c) Revenue Neutrality

TURN and DRA contend that the Decision errs because revenue neutrality does not appear to apply equally to allow decreases as well as increases in basic service rates. Additionally, they assert that the "implicit decision to increase basic residential exchange rates" will adversely affect universal service contrary to State policy as embodied in section 709.³⁸ (TURN/DRA Rhg. App., pp. 44-45.)

It is correct that our Decision does not explicitly mention potential rate decreases in connection with revenue neutrality. However, our rationale for adopting the policy does not preclude decreases, if circumstances so warrant. Our adopted policy provides that until the price cap on non-subsidized basic residential service is lifted, the affected ILECs should be allowed to adjust rates "to offset any FCC mandated price changes in services still subject to price controls." (D.06-08-030, p. 155.) To illustrate how the principle would apply, we stated as an example: "[I]n deed, application of the revenue neutrality principle may be necessary if the FCC or this Commission orders reductions in basic switched access rates." (D.06-08-030, p. 155, fn. 599.)

Flowing from that example, we stated that price changes may be offset either with revenue-neutral price increases in basic service, or revenue-neutral surcharges. (D.06-08-030, p. 155.) However, our statement is linked to the specific example, rather than to the policy as a whole. We continue to believe that in no case should the basic residential rate fall below the set price floors. However, our policy supports either rate increases or decreases, if warranted, in response to FCC action. To clarify, we will modify the Decision as set forth below in the ordering paragraphs.

TURN and DRA are wrong, however, that the Decision contains an implicit determination to increase basic residential exchange rates. Nothing in our Decision operates to authorize an immediate increase in basic residential exchange rates. The reference to such an increase is clearly for illustrative purposes, and we used it in the context of noting that related issues are currently being considered by the FCC. Any ILEC exercise of revenue neutrality must flow from an FCC order which acts as a triggering event. (D.06-08-030, p. 155, fn. 599.)

We further find the section 709 allegation raised by TURN and DRA is overly broad and poorly defined. The statute sets forth several broad policy objectives for the provision of telecommunications services in California.³⁹ TURN and DRA do not specify how they believe our Decision is unlawful with respect to any particular provision of section 709 or any other requirement under the law. Thus, we find no merit to the argument.

Finally, we modify Finding of Fact 78 to correct a typographical error. The Finding of Fact currently reads: "Because ILECs like market power in voice communications markets, it is reasonable to permit all tariffs to go into effect on a one-day filing, but it is also reasonable to require that any tariffs that impose price increases or service restrictions provide a thirty-day advance notice to all affected customers." The word "like" shall be changed to "lack."

B. DisabRA's Application for Rehearing

We next turn to the issues raised in DisabRA's application for rehearing. DisabRA contends that the Decision errs because: (1) it violates section 1705 by failing to state findings of fact and conclusions of law on material issues raised by DisabRA; and (2) even if issues regarding the disabled community are best addressed in R.06-05-028 (the Commission's PPP OIR), the Decision fails to adequately refer those issues to that proceeding. (DisabRA Rhg. App., pp. 2-10.)

Additionally, DisabRA agrees with the allegations of legal error raised by TURN and DRA, particularly as to reporting and monitoring requirements.⁴⁰ (DisabRA Rhg. App., pp. 11-12.)

³⁸ TURN and DRA also allege that the Decision is contrary to the State policies embodied in section 739. However, section 739 of the Public Utilities Code deals with baseline quantities of gas and electricity and is inapplicable for purposes of this proceeding.

³⁹ Policies embodied in section 709 include: assuring affordability and availability of telecommunications services; encouraging the development of new technologies; promoting lower prices and consumer choice; and removing barriers to open and competitive markets. (See Pub. Util. Code, § 709, subdivs. (a) through (h).)

⁴⁰ Although DisabRA expresses its support and agreement with the arguments raised in the application for rehearing filed by TURN and DRA, it presents no independent legal argument, analysis or authority. It is simply a statement of its endorsement. Thus, the relevant issues are addressed separately in response to TURN and DRA's specific contentions.