SUMMARY · Web viewThat Calaveras’, Ducor’s, Siskiyou’s, and Volcano’s means tests include...

Resolution T-17682

CD/HS3

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Communications Division

RESOLUTION T- 17710

Carrier Oversight & Programs Branch

January 14, 2021

R E S O L U T I O N

RESOLUTION T-17710. This Resolution Adopts $35.165 million in California High Cost Fund-A Support for Ten Small Incumbent Local Exchange Carriers for Calendar Year 2021.

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SUMMARY

This Resolution adopts a total of $35.165 million in California High Cost Fund-A (CHCF-A) support for Calendar Year (CY) 2021, to be disbursed to ten Small Incumbent Local Exchange Carriers (Small ILECs) that draw from the fund:

1. Calaveras Telephone Company

2. Cal-Ore Telephone Company

3. Ducor Telephone Company

4. Foresthill Telephone Company

5. Kerman Telephone Company

6. Pinnacles Telephone Company

7. The Ponderosa Telephone Company

8. Sierra Telephone Company

9. Siskiyou Telephone Company

10. Volcano Telephone Company

The ten Small ILECs requested a total of $36.650 million. For reasons discussed below, we decreased support by $1.484 million, and approve $35.165 million, as shown in Table 2, columns B through D.

BACKGROUND

The California High Cost Fund was implemented by Decision (D.) 88-07-022, as modified by D.91-05-016 and D.91-09-042, to provide a source of supplemental revenues for Small ILECs whose basic exchange access line service rates would otherwise be increased to levels that would threaten universal service. These decisions provide foundational program guidelines. Of the 13 Small ILECs eligible for CHCF-A funding, the following ten currently request CHCF-A support:

1) Calaveras Telephone Company (Calaveras);

2) Cal-Ore Telephone Company (Cal-Ore);

3) Ducor Telephone Company (Ducor);

4) Foresthill Telephone Company (Foresthill);

5) Kerman Telephone Company (Kerman);

6) Pinnacles Telephone Company (Pinnacles);

7) The Ponderosa Telephone Company (Ponderosa);

8) Sierra Telephone Company (Sierra);

9) Siskiyou Telephone Company (Siskiyou);

10) Volcano Telephone Company (Volcano).

Three Small ILECs currently do not request CHCF-A support:

1) Happy Valley Telephone Company (Happy Valley);

2) Hornitos Telephone Company (Hornitos); and

3) Winterhaven Telephone Company (Winterhaven).

Public Utilities (P.U.) Code § 275.6 requires the Commission to implement the CHCF-A program to reduce any rate disparity in rural areas charged by small telephone corporations that are subject to rate-of-return regulation. To facilitate that opportunity, the CHCF-A program funding bridges the revenue differential between the basic service rate revenue paid by the Small ILECs’ customers and the revenue requirement needed by a Small ILEC to achieve its authorized rate-of-return. The CHCF-A program is scheduled to sunset on January 1, 2023.[footnoteRef:2] [2: On September 5, 2018, the Governor signed into law Assembly Bill 1959, extending the program from January 1, 2019 to January 1, 2023. The bill is codified in P.U. Code § 275.6(g).]

Notice of Advice Letters

During September 2020, all 13 Small ILECs submitted their respective annual CHCF-A Advice Letters (ALs), in accordance with D.91-09-042. Ten of these 13 Small ILECs requested a total Calendar Year (CY) 2021 CHCF-A support of approximately $36.650 million. Table 1 provides a summary of the AL requests:

With the issuance of the Ducor, Foresthill, and Pinnacles General Rate Cases (GRCs) for Test Year (TY 2019), the first cycle of rate cases as ordered by D.15-06-048 is complete. In this Resolution, the Small ILECs who draw from the CHCF-A now request approval of continuing program funding for CY 2021.

In their AL filings, the Small ILECs have requested adjustments to their CHCF-A support amount related to regulatory changes of industry-wide effect: a) Pro-Rata Changes and Budget Control Mechanism for High Cost Loop Support; b) Reduction in Intercarrier Compensation; c) Alternative-Connect America Fund support; and d) Net interstate expense adjustment (projected Universal Service Fund per the National Exchange Carrier Association (NECA)). The details of these additional amounts can be found in Appendix A for each of the Small ILECs.

The 13 Small ILECs’ CY 2021 CHCF-A AL filings appeared in the Commission’s Daily Calendar during September 2019.

