ALJ/KAJ/hkr DRAFT Item 1

5/3/2001

Decision DRAFT DECISION OF ALJ JONES (Mailed 3/30/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application for Approval of Settlement Transition Agreement and Implementation of Replacement Funding for Small Local Exchange Carriers.

Application 99-09-044 (Filed September 21, 1999)

OPINION

A. Summary

This decision extends the waterfall provision of the California High Cost Fund "A" (CHCF-A) for one additional year, to 2002, for the following seven small Local Exchange Carriers (LECs): Calaveras Telephone Company (Calaveras), Cal-Ore Telephone Co. (Cal-Ore), Ducor Telephone Company (Ducor), Foresthill Telephone Co. (Foresthill), Hornitos Telephone Company (Hornitos), Kerman Telephone Company (Kerman), and Pinnacles Telephone Company (Pinnacles).

The six other Small LECs that are parties to this proceeding will be subject to the waterfall provision in 2001. We anticipate that most Small LECs will decide to file General Rate Cases (GRCs) rather than see a reduction in their draw from the CHCF-A as a result of the waterfall provision, which would mean that six Small LECs would file GRCs in 2001 and seven, in 2002. This will enable the Commission to better manage its workload.