Date of Issuance: September 9, 2011
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Communications Division |
RESOLUTION T-17329 |
Carrier Oversight and Programs Branch |
September 8, 2011 |
R E S O L U T I O N
Resolution T-17329 Rescinding Funding for the Mother Lode Internet Unserved and Underserved Projects in Resolutions T-17197 and T-17225 by Releasing $5,881,405 of California Advanced Services Fund Grant Awards for Other Applicants
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Summary
This Resolution rescinds two California Advanced Services Fund (CASF) grants awarded to Mother Lode Internet from the California Advanced Services Fund (CASF) in Resolutions T-17197 (July 9, 2009) and T-17225 (May 6, 2010), releases the corresponding CASF matching funds approved, and makes the census block groups (CBGs) available to new applicants.
Background
On December 20, 2007, the Commission approved Decision (D.) 07-12-054 which established the CASF program for the purpose of providing matching funds of up to 40% of the total project costs for the deployment of broadband infrastructure in unserved and underserved areas in California. Subsequently, the Legislature in Senate Bill (SB) 1193 (Chapter 393, Stats. of 2008) established the California Advanced Services Fund as a new public purpose program effective through January 1, 2013 (see Public Utilities (PU) Code §281).
The Commission approved Resolution T-17143 on June 12, 2008, in which the Commission adopted application requirements, scoring criteria for the award of funds, and a prescribed timeline for filings and notifications. On September 25, 2010, the Governor signed SB 1040 (Chapter 317, Stats. of 2010) which amended PU Code §281 by providing an additional $125 million to fund three programs: the Broadband Infrastructure Grant Account, the Rural and Urban Regional Broadband Consortia Account, and the Broadband Infrastructure Revolving Loan Account. To implement the provisions of SB 1040 and to address possible changes to the program based on CASF's three year implementation experience, the Commission opened Order Instituting Rulemaking (R.) 10-12-008 on December 16, 2010, in which the Commission may establish new standards and processes to improve the CASF program and continue the efforts of promoting the state's goal of increased broadband deployment, access, and adoption in rural California.
Discussion
Telenational Communications, Inc. (Telenational), an affiliate of Rapid Link, Inc., a national voice and data carrier, and Mother Lode Internet, an internet service provider, applied for two CASF grants. Telenational acts as the fiscal agent for both projects because it holds a Certificate of Public Convenience and Necessity (CPCN) from the Commission under U-6666-C.1 Telenational and Mother Lode Internet are referred to hereafter as MLI.
MLI filed project applications for CASF grants as follows:
_ Unserved - On July 24, 2008, MLI filed an application for a CASF grant for 40% of the total project costs for unserved areas of Alpine, Amador, Calaveras, Tuolumne, and Mariposa counties. Resolution T-17197, adopted July 9, 2009, approved a CASF grant in the amount of $2,771,341 for this project.
_ Underserved - On August 25, 2008, MLI filed an application for a CASF grant for 40% of the total project costs for underserved areas of Tuolumne, Calaveras, Amador, Alpine and Mariposa counties. Resolution T-17225, adopted May 6, 2010, authorized a CASF grant in the amount of $3,110,064 for this project.
Both of these CASF project resolutions had similar requirements. The CASF program required MLI to post performance bonds for each of the projects equal to the amounts of the CASF grants and to provide copies of those performance bonds to the Communications Division (CD). For the unserved project, the Commission directed MLI to submit the performance bonds within five days after the effective date of the project award and, for the underserved project, within 20 days after the effective date of the award.
Since June 2010, CD has communicated in writing and by telephone with MLI at least 20 times, each time requesting information on MLI's progress in obtaining the performance bonds. In July 2010, CD requested MLI to provide a draft of the performance bonds by July 15, 2010, for staff review. CD's request provided specific information as to what the bond should include: a) the project description and completion date as set forth in the respective CASF grant applications; b) the terms and conditions of the CASF awards as set forth in the Resolutions granting the awards; (c) the amounts of the CASF grants and representations that the bonds will remain in full force and effect until the MLI completes the projects in a manner that complies with the requirements of the grants; and (d) a statement that if MLI does not complete the projects and/or does not comply with the conditions of the CASF grants that the Commission may consider allowing MLI additional time to perform before calling the bond(s).
CD maintained regular communications with MLI through March 2011 attempting to coordinate and obtain the required documents to comply with the program criteria. From March to July 2011, CD had not heard from MLI regarding the project compliance. In July 2011, CD contacted MLI and confirmed that MLI was still non-compliant. Although MLI made promises that it would comply, to date, MLI has failed to submit the copies of the executed performance bonds.
