ALJ/TOM/jt2 Mailed 10/6/2006

Decision 06-10-003 October 5, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Verizon California Inc. (U 1002 C) To Extend Its Shared Asset Methodology To Additional Service Company Affiliates Pursuant To Decision 04-03-038.

Application 06-05-008 (Filed May 8, 2006)

DECISION GRANTING REQUEST OF VERIZON CALIFORNIA INC. TO EXTEND SHARED ASSET METHODOLOGY TO ADDITIONAL
SERVICE COMPANY AFFILIATES AS IDENTIFIED IN EXHIBIT A TO THE APPLICATION

1. Summary

This decision grants the unopposed application¹ of Verizon California Inc. (Verizon) for authority to extend the use of the shared asset methodology previously approved in Decision (D.) 04-03-038 to new service company affiliates created as part of an ongoing corporate reorganization, as identified in Exhibit A to the application, and other service companies that fall within the Federal Communications Commission (FCC) definition of "service company" and may be formed in future corporate reorganizations. In order to ensure that the use of this methodology is extended only to service company affiliates with which Verizon will share unused office space and equipment, and to appropriate transactions, we require Verizon to file its annual year-end assessment and adjustment for these shared assets for the prior year in which the year-end assessment was performed with the Director of the Commission Telecommunications Division (TD) and the Director of the Consumer Protection and Safety Division (CPSD), by February 1 of each year. The annual year-end assessment shall be consistent with the FCC's affiliate transaction pricing rules applicable to shared asset usage by service company affiliates.

If Applicant wishes to extend the use of the shared asset methodology to transactions other than the shared use of surplus office space and equipment, we direct Applicant to file an application for our approval at that time.

¹ The application was filed on May 8, 2006. In Resolution ALJ 176-3172 dated May 11, 2006, we preliminarily categorized this proceeding as ratesetting and preliminarily determined that hearings are unnecessary. No protests to the application were filed.