Protests

On October 5, 2019, the Public Advocates Office protested Calaveras’s AL 379, Ducor’s AL 393, Ponderosa’s AL 485, Sierra’s AL 472, Siskiyou’s AL 434, and Volcano’s AL 417. Collectively, the protests asserted these issues:

1. That Calaveras’, Ducor’s, Siskiyou’s, and Volcano’s means tests include revenues, expenses, and elements of rate base that deviate significantly from either the 2019 Annual Report or the 2019 CHCF-A annual filing. Public Advocates contends that these deviations call into question the accuracy of the reported numbers and make it difficult to confirm that Calaveras, Ducor, Siskiyou, and Volcano are not earning above their authorized rates of return.

2. That Ducor and Sierra either incorrectly allocate various line items included in the means test between inter and intrastate jurisdictions or fail to provide adequate explanation of their allocation methodology. The items in question include rent revenue, access revenue, and depreciation and amortization for Ducor and uncollectible revenues and income for Sierra. These issues also make it difficult to confirm that Ducor and Sierra are not earning above their authorized rates of return.

3. That Sierra and Siskiyou incorrectly added uncollectible revenues to total operating revenue instead of subtracting within their means test. This makes it difficult to confirm that Ducor and Sierra are not earning above their authorized rates of return.

4. That Ponderosa and Sierra did not provide supporting documentation to validate their requested adjustments for Pro-Rata Changes (line 3a). Additionally, Sierra did not provide supporting documentation to validate their requested adjustment for the Budget Control Mechanism (BCM).

5. That Volcano’s reported Pro-Rata Changes, BCM Impacts, and BCM Refund (lines 2a, 2b, and 2c of Volcano AL 417) do not match the data from the Universal Service Administrative Company (USAC). Public Advocates contends that these same errors were present in Volcano’s 2019 AL (AL 411) and therefore the Commission should account for the additional unreported revenue when determining the 2021 CHCF-A subsidy amount.

6. That the requested amount of CHCF-A support for 2021 was not consistent between Volcano’s AL 417 and their supporting workpapers.

Reply to Protests

On October 19, 2020, the Small ILECs filed their consolidated response to Public Advocates’ six protests and provided a response to each issue, as described below.

1. The Small ILECs provided general descriptions of activities that they contend are responsible for the deviations noted in Calaveras’, Ducor’s, Siskiyou’s, and Volcano’s means tests as compared to their 2019 Annual Reports or 2019 CHCF-A filings. Additionally, they state that the 2019 Annual Reports are not a valid comparison because of differences in how financial data is presented and the time period compared to 2020 CHCF-A filing.

2. Small ILECS contend that all but one of the items protested in Sierra’s and Ducor’s means tests were correctly allocated between the inter- and intrastate jurisdictions and follow either NECA reporting guidelines or allocation factors established in the GRC. Sierra determined that $11,000 of uncollectible revenues were incorrectly assigned to the intrastate jurisdiction and filed a supplement to AL 472 on November 3, 2020. Additionally, the Small LECs provided support for Sierra’s allocation factors.

3. In Sierra and Siskiyou’s means tests, uncollectible revenues were correctly added to total operating revenue to reflect payments for amounts that were previously recorded as uncollectible.

4. In response to data requests from Public Advocates, the Small ILECs provided supporting documentation to validate their requested adjustments for Sierra’s and Ponderosa’s Pro-Rata Changes as well as for Sierra’s adjustment for the BCM.

5. The CPUC approved Volcano’s requested adjustments for Pro-Rata Changes, BCM Impacts, and BCM Refund in their 2019 CHCF-A filing and therefore Volcano must reverse the same amounts in Line 2 of their 2020 filing.

6. They acknowledged that Volcano’s request for 2021 CHCF-A support was not consistent between Volcano’s AL 417 and the supporting workpapers. Volcano filed a supplement to AL 417 on September 29, 2020 to correct the support request shown on the AL.

DISCUSSION2021 CHCF-A Rules and Orders Considered

Staff recommends CHCF-A support of $35.165 million, compared to the Small ILECs’ cumulative request of $36.650 million, due to final Net Interstate Expense Adjustment data provided by NECA.

Table 2 shows:

1. CY 2021 Small ILECs’ requested CHCF-A support;

2. Staff’s proposed adjustments; and

3. Staff’s proposed annual and monthly support amounts for CHCF-A.

Staff’s proposed support column includes CHCF-A support authorized by this Resolution for the ten Small ILECs that requested support for CY 2021.

Staff’s total recommended amount is also based on the following Federal Communications Commission (FCC) and Commission rulings and decisions:

Means Test

The Appendix to D.91-09-042, Implementation Rules, requires that, except for the following 12 months after a decision or resolution is rendered by the Commission in a Small ILEC’s rate case, each Small ILEC’s CHCF-A support request shall be subject to a means test. This means test exception is an issue that will be considered for review in Phase 2 of the CHCF-A Rulemaking, R.1111007.

