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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Telecommunications Division

RESOLUTION T-16238

Public Program Branch

Date: November 19, 1998

R E S O L U T I O N

RESOLUTION T-16238. GTE CALIFORNIA INCORPORATED

(U-1002-C). REQUEST TO IMPLEMENT A PERMANENT CALIFORNIA HIGH COST FUND-B SURCREDIT IN COMPLIANCE WITH DECISION 98-09-039.

BY ADVICE LETTER NO. 8838 FILED ON SEPTEMBER 21, 1998, SUPPLEMENTAL ADVICE LETTER 8838-A FILED ON NOVEMBER 16, 1998 AND SUPPLEMENTAL ADVICE LETTER 8838-B FILED ON NOVEMBER 17, 1998

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SUMMARY

On September 21, 1998, GTE California (GTEC) filed an Advice Letter and supplemental Advice Letters in compliance with Ordering Paragraphs (O. P.) 1 and 28, respectively, of Decision (D.) 98-09-039 to implement a permanent surcredit beginning on December 1, 1998 relating to the California High Cost Fund-B (CHCF-B). This resolution approves on a provisional basis the permanent CHCF-B surcredit of 3.16% pending the review of CHCF-B claims submitted by GTEC to the CHCF-B Administrative Committee (AC). The company's surcredit reduces all rates, except for residential basic service, contracts, and coin-sent paid calls.

BACKGROUND

D.96-10-066

In D.96-10-066, the Commission established the CHCF-B to subsidize basic exchange service provided by five telecommunications carriers, including GTEC, in designated high cost areas in California. The subsidy from the CHCF-B substitutes for the internal subsidies that utilities received from other services as well as rates and charges for basic services offered in low cost areas. CHCF- B is funded through a surcharge on end-users of telecommunications services. The CHCF-B surcharge has been in place since February 1, 1997.

D.96-10-066 provided the following requirement for the large and mid-size local exchange carriers including GTEC which serve designated high cost areas to reduce their rates by an amount equal to their subsidies drawn from the CHCF-B:

D. 98-09-039

In D. 98-09-039 the Commission partially implemented the CHCF-B and adopted the following ordering paragraphs which are applicable to this advice letter filing:

GTEC's Advice Letter

GTEC filed Advice Letter 8838 on September 21, 1998 in compliance with O. P. 1 of D. 98-09-039 to implement a permanent surcredit of 3.16% beginning on December 1, 1998. This surcredit is based on an annual rate reduction of approximately $47.7 M which GTEC asserts is equal to the net amount of the CHCF-B claims dated September 15, 1998 as filed by GTEC for the period of August 1997 through July 1998. GTEC filed supplemental Advice Letter 8838-B to correct Supplemental Advice Letter 8838-A. The supplemental Advice Letter 8838-B is filed correctly in compliance with O.P. 28 of D.98-09-039.

NOTICE/PROTESTS

GTEC states that a copy of the Advice Letter and supplemental Advice Letters and related tariff sheets were mailed to those interested utilities and/or parties in its letter to the Public Utilities Commission dated June 5, 1985 and the Universal Service List. Notice of Advice Letter No. 8838 was published in the Commission Daily Calendar of September 25, 1998. To date, no protest to this Advice Letter has been received.

DISCUSSION

The AC has not formally approved any of the CHCF-B claims filed by GTEC. Therefore, the Telecommunications Division recommends that the Commission require the implementation of the surcredit filed in Advice Letter 8838 to be on a provisional basis subject to revision, if necessary, by the Commission utilizing the process as set forth in Ordering Paragraph 3 of D.98-09-039. The Telecommunications Division further recommends that the provisional status be effective until the Commission acts through subsequent resolution action to establish the permanent surcredit. We will adopt the Telecommunications Division recommendation to require the implementation of the surcredit filed in Advice Letter 8838 to be on a provisional basis subject to further revision by further Commission action.

Tariff Sheets

The tariff sheets filed by Advice Letter 8838 provide for the surcredit to be on a permanent basis. Providing for the surcredit to be on a provisional basis as adopted in this resolution will require GTEC to amend the tariff sheets filed by Advice Letter 8838 to specify that the surcredit is provisional and subject to revision by further action of the commission. We will therefore require GTEC to so amend the tariff sheets filed by Advice Letter 8838 through the filing of a supplemental to Advice Letter 8838.

FINDINGS

1. GTE California has timely filed its claims for California High Cost Fund-B funds for the period of August 1997 through July 1998.

2. The surcredit of 3.61% as filed by GTE California is based on the annual amount of the California High Cost Fund-B claims filed by GTE California for the period of August 1997 through July 1998.

3. The California High Cost Fund-B Administrative Committee has not formally approved any California High Cost Fund-B claims filed by GTE California.

4. The surcredit of 3.61% as filed by GTE California in Advice Letter 8838 should be implemented on a provisional basis and should be subject to revision by the Commission through subsequent resolution action. The adoption of a permanent surcredit for GTE California should be through the process set forth in Ordering Paragraph 3 of D.98-09-039.

5. GTE California should file another supplement Advice Letter within five days of the effective date of this resolution to reflect that the surcredit of 3.16% as adopted herein is implemented on a provisional basis subject to revision through subsequent Commission action by resolution.

THEREFORE, IT IS ORDERED that:

1. GTE California shall implement the surcredit of 3.16% as filed in Advice Letter 8838 on December 1, 1998 on a provisional basis. This surcredit shall be subject to revision by the Commission through subsequent resolution action utilizing the process set forth in Ordering Paragraph 3 of D.98-09-039.

2. Within five days of the effective date of this resolution, GTE California shall file another supplement to Advice Letter 8838 to revise the tariff sheets filed by Advice Letter 8838 to indicated that the surcredit of 3.16% as ordered by this resolution shall be on a provisional basis and shall be subject to revision by further Commission resolution action.

This Resolution is effective today.

I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on November 19, 1998. The following Commissioners approved it:

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