4. Discussion

Rule 12.1(d) of the Commission's Rules of Practice and Procedure provides that, before approving a settlement, the Commission must determine that the settlement is reasonable in light of the whole record, consistent with the law, and in the public interest. We find that the Settlement Agreement fully satisfies these requirements and therefore should be approved.

The Settlement Agreement at issue here also includes imposition of a penalty. In determining the appropriate penalty, the parties took into consideration the criteria used by the Commission. Specifically, the parties considered factors previously used by the Commission in setting fines, including but not limited to: (1) severity of the offense, (2) conduct of the utility, and (3) Commission precedent in similar cases.3

Here, CPSD indicates that it is satisfied that the Settlement Agreement resolves all of the concerns raised in its protest and that adoption of the Settlement Agreement would be in the public interest. We agree. The Settlement Agreement does the following:

1. It shows unequivocal acknowledgement of CPSD's concerns by Applicant, the history of cooperation by Applicant in addressing the issues raised by CPSD during the course of this proceeding, and Applicant's commitment to comply with all regulatory matters going forward;

2. The terms and conditions it imposes upon Applicant allow Applicant to serve California customers. It provides the Commission with necessary assurances that in the future, Applicant will comply with its regulatory obligations. It imposes a $6,500 penalty for the failure to fully disclose information to the Commission during the application process and requires Applicant to file an amended application fully disclosing the violations, which preserves the integrity of the application and licensing process of the Commission and provides sufficient deterrence to Applicant (and by example to others similarly situated) from engaging in future violations for which further penalties will be imposed by the Commission; and

3. It saves the Commission the further expense and commitment of resources involved in possible hearings on the questions of the violations set forth in CPSD's protest and the degree of culpability associated with same.

As a result of the Settlement Agreement, the Commission finds that the public will benefit because Applicant has taken measures to rectify a violation of law, and to protect California consumers and the integrity of the Commission's jurisdiction and process. The terms of the Settlement Agreement protect Applicant's customers and members of the public in California by ensuring that Applicant will fully meet its regulatory and legal obligations while allowing Applicant to offer the services contemplated to California consumers. Additionally, the terms of the Settlement Agreement are consistent with other settlement agreements that the Commission has approved based on similar factual situations.

The proposed Settlement Agreement is an all-party settlement as CPSD and Applicant are the only active parties in this proceeding. The settling parties reasonably reflect the affected interests. The Parties have had sufficient opportunity to review and discuss the terms of the Settlement Agreement. All issues raised by the CPSD's protest to the Application have been resolved in the Settlement Agreement. Therefore, the Settlement Agreement is found to be reasonable and in the public interest and should be adopted. Accordingly, we adopt the Settlement Agreement, and Applicant is granted a CPCN consistent with the terms and conditions set forth in the Settlement Agreement.

Rule 12.1(b) requires the Parties to hold a public settlement conference providing all Parties to the proceeding an opportunity to review and discuss the settlement. The only two parties to this proceeding are CPSD and Kingstone, who have had sufficient opportunity to review and discuss the settlement.

Applicants for Non-Dominant Interexchange Carrier authority are required to make a reasonable showing of technical expertise in telecommunications or a related business. Applicant submitted biographical information on its officers that demonstrates that it possesses sufficient experience and knowledge to operate as a telecommunications provider.

To be granted a CPCN, an applicant for authority to provide limited facilities-based non-dominant interexchange services must demonstrate that it has a minimum of $100,000 cash or cash equivalent to meet the firm's start-up expenses.4 An applicant must also demonstrate that it has sufficient additional resources to cover all deposits required by local exchange carriers (LEC) and/or interexchange carriers (IECs) in order to provide the proposed service.5

Kingstone has provided documentation, filed under seal, that it possesses the required minimum of $100,000 that is reasonably liquid and available, it has demonstrated that it has sufficient funds to meet its start-up expenses, and it has fulfilled this requirement. Moreover, Applicant has obtained a surety bond in the amount of $25,000. While provision of a surety bond was a requirement of the registration process, Kingstone has agreed to maintain the bond as a product of this decision. The bond will be submitted via an information-only advice letter within five days after the effective date of the CPCN issued to Kingstone.

Kingstone requests exemption from the tariffing requirements but reserves the right to file tariffs prior to commencing operations in California. The request for detariffing is granted to the extent permitted under D.07-09-018. Kingstone must comply with all General Order (GO) 96-B Telecommunications Industry Rules with respect to the following: 1) the posting of all detariffed rates, terms, and conditions on an internet site pursuant to Rule 5.2 of the Telecommunications Rules; and 2) the notification of affected customers for any service not provided under tariff, of higher rates or charges, more restrictive terms or conditions, withdrawal of service, or transfer of ownership or customer base pursuant to Rule 5.3 of the Telecommunications Rules. Further, Kingstone must observe the consumer protection rules adopted in D.98-08-031.

CEQA requires the Commission as the designated lead agency to assess the potential environmental impact of a project in order that adverse effects are avoided, alternatives are investigated, and environmental quality is restored or enhanced to the fullest extent possible. Applicant has no plan for constructing facilities at this time other than switching equipment installed in existing buildings. Therefore, it can be seen with certainty that there is no possibility that granting this application will have an adverse effect upon the environment. Applicant must file for additional authority, and submit to any required CEQA review, before it can construct facilities.

3 Rulemaking to Establish Rules For Enforcement of the Standards of Conduct Governing Relationships Between Energy Utilities and Their Affiliates Adopted By the Commission In Decision 97-12-088, (1998) Decision (D.) 98-12-075 at 71, 1998 Cal. PUC LEXIS 1016.

4 The financial requirement for Non-Dominant Exchange Carriers (NDIEC) is contained in D.91-10-041.

5 The requirement for NDIEC applicants to demonstrate that they have additional financial resources to meet any deposits required by underlying LECs and/or IECs is set forth in D.93-05-010.

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