STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

December 28, 2004 Agenda ID #4184

Ratesetting

TO: PARTIES OF RECORD IN APPLICATION 01-02-024 ET AL.

This is the draft decision of Administrative Law Judge (ALJ) Duda. It will not appear on the Commission's agenda for at least 30 days after the date it is mailed. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Parties to the proceeding may file comments on the draft decision as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service.

/s/ ANGELA K. MINKIN by PSW

Angela K. Minkin, Chief

Administrative Law Judge

ANG:sid

Attachment

ALJ/DOT/sid DRAFT Agenda ID #4184

Ratesetting

Decision DRAFT DECISION OF ALJ DUDA (Mailed 12/28/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Switching in Its First Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 01-02-024 (Filed February 21, 2001)
Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Loops in Its First Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 01-02-035 (Filed February 28, 2001)
Application of The Telephone Connection Local Services, LLC (U 5522 C) for the Commission to Reexamine the Recurring Costs and Prices of the DS-3 Entrance Facility Without Equipment in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-031 (Filed February 28, 2002)

Application of AT&T Communications of California, Inc. (U 5002 C) and WorldCom, Inc. for the Commission to Reexamine the Recurring Costs and Prices of Unbundled Interoffice Transmission Facilities and Signaling Networks and Call-Related Databases in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-032 (Filed February 28, 2002)
Application of Pacific Bell Telephone Company (U 1001 C) for the Commission to Reexamine the Costs and Prices of the Expanded Interconnection Service Cross-Connect Network Element in the Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-02-034 (Filed February 28, 2002)
Application of XO California, Inc. (U 5553 C) for the Commission to Reexamine the Recurring Costs of DS1 and DS3 Unbundled Network Element Loops in Its Second Annual Review of Unbundled Network Element Costs Pursuant to Ordering Paragraph 11 of D.99-11-050.	Application 02-03-002 (Filed March 1, 2002)

OPINION RESOLVING BILLING ADJUSTMENT ISSUES

I. Summary

This decision resolves outstanding issues in this proceeding relating to the adjustment, or "true-up," of interim unbundled network element (UNE) rates to permanent rate levels now that permanent rates have been adopted for Pacific Bell Telephone Company d/b/a SBC California (SBC-CA) in Decision (D.) 04-09-063.

This order lifts the stay of billing adjustments established through Ordering Paragraph 4 of D.04-09-063, and orders payment of billing adjustments as follows:

· Ten carriers whose cash or cash equivalents indicate they possess cash at least 10 times the amount of their true-up debt shall pay their true-up obligations immediately, within 10 days from this order.

· All other carriers shall pay in equal installments over 12 months, subject to interest and late payment penalties.

· All billing disputes arising from payment of the true-up shall be handled through arrangements in existing interconnection agreements.

· True-up payments should be calculated based on a 10% shared and common cost markup, rather than the current 21% in UNE rates, subject to adjustment following adoption of a corrected markup in Application (A.) 04-03-013 (the 2004 SBC-CA UNE Reexamination proceeding).