The Implementation Rules also state “Utilities shall be eligible for support from the fund limited to the amount which are forecasted to result in earnings not to exceed authorized intrastate rates of return or to the current funding level amount for the year for which HCF is being requested, whichever amount is lower.”[footnoteRef:3] Making such determinations is the purpose of the means test. [3: D.91-09-042, Appendix at p.2.]

In administering the Commission’s means test, staff’s calculations indicate that Calaveras, Cal-Ore, Ducor, Foresthill, Kerman, Ponderosa, Sierra, Siskiyou, and Volcano[footnoteRef:4] are not earning more than their authorized rate of return. [4: This resolution does not apply the means test to Pinnacles.]

Additionally, the Small ILECs provided an estimate for Line 5b USF-HCLS (High Cost Loop Support, under Line 5 Net Interstate Expense Adjustment in Appendix A) in their respective ALs. Staff has used the final NECA USF-HCLS data to determine the funding amount.[footnoteRef:5] [5: The Small ILECs that have elected to receive Alternative-Connect America Fund (A-CAM) support in place of HCLS are not included in the NECA USC-HCLS data.]

The means test includes state operating fixed charges (interest), where applicable.[footnoteRef:6] The forecasted earnings must be based on at least seven months of recorded financial data, annualized for the year that the AL is filed. The means test only evaluates recurring funding. [6: D.91-09-042 amending D.91-05-016, replacing Conclusion of Law 3, stating: “The CHCF rules should be modified to limit CHCF support to amounts which would provide no more than the utility’s authorized intrastate rate of return or to the current funding level for the year for which CHCF is being requested, whichever is lower, using a “means test” as proposed by DRA. The means test should be based on forecasted intrastate rate of return using at least seven months of recorded data annual for the year in which the CHCF advice letter is filed and adjusted for known Commission regulatory decisions for determining appropriate funding levels for the utility.”]

Net Interstate Expense Adjustment

D.91-09-042 authorizes the Small ILECs to include any changes to their federal Universal Service Fund (USF) funding in the annual CHCF-A filings. In addition, Resolution T-16117 states that any change in USF funding level must be determined for each carrier by the difference between the forecasted USF support for the current year and the forecasted USF support for the coming year. The current year's forecasted USF-HCLS support is the amount adopted by the Commission for the current year CHCF-A revenue requirement. The coming year's forecasted USF-HCLS is the amount projected by NECA, the administrator of USF.[footnoteRef:7] [7: NECA provided a link to projected 2021 USF payment data on October 2, 2020. These updated projections compared to the original estimates provided in the respective annual support ALs resulted in changes to the CHCF-A funding for seven of the Small ILECs. ]

In response to the NECA HCLS funding changes, Staff has adjusted each Small ILEC’s CHCFA CY 2021 support by incorporating the final NECA adjustment data into the 2021 CHCF-A support calculations as described in Section B, titled “CHCF-A Support Summary by Carrier.” The resulting adjustment, if any, is reflected in Line 5c of each carrier’s Appendix A calculation sheet.

Cal-Ore, Ducor, Pinnacles, Happy Valley, Hornitos, and Winterhaven have transitioned to the federal Alternative Connect America Cost Model (A-CAM) [footnoteRef:8] which is voluntary and offers model-based support. A-CAM support amounts are predetermined and therefore, NECA does not provide forecasted USF-HCLS amounts for these companies. Ducor and Pinnacles each receive a fixed amount of support each year during the term of their A-CAM election. Cal-Ore is a transitional A-CAM carrier, so their support is reduced by a fixed amount each year until 2022. Happy Valley, Hornitos, and Winterhaven do not request CHCF-A support, so any changes in the federal funding that they receive has no effect on the CHCF-A. [8: Federal Communications Commission DA 16-1422; DA 18-750; FCC Wireline Competition Bureau Docket 10-90. ACAM provides federal funding to Small ILECs that accept support calculated by a cost model to build broadband to a specific number of fixed, eligible locations.]

Revenue Adjustment Associated with Rate of Return Reform (Non-Recurring)

There are two non-recurring revenue effects requested for CY 2021 discussed as follows. The impacts of these effects, if any, are shown on lines 3a and 3b of each carrier’s Appendix A calculation sheet.

High Cost Loop Support Reimbursement Rates (Pro Rata) (FCC 14-190, Section VI. A.)