CD recommends that the Commission rescind these two awards for failure of the grantee to submit required documents explicitly set forth as conditions in Resolutions T-17143, T-17197, and T-17225. Because MLI has not demonstrated that it will provide broadband service to the unserved and underserved areas covered by its projects, CD believes the Commission should consider grant requests from other providers for these areas. Accordingly, the Commission should release the CASF funds allocated to these projects and return the census block groups (CBGs) to the pool of unserved and underserved areas for reallocation to other applicants/grants.
A summary of the funds released is shown:
The list of CBGs made available for new CASF project proposals is shown in Appendix A.
Comments on Draft Resolution
In compliance with PU Code §311(g), a notice letter was emailed on August 3, 2011, informing all CASF applicants and parties on the service list of R.06-06-028 of the availability of the draft of this Resolution for public comments at the Commission's website http://www.cpuc.ca.gov/static/documents/index.htm. This letter also informed parties that the final conformed Resolution adopted by the Commission will be posted and available at this same website.
The Commission did not receive any comments on this resolution.
Findings
1. In Decision (D.) 07-12-054, the Commission established the California Advanced Services Fund (CASF) to provide matching funds of up to 40% of the total project costs for the deployment of broadband infrastructure in unserved and underserved areas in California.
2. Resolution T-17143, approved on June 12, 2008, adopts the application requirements, scoring criteria for the award of funds, and a prescribed timeline for other filings and notifications.
3. On September 25, 2010, the Governor signed SB 1040 (Chapter 317, Stats. of 2010) which amended Public Utilities Code §281 by providing an additional $125 million to fund three programs: the Broadband Infrastructure Grant Account, the Rural and Urban Regional Broadband Consortia Account, and the Broadband Infrastructure Revolving Loan Account. The Commission opened Order Instituting Rulemaking (R.) 10-12-008 on December 6, 2010, in which the Commission may establish new standards and processes to improve the CASF program.
4. In administering the program, the Communications Division found that two projects approved for awards to Telenational Communications, Inc. and Mother Lode Internet have not complied with CASF funding requirements set forth in Resolution T-17143. Specifically, Telenational Communications, Inc. and Mother Lode Internet have failed to submit performance bonds that ensure the security of the public funds during construction.
5. Since June 2010, the Communications Divisions maintained regular communications with Telenational Communications, Inc. and Mother Lode Internet to coordinate their submission of the performance bonds for both projects. To date, neither company has submitted the performance bonds for the Mother Lode Broadband projects.
6. The Commission should rescind Resolutions T-17197 and T-17225 for the two specified projects, release the corresponding funding, and make the respective census block groups available to other applicants/grants.
7. The amount of $5,881,405 allocated to the two projects is as follows:
8. A notice letter was emailed on August 3, 2011, informing all applicants filing for CASF funding and parties on the service list of R.06-06-028 of the availability of the draft of this Resolution for public comments at the Commission's website http://www.cpuc.ca.gov/static/documents/index.htm. This letter also informed parties that the final conformed Resolution adopted by the Commission will be posted and available at this same website.
9. The Commission did not receive any comments on this resolution.
THEREFORE, IT IS ORDERED that:
1. Resolutions T-17197 and T-17225 are rescinded, as specified, and the census block groups listed in Appendix A are made available to other applicants.
2. The amount of $5,881,405 allocated to the projects approved in these two Resolutions is released and made available to other applicants.
This Resolution is effective today.
I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on September 8, 2011. The following Commissioners approved it:
/s/ Paul Clanon |
PAUL CLANON Executive Director |
MICHAEL R. PEEVEY President |
TIMOTHY ALAN SIMON |
MICHEL PETER FLORIO |
CATHERINE J.K. SANDOVAL |
MARK J. FERRON |
Commissioners |
1 Under PU Code §854(a), no person or corporation shall acquire control of any public utility organized and doing business in this state without first securing authorization from the Commission, and any such acquisition without prior authorization shall be void and of no effect. In Application 09-02-021, Rapid Link requested approval to acquire ownership of Telenational. On June 18, 2009, D.09-06-024 approved a transfer of control of Telenational to Rapid Link, Inc. and also imposed a $1,000 fine for failure to obtain Commission approval prior to the change. The CASF's primary concern with this organizational change was ensuring that the proper entity holding the CPCN is the fiscal agent. In D.09-06-024, the Commission approved the acquisition, thereby permitting Telenational to act as the CASF fiscal agent for the Mother Lode Broadband Projects.
