Conclusions of Law

1. The PEP costs incurred by Pacific and GTEC fail to meet the necessary conditions for LE factor cost recovery.

2. Customers of Pacific and GTEC should not be required to bear the burden of the PEP costs through an LE factor since the requisite LE factor criteria have not been met.

3. The motion of Pacific for LE factor treatment of PEP costs should be denied.

ORDER

IT IS ORDERED that:

1. The motion of Pacific Bell for Limited Exogenous (LE) factor recovery of Public Education Plan (PEP) costs incurred as part of an overlay relief plan is denied.

2. The motion of the Office of Ratepayer Advocates to deny carriers LE factor recovery of PEP costs incurred as part of an overlay relief plan is granted.

This order is effective today.

Dated , at San Francisco, California.