Adjustments for this item are found in line 3a of each carrier’s Appendix A calculation sheet. FCC 14-190, Section VI.A., the FCC’s April 2014 Notice of Proposed Rulemaking (NPRM) sought comment on several proposals for near-term reform of high-cost universal service support for rate-of-return carriers. The FCC noted in the April 2014 NPRM that they have significant concerns regarding the structure and incentives created under the existing high-cost mechanisms for rate-of-return carriers, such as the “race to the top” incentives that exist under HCLS. Under the current HCLS rules, rate-of-return carriers receive reimbursement for a fixed percentage of their unseparated loop expenses to the extent that they exceed a benchmark set in relation to the national average cost per loop (NACPL). Carriers with the highest loop costs relative to the national average have minimal incentive to reduce their expenses and eliminate waste. Carriers with costs close to the ever rising NACPL risk losing all HCLS for prior investments, while carriers with higher cost per loop are sheltered from the impact of the HCLS cap.

The FCC adopted a revised methodology for applying the cap on high cost loop support so that support is distributed more equitably among all high-cost carriers, and to incentivize carriers with the highest loop costs to curb waste in the operation of their study areas. (FCC 14-190, Section VI. 99)

The Pro-Rata adjustments do not apply to the Small ILECs that have elected ACAM support[footnoteRef:9]. [9: Cal-Ore, Ducor, and Pinnacles have elected A-CAM support. Happy Valley, Hornitos, and Winterhaven have also elected A-CAM support but do not draw from the CHCF-A.]

Budget Control Mechanism (FCC 16-33,[footnoteRef:10] Section II.B.6; and 18-176[footnoteRef:11] Sections III.C.1.a. and III.C.4), [10: WC Dkt Nos 10-90, 14058, 01-92, Report and Order, Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking (FCC 16-33), FCC 16-33 (rel. March 30, 2016)] [11: WC Dkt Nos. 10-90, 14-58, 07-135, 01-92, Report and Order, Further Notice of Proposed Rulemaking, and Order on Reconsideration (FCC 18-176), FCC 18-176 (rel. December 12, 2018)]

Adjustments for this item are found in line 3b of each carrier’s Appendix A calculation sheet. The FCC previously adopted an overall budget of $4.5 billion for the high-cost program, and a budget within that amount of $2 billion per year for high-cost support for rate-of-return carriers. It did not, however, adopt a method for enforcing the budget for rate of return carriers. In In FCC 16-33 Section II.B.6, the FCC has adopted a self-effectuating mechanism for controlling total support distributed pursuant to HCLS and Connect America Fund Broadband Loop Support (CAF-BLS) to stay within the budget for rate-of-return carriers.

In FCC 18-176 Section III.C.1.a, the FCC simplified the BCM calculation by eliminating the per-line reduction calculation. In this Order, the FCC adopted a new budget of approximately $1.42 billion for legacy carriers that is separate from the A-CAM budget. This budget will be increased annually by inflation. The BCM adjustments do not apply to the Small ILECs that have elected A-CAM support.

Revenue Adjustment Associated with Connect America Fund – Intercarrier Compensation (Recurring)

The FCC’s Connect America Fund instituted a comprehensive intercarrier compensation reform and established that “[f]or rate-of-return carriers, recovery will be calculated initially based on rate-of-return carriers’ fiscal year 2011 interstate switched access revenue requirement, intrastate access revenues that are being reformed as part of this Order, and net reciprocal compensation revenues. This baseline will decline at five percent annually…”[footnoteRef:12] The CHCF-A program allows for annual recovery of the difference in the reduction in intercarrier compensation.[footnoteRef:13] The resulting adjustment, if any, is reflected in Line 4a (National Broadband Plan (5% reduction Intercarrier Compensation) of each carrier’s Appendix A calculation sheet. [12: FCC 11-161, Paragraph 39.] [13: D.91-09-042, Appendix, Part B: “Annual Settlements Effects and HCF Adjustments.”]

Cost of Capital

The Cost of Capital proceeding concluded on December 15, 2016, with the issuance of D.16-12-035. In this decision, the Commission adopted company-specific cost of capital (or rate of return) to be applied in pending and future GRC applications initiated before the year 2021 for all ten of the Small ILECs that draw CHCF-A support.

Waterfall

Pursuant to the Implementation Rules in D.91-09-042 and D.15-06-048, the phase-down of the CHCF-A funding percentage level is reinitiated effective January 1 following the year after the completion of a Small ILEC’s GRC and follows a six-year course. A Small ILEC’s CHCF-A funding level remains at 100% for the first three years after GRC completion; the funding level is then reduced to 80% during the fourth year if no subsequent GRC application is submitted. The funding level then drops to 50% during the fifth year if no GRC application is submitted, and the funding level is further reduced to 0% during the sixth year, if no GRC application is submitted. This six-year phase down of funding level is known as the Waterfall.

