BILL NUMBER: SB 1276 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 25, 2004
PASSED THE ASSEMBLY AUGUST 19, 2004
AMENDED IN ASSEMBLY AUGUST 17, 2004
AMENDED IN ASSEMBLY JUNE 16, 2004
AMENDED IN ASSEMBLY JUNE 9, 2004
AMENDED IN SENATE APRIL 1, 2004
INTRODUCED BY Senator Bowen
(Coauthor: Assembly Member Firebaugh)
FEBRUARY 13, 2004
An act to amend Sections 270 and 739.3 of the Public Utilities
Code, relating to telecommunications, making an appropriation
therefor, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 1276, Bowen. Telecommunications: telephone service rates:
universal service programs.
Existing law, the federal Telecommunications Act of 1996,
establishes a program of cooperative federalism for the regulation of
telecommunications to attain the goal of local competition, while
implementing specific, predictable, and sufficient federal and state
mechanisms to preserve and advance universal service, consistent with
certain universal service principles. The universal service
principles include the principle that consumers in all regions of the
nation, including low-income consumers and those in rural, insular,
and high-cost areas, should have access to telecommunications and
information services, including interexchange services and advanced
telecommunications and information services, that are reasonably
comparable to those services provided in urban areas and that are
available at rates that are reasonably comparable to rates charged
for similar services in urban areas. The federal universal service
principles also include the principle that elementary and secondary
schools and classrooms, health care providers, and libraries should
have access to advanced telecommunications service. The act
authorizes states to adopt regulations not inconsistent with Federal
Communications Commission rules to preserve and advance universal
service. The act requires that every telecommunications carrier that
provides intrastate telecommunications services contribute, on an
equitable and nondiscriminatory basis, in a manner determined by the
state, to the preservation and advancement of universal service in
that state. The act authorizes each state to adopt regulations to
provide for additional definitions and standards to preserve and
advance universal service within the state, only to the extent that
they adopt additional specific, predictable, and sufficient
mechanisms that do not rely on or burden federal universal service
support mechanisms.
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. Existing law establishes the California High-Cost
Fund-A Administrative Committee Fund, the California High-Cost
Fund-B Administrative Committee Fund, the Universal Lifeline
Telephone Service Trust Administrative Committee Fund, the Deaf and
Disabled Telecommunications Program Administrative Committee Fund,
the Payphone Service Providers Committee Fund, and the California
Teleconnect Fund Administrative Committee Fund in the State Treasury
and requires that the moneys in the funds be expended only to
accomplish specified telecommunications universal service programs,
upon appropriation in the annual Budget Act.
This bill would provide that moneys in the funds are the proceeds
of rates and are held in trust for the benefit of ratepayers and to
compensate telephone corporations for their costs of providing
universal service. The bill would require that the moneys in the
funds be expended only to accomplish specified telecommunications
universal service programs, upon appropriation in the annual Budget
Act or upon supplemental appropriation.
Existing law, until January 1, 2005, requires the commission to
develop, implement, and maintain a program to establish a fair and
equitable local rate structure designed to reduce any disparity in
rates charged by small independent telephone corporations serving
rural and small metropolitan areas, and a competitively neutral, and
broadbased program to provide for transfer payments to telephone
corporations serving areas where the cost of providing services
exceeds rates charged by providers, as determined by the commission.
Pursuant to this requirement, the commission has imposed a surcharge
to intrastate telephone service to fund the transfer payments funded
through the California High-Cost Fund-A Administrative Committee
Fund and the California High-Cost Fund-B Administrative Committee
Fund.
This bill would extend these programs until January 1, 2009. The
bill would make other technical changes and would require the
commission to structure the programs so that any charge imposed to
promote the goals of universal service reasonably equals the value of
the benefits of universal service.
The bill would require the commission by January 1, 2006, to
conduct a review of the program, as extended by the bill, for the
establishment of a fair and equitable local telephone rate support
structure, and a review of the California High-Cost Fund-B
Administrative Committee Fund, to accomplish an adjustment of subsidy
payments to reflect updated operating costs and an evaluation of
whether subsidy levels can be reduced while maintaining the goals of
the program.
Existing law establishes the California Teleconnect Fund
Administrative Committee to advise the Public Utilities Commission
regarding the development, implementation, and administration of a
program to advance universal service by providing discounted rates to
qualifying schools, libraries, hospitals, health clinics, and
community organizations, funded through the California Teleconnect
Fund Administrative Committee Fund.
This bill would appropriate $17,974,000 from the California
Teleconnect Fund Administrative Committee Fund to the commission for
the purpose of transferring funds to telephone corporations providing
discounted rates to qualifying schools, libraries, hospitals, health
clinics, and community organizations and authorized to receive these
funds.
The bill would declare that it is to take effect immediately as an
urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 270 of the Public Utilities Code, as amended by
Section 1 of Chapter 903 of the Statutes of 2001, is amended to
read:
270. (a) The following funds are hereby created in the State
Treasury:
(1) The California High-Cost Fund-A Administrative Committee Fund.
(2) The California High-Cost Fund-B Administrative Committee Fund.
(3) The Universal Lifeline Telephone Service Trust Administrative
Committee Fund.
(4) The Deaf and Disabled Telecommunications Program
Administrative Committee Fund.
(5) The Payphone Service Providers Committee Fund.
(6) The California Teleconnect Fund Administrative Committee Fund.
