BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1553
                                                                  Page  1

          Date of Hearing:  August 7, 2002

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                     SB 1553 (Battin) - As Amended:  May 1, 2002 

          Policy Committee:                               
          UtilitiesVote:14-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC) to  
          examine the impact of toll call pricing in the Coachella Valley,  
          consider whether additional options are needed to serve that  
          area, and report to the Legislature by July 2004.

           FISCAL EFFECT  

          Absorbable special fund costs to the PUC for the examination and  
          report, which could require reprioritizing commission workload.   
          [Public Utilities Reimbursement Account]

           COMMENTS  

           1)Background  .  In general, telephone calls beyond 12 miles of a  
            customer are billed as toll calls.  In geographic locations  
            where customers cannot call out to get a reasonable range of  
            essential services within the local calling area, the PUC has  
            considered extending the 12-mile limit to allow calls without  
            extra monthly toll charges. Areas where PUC has extended the  
            12-mile limit are known as extended areas of service (EAS)  
            routes.  While creating a new EAS route lets certain local  
            callers avoid paying toll charges, the remaining ratepayers in  
            the territory absorb the cost of that benefit.

            In January 1995, PUC opened the market for short-distance toll  
            calls to competition. Because the market is competitive, PUC  
            concluded there was no need to create additional EAS routes  
            because competitive pressures would reduce the cost of toll  
            calls, making it unnecessary to reduce the price of those  
            calls by regulation.  In June 1998, the PUC declared a  








                                                                  SB 1553
                                                                  Page  2

            moratorium on the creation of new EAS routes.

           2)Purpose  .  The author notes that some residents in the  
            Coachella Valley are in the unique predicament of incurring  
            toll charges for calling only two miles away due to the toll  
            call structure in that area.  This bill requires the PUC to  
            assess whether there are other options that can be provided to  
            these residents and report to the Legislature.



           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081