BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 396
                                                                  Page  1

          Date of Hearing:   June 29, 2005

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                    SB 396 (Battin) - As Amended:  April 7, 2005 

          Policy Committee:                               
          UtilitiesVote:10-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC) to  
          report to the Legislature by July 2007, on the impact of toll  
          call pricing in the Coachella Valley and whether additional  
          steps are necessary to encourage innovative pricing plans.

           FISCAL EFFECT  

          One-time special fund costs of $85,000 for the PUC to complete  
          the study. [Public Utilities Reimbursement Account]

           COMMENTS  


           1)Background and Purpose  . 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 essential services, i.e., police, fire,  
            schools, etc., the PUC may approve an Extended Area Service  
            (EAS), which extends the toll-free geographic area of a  
            community. While an EAS allows certain callers to avoid paying  
            toll charges, the remaining ratepayers within the service  
            territory absorb the cost of that benefit. In January 1995,  
            the PUC opened the market for short-distance toll calls to  
            competition, and subsequently 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  








                                                                  SB 396
                                                                  Page  2

            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.


           2)Prior Legislation . 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.


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