BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                          Senator Carole Migden, Chairwoman

                                           396 (Battin)
          
          Hearing Date:  5/2/05           Amended: 4/7/05
          Consultant:  Lisa Matocq        Policy Vote: E, U & C 8-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY: SB 396 requires the Public Utilities Commission  
          (PUC) to report to the Legislature, by July 1, 2007, on the  
          impact of toll call pricing in the Coachella Valley, and whether  
          additional steps are necessary to encourage innovative pricing,  
          and related matters. 
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions               2005-06     2006-07    2007-08    Fund
                                                                   
          PUC                                             $85 over two  
          years             --              Special*
                                                       Costs should be  
          offset by fee revenues.                   

          *Public Utilities' Reimbursement Account (PURA) 
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: 
          
          Generally, local toll-free telephone calling areas are limited  
          to a geographic area of 12 miles.  In certain circumstances,  
          such as where customers cannot reach a reasonable range of  
          services, i.e., police, fire, schools, etc., the PUC may approve  
          an Extended Area Service (EAS).  An EAS extends the toll-free  
          geographic area of a community.  While it allows certain callers  
          to avoid paying toll charges, the remaining ratepayers in the  
          territory absorb the cost of that benefit.

          In January 1995, the PUC opened the market for short-distance  
          toll calls to competition. Because the market is competitive,  
          the PUC concluded that the public interest would be served by  
          allowing competitive pressures to offer customers choices for  
          toll calls, rather than creating new EAS routes.  











          This bill requires the PUC to determine the impact of toll  
          pricing in the Coachella Valley and consider whether additional  
          options, i.e., innovative pricing plans, consumer education  
          programs, etc. may be necessary to serve the area.  

          SB 1553 (Battin) of 2002 was similar to this bill and was vetoed  
          by Governor Davis.  In his veto message, the Governor expressed  
          concerns over costs and a "piecemeal approach" to an issue of  
          statewide significance. 

          Increased costs to the PUC are based on one new staff position,  
          a PURA III, on a limited term basis. PURA revenues are derived  
          from an annual fee imposed on utilities.  Therefore, any  
          increased costs should be recovered from fee revenues.