BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1858 - Dunn Hearing Date:
April 13, 2004 S
As Amended: March 25, 2004 Non-FISCAL B
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DESCRIPTION
Current law provides for a "911" emergency telephone services
program administered by the Department of General Services'
Telecommunications Division (DGS-TD). This program, funded
through a surcharge on telephone bills, pays for the equipment
and services needed by local public safety agencies to answer
the "911" call.
Current law requires that all telephone rates be just and
reasonable.
This bill requires the California Public Utilities Commission
(CPUC) to ensure all funds paid to a telephone corporation from
the 911 account are reflective of charges that are just and
reasonable.
BACKGROUND
The state's 911 program is paid for by a surcharge on every
customer's telephone bill. That surcharge is statutorily capped
at 0.75% of a customer's phone bill, and has been set at 0.72%
by DGS-TD since 1995. The surcharge raises about $140 million
annually.
About 25% of that money goes to public safety agencies that use
the competitive bidding process to buy telephones and computers
necessary to respond to 911 calls.
The remaining 75% of the 911 budget is spent for telephone and
database services provided by regulated telephone companies. A
discussion about the cost pressures on the 911 fund is
incomplete without reviewing these costs.
There has been pressure for additional spending authority out of
the 911 fund. Last year, some public safety agencies felt
DGS-TD didn't provide adequate funding for the equipment those
agencies feel they need to respond to 911 service calls.
Additional pressure comes from the costs incurred to upgrade the
telephones and computers to make 911 service for cellular phones
comparable to 911 service for traditional phones.
COMMENTS
1.What The Phone Companies Do . The 911 services provided by the
regulated telephone companies are database services and
network services. The database services provide the 911
caller's telephone number and location, as well as the
jurisdictional boundaries of the public safety agencies, and
comprise 50% of the 911 budget.
Network services are the electronic transportation of calls
connecting the public safety answering points throughout the
state. Though the prices of these services are regulated at
the CPUC, the CPUC hasn't examined the pricing structure since
at least 1994.
2.CPUC Pricing Review . Prior to the opening of telephone
markets to competition, the CPUC would ensure just and
reasonable prices by periodically and comprehensively
examining the costs of providing service.
Based on those costs, the CPUC established prices designed to
allow a utility to recover all its costs, plus a reasonable
return on its investment. Since the late 1980's the CPUC has
relaxed its regulatory grip and utilized a regulatory system
which calibrates the degree of regulation for a particular
service with the degree of competition for that service.
The periodic cost reviews, known as general rate cases, have
largely disappeared, which explains why the cost of 911
service hasn't been looked at in over a decade. This bill
requires the CPUC to ensure that the prices for those services
are reflective of charges that are just and reasonable, which
is a requirement of existing law.
DGS-TD is considering whether these database and network
services can be purchased competitively and has issued a
"request for information" (RFI), the precursor to putting
something out to bid via a "request for proposal" (RFP).
3.Technically Speaking . The author and committee may wish to
consider replacing the existing language with the following to
ensure the CPUC conducts a review of the cost of 911 service:
"The commission shall review the rates charged by
telephone corporations for 911 emergency service to
ensure that those rates are just and reasonable."
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Randy Chinn
SB 1858 Analysis
Hearing Date: April 13, 2004