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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Telecommunications Division

RESOLUTION T-16898

Public Programs Branch

December 16, 2004

R E S O L U T I O N

Resolution T-16898. Approval of the California High Cost Fund-B Administrative Committee Fund Surcharge rate from January 1, 2005 and thereafter, to comply with the Requirements of Public Utilities Code Section 270 (A).

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Summary

This resolution adopts a surcharge rate of 2.43% for the California High Cost Fund-B (CHCF-B) Administrative Committee (AC) fund effective January 1, 2005 and thereafter, until further revised by the Commission.

Background

In Decision (D) 96-10-066, the Commission established the CHCF-B program to provide universal service subsidy support in the high cost areas of SBC California, Verizon of California, Surewest Telephone Company, Citizens Telecommunications Company of California, and new carriers that become Carriers of Last Resort (COLR).

In October 1999, PU Code § 270-281 were codified as a result of the enactment of Senate Bill (SB) 669 (Stats. 1999, Chapter 677). § 270(b) requires that the monies in the CHCF-B and five other funds may only be expended pursuant to § 270-281 and upon appropriation in the annual Budget Act.

By Resolution T-16794, dated December 18, 2003, the Commission adopted a budget for Fiscal Year (FY) 2004-05 for the CHCF-B AC fund. In that Resolution, the Commission adopted a surcharge rate of 2.2% effective July 1, 2003 and an expense budget of $438.867 million for FY 2004-05. On October 28, 2004, the Commission adopted Resolution T-16883 for an expense budget for FY 2005-06 (July 1, 2005 to June 30, 2006) in the amount of $ 448.451 million.

Discussion

In this Resolution, the Telecommunications Division (TD) recommends a CHCF-B AC Fund surcharge rate of 2.43% effective January 1, 2005 and thereafter, until further revised by the Commission.

Appendix A shows a comparison of the CHCF-B AC Fund adopted and actual FY 2003-04 budgets, the FY 2004-05 adopted and recast budgets, and the proposed and adopted budgets for FY 2005-06.

Resolution T-16794 adopted the CHCF-B AC Fund budget for FY 2004-05. That budget used a billing base of $20,947.125 million, a surcharge rate of 2.2% and a beginning balance of $30.438 million as of July 1, 2004. TD recommends that the forecasted billing base for FY 2004-05 should be revised to $18,441.522 million because of the impact of Voice Over Internet Protocol (VOIP). TD recommends that the projected billing base for FY 2005-06 should be $18,828.692 million taking into consideration the effects of VOIP.

Because of the revised lower billing base of $18,441.522 million for FY 2004-05, TD recommends that the current surcharge rate of 2.2% should be increased to 2.43% effective January 1, 2005 and thereafter, unless modified by the Commission. This new surcharge rate will result in an ending balance of $32.467 million on June 30, 2005.

For FY 2005-06, projected program expenses are $448.451 million as adopted in Resolution T-16883. TD recommends that the surcharge rate of 2.43% should be continued for FY 2005-06. This will result in projected surcharge revenue of $456.507 million and an ending balance of $46.128 million as of June 30, 2006.

TD's proposed surcharge rate of 2.43% effective January 1, 2005 and thereafter, until further revised by the Commission, is reasonable and should be adopted.

Modified Advice Letter Filings

By Resolution T-16901, dated December 2, 2004, the Commission modified the current tariff process for revising telecommunications Public Program surcharge rates. The new process requires all certificated carriers filing tariffs with the Commission to file a generic tariff reference to Pacific Bell (d.b.a SBC California) tariffs for the list of Public Program surcharge rates, including the CHCF-B AC Fund and Reimbursement Fee, and the amounts to become effective on January 1, 2005 and thereafter.

In compliance with the modified tariff process, only SBC should file an Advice Letter on or before December 24, 2004, modifying the surcharge rate from 2.2% to 2.43%, effective January 1, 2005 and thereafter, until further revised by the Commission. The other certificated carriers, who file tariffs with the Commission, would not have to file an Advice Letter reflecting the new surcharge rate of 2.43% effective on January 1, 2005 and thereafter. Pursuant to Ordering Paragraph # 1 of Resolution T-16901, these carriers should have already cross-referenced any future changes in the Public Program surcharges, including CHCF-B, to the SBC tariff.

Finally, all other carriers who do not file tariffs with the Commission will have to ensure that they have included the revised surcharge rate of 2.43% on their intrastate billings, starting on January 1, 2005 and continue thereafter, until further revised by the Commission.

Comments

In compliance with PU Code § 311 (g), a notice letter was e-mailed on November 16, 2004 to all telecommunications carriers, the CHCF-B AC, and the parties on the service list of R.95-01-020/I.95-01-021 informing these parties that this draft resolution is available at the Commission's website http://www.cpuc.ca.gov and is available for public comments. In addition, the Telecommunications Division (TD) informed these parties of the availability of the conformed resolution at the same website.

TD received no comments on this resolution.

Findings

THEREFORE, IT IS ORDERED that:

This Resolution is effective today.

I hereby certify that the Public Utilities Commission at its regular meeting on December 16, 2004 adopted this Resolution. The following Commissioners approved it:

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