(b) Moneys in the funds are the proceeds of rates and are held in
trust for the benefit of ratepayers and to compensate telephone
corporations for their costs of providing universal service. Moneys
in the funds may only be expended pursuant to this chapter and upon
appropriation in the annual Budget Act or upon supplemental
appropriation. Any appropriation from the California High-Cost
Administrative Committee Fund-B for the purposes of the grant program
established in Section 276.5 of the Public Utilities Code regarding
rural telecommunications infrastructure, may not be made until all of
the following events have occurred:
(1) The United States Supreme Court has decided Iowa Utilities
Board v. Federal Communications Commission (219 F.3d 744 (8th Cir.);
certiorari granted January 22, 2001).
(2) The commission recalculates the statewide average cost to
serve a residential line stated in Decision 96-10-066, as it
determines to be appropriate.
(3) The commission is current on all claims made by carriers for
service provided in high-cost areas, except for those claims that the
commission is in the process of investigating, contesting, or
disallowing.
(c) Moneys in each fund may not be appropriated, or in any other
manner transferred or otherwise diverted, to any other fund or
entity, except as provided for in Sections 276 and 276.5.
(d) This section shall remain in effect only until January 1, 2006,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2006, deletes or extends that date.
SEC. 2. Section 270 of the Public Utilities Code, as added by
Section 2 of Chapter 903 of the Statutes of 2001, is amended to read:
270. (a) The following funds are hereby created in the State
Treasury:
(1) The California High-Cost Fund-A Administrative Committee Fund.
(2) The California High-Cost Fund-B Administrative Committee Fund.
(3) The Universal Lifeline Telephone Service Trust Administrative
Committee Fund.
(4) The Deaf and Disabled Telecommunications Program
Administrative Committee Fund.
(5) The Payphone Service Providers Committee Fund.
(6) The California Teleconnect Fund Administrative Committee Fund.
(b) Moneys in the funds are the proceeds of rates and are held in
trust for the benefit of ratepayers and to compensate telephone
corporations for their costs of providing universal service. Moneys
in the funds may only be expended pursuant to this chapter and upon
appropriation in the annual Budget Act or upon supplemental
appropriation.
(c) Moneys in each fund may not be appropriated, or in any other
manner transferred or otherwise diverted, to any other fund or
entity.
(d) This section shall become operative on January 1, 2006.
SEC. 3. Section 739.3 of the Public Utilities Code is amended to
read:
739.3. (a) The commission shall develop, implement, and maintain
a suitable program to establish a fair and equitable local rate
structure aided by universal service rate support to small
independent telephone corporations serving rural and small
metropolitan areas. The purpose of the program shall be to promote
the goals of universal telephone service and to reduce any disparity
in the rates charged by those companies.
(b) For purposes of this section, small independent telephone
corporations means those independent telephone corporations serving
rural areas, as determined by the commission.
(c) The commission shall develop, implement, and maintain a
suitable, competitively neutral, and broadbased program to establish
a fair and equitable local rate support structure aided by universal
service rate support to telephone corporations serving areas where
the cost of providing services exceeds rates charged by providers, as
determined by the commission. The commission shall develop and
implement the program on or before October 1, 1996. The purpose of
the program shall be to promote the goals of universal telephone
service and to reduce any disparity in the rates charged by those
companies. Except as otherwise explicitly provided, this
subdivision does not limit the manner in which the commission
collects and disburses funds, and does not limit the manner in which
it may include or exclude the revenue of contributing entities in
structuring the program.
(d) The commission shall structure the programs required by this
section 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.
(e) The commission shall investigate reducing the level of
universal service rate support, or elimination of universal service
rate support in service areas with demonstrated competition.
(f) This section shall remain in effect until January 1, 2009, and
as of that date is repealed, unless a later enacted statute that
becomes effective on or before January 1, 2009, deletes or extends
that date.
SEC. 4. The Public Utilities Commission shall, by January 1, 2006,
conduct a review of the program established pursuant to subdivision
(c) of Section 739.3 of the Public Utilities Code and of the
California High-Cost Fund-B Administrative Committee Fund, to
accomplish both of the following:
(a) Adjust universal service rate support payments to reflect
updated operating costs.
(b) Evaluate whether universal service rate support levels can be
reduced while still meeting the goals of this program.
SEC. 5. There is hereby appropriated from the California
Teleconnect Fund Administrative Committee Fund to the Public
Utilities Commission, seventeen million nine hundred seventy-four
thousand dollars ($17,974,000) for the purpose of transferring funds
to telephone corporations providing discounted rates to qualifying
schools, libraries, hospitals, health clinics, and community
organizations and authorized to receive these funds pursuant to
Chapter 1.5 (commencing with Section 270) of Part 1 of Division 1.
SEC. 6. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
The authority to expend money from the California Teleconnect Fund
Administrative Committee Fund was deleted from the Budget Act for
fiscal year 2004-05. The California Teleconnect Fund Administrative
Committee Fund provides funding to compensate telephone corporations
for providing service at discounted rates to qualifying schools,
libraries, hospitals, health clinics, and community organizations.
In order to provide sufficient revenues for the telephone
corporations authorized to receive these funds pursuant to Chapter
1.5 (commencing with Section 270) of Part 1 of Division 1 of the
Public Utilities Code, so that those telephone corporations may
continue to provide teleconnect services, it is necessary that this
act take effect immediately.