and
ensure the financial integrity of the telephone corporation.
   (3) Ensure that the rates charged to customers of small
independent telephone corporations are just and reasonable and are
reasonably comparable to rates charged to customers of urban
telephone corporations.
   (4) Provide universal service rate support from the California
High-Cost Fund-A Administrative Committee Fund to small independent
telephone corporations in an amount sufficient to supply the portion
of the revenue requirement that cannot reasonably be provided by the
customers of each small independent telephone corporation after
receipt of federal universal service rate support.
   (5) Promote customer access to advanced services and deployment of
broadband-capable facilities in rural areas that is reasonably
comparable to that in urban areas, consistent with national
communications policy.
   (6) Include all reasonable investments necessary to provide for
the delivery of high-quality voice communication services and the
deployment of broadband-capable facilities in the rate base of small
independent telephone corporations.
   (7) Ensure that support is not excessive so that the burden on all
contributors to the CHCF-A program is limited.
   (d) In order to participate in the CHCF-A program, a small
independent telephone corporation shall meet all of the following
requirements:
   (1) Be subject to rate-of-return regulation.
   (2) Be subject to the commission's regulation of telephone
corporations pursuant to this division.
   (3) Be a carrier of last resort in their service territory.
   (4) Qualify as a rural telephone company under federal law (47
U.S.C. Sec. 153(44)).
   (e) Upon request from the commission, a small independent
telephone corporation that receives support from the CHCF-A program
shall provide information regarding revenues derived from the
provision of unregulated Internet access service by that corporation
or its affiliate within that corporation's telephone service
territory. The commission shall treat as confidential any information
provided pursuant to this subdivision.
   (f) The commission shall structure the CHCF-A program so that any
charge imposed to promote the goals of universal service reasonably
equals the value of the benefits of universal service to contributing
entities and their subscribers.
   (g) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
   SEC. 2.    Section 455.4 is added to the  
Public Utilities Code   , to read:  
   455.4.  (a) For purposes of this section, "small independent
telephone corporation" has the same meaning as in Section 275.6.
   (b) A small independent telephone corporation may file its general
rate case application or advice letter initiating a general rate
case any time up to and including December 1 of the second year
preceding the test year used in its rate case.
   (c) The commission shall 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.
   (d) Notwithstanding Section 454, if the commission fails to issue
a final decision as required by subdivision (c), the rate design
proposed by the small independent telephone corporation in its
application or advice letter shall take effect on an interim basis
beginning 390 days following the filing of the application or advice
letter. That rate design shall be subject to an accounting true-up if
a final commission decision or resolution concluding the rate case
is issued within 420 days of the filing. The rate design adopted in a
commission decision or resolution within 420 days shall be made
effective as of the 390th day and the accounting true-up shall
eliminate any revenue differences between the interim rate design and
the rate design in the commission decision or resolution. If a final
decision or resolution concluding the case has not been issued by
the commission within 420 days of the filing, the interim rate design
that took effect on the 390th day following the filing of the
general rate case application or advice letter shall become final and
that rate design shall remain in place until the commission issues a
final decision or resolution concluding the rate case, without any
true-up accounting. 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 shall take effect on a
prospective basis only, as of the effective date of the final
decision or resolution.
   (e) The requirements of subdivisions (c) and (d) may be waived at
any time by mutual consent of the executive director of the
commission and the small independent telephone corporation.