COMMENTS

The draft resolution of the Telecommunications Division in this matter was mailed on August 8, 2000 in accordance with PU Code Section 311(g) to the parties of record in R.95-10-020/I. 95-01-021 and the six carriers who are presently receiving payments for the CHCF-B claims.

FINDINGS

1. GTE Service Corporation's proposal for resolving compliance issues relating to the California High Cost Fund-B (CHCF-B) claims is reasonable and should be adopted.

2. An adjustment of $1.351 million to reduce future CHCF-B claims in the year 2001 for both GTE California and GTE-Contel is reasonable and should be adopted.

3. GTE should not recover the $1.351 million from the CHCF-B program, as GTE shareholders' income should be reduce by this amount in year 2001.

4. The claim amount of $145.633 million, as set forth in Attachment A of this resolution, for both GTE California and GTE-Contel for the time period from February 1997 through October 1999 is reasonable and should be adopted.

5. All ratepayers of intrastate services, other than those subscribing to residential basic services and contracts, should benefit from the adoption of $145.633 million through the catch-up surcredit and other rate reductions.

6. Residential basic ratepayers benefit from the CHCF-B program in the form of subsidy supports in high cost areas of GTE California and GTE-Contel.

7. GTE California and GTE-Contel will comply with Commission resolutions and decisions as required for the CHCF-B program for high cost claims starting for November 1999 and thereafter.

8. The Commission is committed to utilize the Internet for distributing Commission orders and information.

THEREFORE, IT IS ORDERED that:

1. GTE Service Corporation's proposal of resolving compliance issues relating to the California High Cost Fund-B (CHCF-B) is adopted.

2. An adjustment of $1.351 million to reduce future CHCF-B claims in year 2001 is adopted for both GTE California and GTE-Contel.

3. The claim amounts of $145.633 million, as set forth in Attachment A of this resolution, is adopted for both GTE California and GTE-Contel for the time period from February 1997 through October 1999.

4. GTE California and GTE-Contel shall comply with Commission resolutions and decisions as required for the CHCF-B program for high cost claims starting with the month of November 1999 and thereafter.

This Resolution is effective today.

I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on September 7, 2000. The following Commissioners approved it:

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WESLEY M. FRANKLIN

Executive Director