Discussion

Commission Rule of Practice and Procedure 51(e) requires that settlement agreements be (1) reasonable in light of the whole record, (2) consistent with the law, and (3) in the public interest to be approved by the Commission.

a. Reasonable in Light of the Whole Record

The record in this case reveals allegations of billing errors. Such errors have been corrected. Calculating reparations for the overcharges to the specific customers is economically infeasible. The parties' methodology results in a reasonable estimate of the amount MCI improperly obtained, and pursuant to the terms of the agreement, MCI will turn over this amount to one of three potential recipients. MCI, thus, will retain no benefit of its erroneous billing. This outcome is reasonable in light of the whole record.

b. Consistent with the Law

Public Utilities Code Section 734 requires that reparations be made to the person that paid the unauthorized charge. Here, however, we are unable to comply with the letter of that statutory directive. In Ortega v. AT&T Communications, 1998 Cal. PUC LEXIS 673, (D.98-10-023), we were faced with a similar dilemma. AT&T had overcharged coin users of pay telephones. Such users are anonymous, and thus refunds to the actual customers were impossible. We determined that where refunds to past customers were impracticable, the simplest refund mechanism would be to reduce charges for current services. (1998 Cal. PUC LEXIS 673, * 16.) We find that this rationale presents a fair and efficient resolution of the issue. There is likely to be a substantial overlap between current users of the MCI service and those previously overcharged. Thus, temporarily reducing charges for current service is consistent with the intent of the statute. Accordingly, we will select option two, reduced rates for current customers, from the three options presented by the parties. MCI shall file an advice letter setting forth tariff revisions necessary to reduce its revenue from intrastate Maximum Security Collect calls by $522,458.33.

The settlement is therefore consistent with the law.

c. In the Public Interest

This agreement will avoid substantial litigation costs imposed on both the parties and the Commission. It will also obtain lower rates for current users of the prison telephone system. These factors and the other factors cited above support our finding that the settlement is in the public interest.

For these reasons, the Commission finds that the settlement agreement is reasonable in light of the whole record, is consistent with the law, and is in the public interest. The agreement is approved pursuant to Rules 51 through 51.10 of the Commission's Rules of Practice and Procedure.