CHCF-A Support

The Commission, in D.01-02-018, approved Settlement Transition Agreements (STAs) between Pacific Bell and the small Local Exchange Carriers (small LEC's). Monies that Pacific Bell paid the small LEC's through toll and access pool settlements were replaced by authorized draws from the CHCF-A. The CHCF-A itself was originally established by D.85-06-115 as a means of subsidizing reasonable basic exchange rates for the customers of small LEC's that adopted Pacific's statewide average toll, toll private line, and access charges (settlement pools). D.01-02-018 required the small LEC's' replacement funding for the STAs be subject to the same rules that apply to current draws from the CHCF-A, namely, basic residential rates need to be 150% of AT&T urban rate as necessary, and both the means test and the waterfall provisions should apply.

CD's calculation of total company results of operations at present rates shows that Ponderosa would earn $2,251,560 in Net Operating Revenues and a total company rate of return of a 7.81% ( Appendix A; Column B) prior to any CHCF-A adjustment.

For test year 2009, CD's computation of Ponderosa's CHCF-A draw is $3,680,994 (Appendix C; Column B) based on CD's projected revenues (including rate design), expenses, rate base and an overall rate of return of 10%.

Federal USF Support

In this GRC filing, Ponderosa proposed that it would receive $6,556,611 in Universal Service Fund (USF) funding for test year 2009. On October 8, 2008, CD received 2009 USF funding amount information from the National Exchange Carrier Association, Inc. (NECA) for all the small rural local exchange carriers in California. According to the NECA data, Ponderosa will receive $6,997,308 in USF funding in 2009. This amount is a substantial increase of $440,697 from the amount Ponderosa originally proposed. The increased USF funding amount of $440,697 will be made up by an equal decrease in Ponderosa's 2009 CHCF-A funding amount.

CD recommends that Ponderosa provide notice to all its customers of all increases and changes to its rates and charges within 7 days of the adoption of this resolution.