6. Assignment of Proceeding

Dian M. Grueneich is the assigned Commissioner and Karen Jones is the assigned Administrative Law Judge in this proceeding.

1. Historically the telephone companies added customers to the LifeLine program when they first contacted the telephone provider.

2. The back-billing issue that has been experienced was not anticipated when the Commission made the decision to continue the first contact model in D.05-04-026.

3. There is no reason to believe back-billing problems are temporary.

4. May 2008 data provided by the Communications Division (CD) shows that 51% of those who applied either did not return the application forms or were determined to be ineligible by the CertA and were then subject to back-billing.

5. When the data Solix provided to AT&T for the period February-April 2008 is annualized, it shows that over half a million customers per year are found ineligible and subject to back-billing.

6. Under pre-qualification, customers have an incentive to move quickly and return their forms by the deadline.

7. According to the information compiled by CD, the responding carriers all have payment plans that would allow a LifeLine applicant to defer payment of part of the non-recurring charges.

8. The program's reputation has suffered over the past two years as customers are found to be ineligible and forced to pay large back-bills.

9. Back-billing affects only the certification process, not the verification procedure.

10. Pre-qualification simplifies the process for carriers and Commission staff.

11. Allowing LifeLine applicants to defer their charges until the CertA determines whether they are eligible for the program is of no benefit; it would involve almost the same level of back-billing that the program is currently experiencing.

12. It makes sense to establish a credit on the customer's bill as the default, but require carriers to notify customers that they can request a refund check.

13. Implementation of a pre-qualification system requires carriers to revise their methods and procedures, rewrite scripts for the customer representatives, and train them in the revised procedures, as well as make changes to various computer systems.

14. There is no way to flash cut the enrollment process without causing a great deal of confusion on the part of those applying for LifeLine.

15. The switch to pre-qualification will not impact the CertA's procedures to any significant degree.

16. Commission staff, the marketing contractor, call center contractor, CBOs, social service agencies, and other external entities need to engage in an education campaign so that customers are aware of the change in advance of the pre-qualification implementation date.

17. The interactive website will expedite the process for customers who are certifying using program-based eligibility and for customers who are re-certifying through the annual verification process.

18. Currently, about 20% of those who apply for LifeLine utilize the income-based eligibility option.

19. Non-response data should be analyzed by language group to determine if there are differences in responses among language groups.

1. The Moore Universal Telephone Service Act is silent on the issue of when the low-income individual receives the discounted service - either at "first contact" or after being "pre-qualified."

2. Subjecting 50% of the applicants to back-billing when they are deemed ineligible for the program is unacceptable.

3. The interactive website should decrease the approval time for applicants who apply on the basis of participation in a means-tested program.

4. Carriers should notify LifeLine applicants about their payment plans and make them available to assist in payment of charges.

5. Once a customer successfully completes the LifeLine application process, the customer should be credited the difference between LifeLine rates and charges and regular recurring rates and non-recurring charges, as well as any deposits paid related to basic service, back to the date when the customer contacted his/her carrier requesting to be added to LifeLine.

6. Payment plans are not a part of "rate regulation;" billing practices fall under "terms and conditions."

7. Carriers should inform customers of any deposits at the time customers request service.

8. GO 153 should be modified as described in this order to implement a system of pre-qualification.

9. The prior version of GO 153 needs to remain in effect to provide a framework for processing the applications of all those customers who applied prior to the implementation date.

10. Once the transition to pre-qualification is complete, CD will notify the service list of this proceeding and all LifeLine carriers that the prior version of GO 153 has been superseded.

11. To be consistent with the Moore Universal Telephone Service Act, it is the Commission's responsibility to ensure that all those Californians entitled to LifeLine service are able to receive that service.

12. Income-based eligibility should not be eliminated unless data from the CertA demonstrates that the number of customers applying based on their income is de minimus.

13. Carriers are entitled to recover those expenses specifically related to the implementation of a pre-qualification enrollment process, including, but not limited to, necessary system changes, revision of methods and procedures and rewriting scripts for customer service representatives.

14. There is a need for Commission staff, the marketing contractor, call center contractor, CBOs, social service agencies, and other external entities to engage in an education effort so that customers are aware of the shift to a pre-qualification requirement well in advance of the implementation date.

ORDER

IT IS ORDERED that:

1. We are adopting a system of pre-qualification for the LifeLine program for all customers that contact their carriers to apply beginning on July 1, 2009.

2. General Order (GO) 153 shall be modified as described in this order. The revised GO shall be applicable to all customers described in Ordering Paragraph 1 above.

3. All LifeLine carriers shall notify customers that, once certified, they will receive a credit on their bill for LifeLine discounts as of the application date and, if they have a credit balance of at least $10.00, may request a refund check for any net credit balances reflected on their next bill.

4. Once a customer is deemed eligible for LifeLine discounts, the LifeLine carrier shall apply those discounts and any previously collected charges and deposits related to basic service, to the customer's bill. If such credits generate a credit balance on the customer's bill of greater than $10.00, and the customer's account does not include any amounts past due, the carrier must provide the customer with the option of receiving a refund check.

5. All LifeLine carriers shall inform customers of the following when they request service: (1) specify any deposits required; (2) allow customers to make payment arrangements for deposits, and (3) itemize the deposits on the first bill to distinguish the deposit amount for basic service connection and any other services.

6. All LifeLine carriers shall inform LifeLine applicants that they have the option of utilizing payment plans for charges and any deposits for basic service that the carrier requires.

7. Pursuant to General Order 153 Rule 9.2.1, LifeLine carriers may recover the reasonable costs of implementing the pre-qualification enrollment process described in this decision.

8. All LifeLine carriers shall provide drafts of the revised scripts to be used by their customer service representatives to the Communications Division (CD) by April 1, 2009 for review.

9. CD shall schedule a workshop to discuss pre-qualification implementation issues wthin 30 days of the issuance of this decision.

10. CD shall notify the service list of this proceeding and all LifeLine carriers when the transition is complete and the prior version of GO 153 is to be superseded by the version adopted in this order.

11. The Executive Director shall coordinate an inter-divisional effort to prepare a document that describes each existing low-income utility assistance program, including the Federal Low-Income Home Energy Assistance Program, along with a brief description of where the consumer can go for more information on a particular program and the requirements to participate. That information shall be available on the Commission's website as well as in brochure form that is distributed as part of the Commission's outreach efforts.

12. The Executive Director shall open a new proceeding to coordinate the application process for the Commission's various low-income programs.

Dated August 21, 2008, at San Francisco, California.

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