California High Cost Fund-A

Background

The California High Cost Fund-A (CHCF-A) is a subsidy program based on the principle of universal service, a concept that basic telephone service be affordable and ubiquitously available to all members of society. It provides a source of supplemental revenues to 14 small local exchange carriers (LECs) for the purpose of minimizing any rate disparity of basic telephone services between rural and metropolitan areas.

In November 2011, the CPUC opened a proceeding (R.11-11-007) to review the CHCF-A program in the context of market, regulatory and technological changes since the program was first established in 1987. The proceeding seeks to solicit constructive proposals on whether the CHCF-A program should continue and if so, how it should be modified.

DRA's Policy Position

DRA filed comments on February 1, 2012 and reply comments on March 30, 2012.

DRA strongly supports the goals for universal service because of their critical impact on public safety and the state economy. DRA recommends that the CPUC:

• Gradually phase down the amount that the 14 small LECs draw from CHCF-A because the program appears to have met its goals.
• At the end of the phase-down, move the small LECs out of rate-of-return regulation to a modified form of the Uniform Regulatory Framework.

Current Proceeding Status

The proceeding is open and comments are filed on the Order Instituting Rulemaking. A Prehearing Conference was held on June 4, 2012 and the parties are awaiting a Scoping Memo to be issued by the Assigned Commissioner.

See the proceeding docket.

Other Resources

CPUC's CHFC-A website