In D.20-08-011, the Commission determined that the program and ratemaking changes from a pending Phase 2 decision in R.11-11-007 will require time to implement and therefore delayed the start of the next cycle of GRCs by one year. D.20-08-011 extended the filing deadlines for Group A companies to October 1, 2021, Group B companies to October 1, 2022, and Group C companies to October 1, 2023. This Decision also made changes to the composition of the groups[footnoteRef:14]. [14: The following are the GRC groups as modified by D.20-08-011. Group A: Sierra, Siskiyou, and Volcano. Group B: Kerman, Foresthill, and Ponderosa. Group C: Ducor, Calaveras, Pinnacles, and Cal-Ore.]

In addition, D. 20-08-011 froze the waterfall provision for each of the Independent Small LECs until their next filing deadline under the revised GRC schedule. The Independent Small LECs shall be subject to the waterfall provision beginning the year following their next GRC application deadline (i.e. beginning in 2022 for Group A carriers).

The funding percentage levels for the thirteen Small ILECs for CY 2021 are summarized in Table 3, as well as line 10 (Waterfall Effect) of each carrier’s Appendix A calculation sheet:

Pursuant to the revised GRC cycle adopted in D.20-08-011, no Small ILECs were scheduled to file GRC applications during 2020 for TY 2022 to maintain their funding level at 100%.

Happy Valley, Hornitos, and Winterhaven do not draw support from the CHCF-A fund as their respective funding levels pursuant to the CHCF-A waterfall criteria have reached 0%, and none of these carriers have requested further support from the CHCFA fund.

Tax Cuts and Jobs Act Impacts

The Tax Cuts and Jobs Act (TCJA) was signed into law on December 22, 2017 and became effective January 1, 2018. Among other things, the TCJA reduced the top corporate income tax rate from 35% to 21%. Accordingly, the reduced federal income tax rate justified a reduction in the Small ILEC companies’ respective revenue requirements and CHCF-A support. This also justified adopting a methodology to ensure that ratepayers received the benefits of “normalized” excess deferred income tax for the four companies whose GRC proceedings were determined for TY 2018.[footnoteRef:15] [15: Cal-Ore (Resolution T-17617); Ponderosa (T-17618); Sierra (T-17619); and Calaveras (T-17626)]

In Resolution T-17616, Staff postponed action on excess deferred income tax reserve for the six Small ILECs that were not subject to TY 2018 GRCs (Ducor, Foresthill, Kerman, Pinnacles, Siskiyou and Volcano), as Staff recommended that such consideration be deferred until each company’s next GRC. The Ducor, Foresthill, and Pinnacles GRC proceedings are now closed and excess deferred income tax reserve has been established for these companies.[footnoteRef:16] The Siskiyou, and Volcano GRC applications will be filed in October 2021 for TY 2023 and the Kerman application will be filed in October 2022 for TY 2024, at which time an equitable amount of excess deferred income tax and a reasonable method for their normalization (disposal) can be determined.[footnoteRef:17] [16: On November 19, 2020, the Commission approved D.20-11-051 and granted rehearing of Resolution T-17618. Resolution T-17618 reduced Ponderosa’s revenue requirement and CHCF-A support for 2019 as result of changes resulting from the Tax Cut and Jobs Act of 2017. ] [17: Resolution T-17616, adopted November 8, 2018, adjusted the federal income tax rate from 34% to 21% for these carriers, for April 2018 through December 2018, while also revising each carrier’s CHCF-A support. Prior to the TCJA, the Small ILECs’ GRC-adopted revenue requirements were based on a 34% federal income tax rate.]

Results of GRCs affecting CHCF-A Support

With the first cycle of Small ILEC rate cases completed as ordered by D.15-06-048 and the schedule for the next cycle of rate cases modified by D.20-08-011, there are no GRC applications scheduled for submission until October 2021. Those applications will be considered during 2022 for TY 2023. That means that no Small ILEC GRC decisions are scheduled to be issued during CY 2021. Therefore, this Resolution determines each CHCF-A recipient carrier’s CY 2021 CHCF-A support, as opposed to certain years where a GRC decision determines a carrier’s support.

Test Year Funding

The final decision in a GRC determines the revenue requirement threshold at which a Small ILEC may earn its authorized rate of return. If the Small ILEC received additional funding through the AL adjustment process, this would cause it to exceed its authorized rate of return. The Implementation Rules from D.91-09-042, Appendix, Page 2, states, “Utilities shall be eligible for support from the fund limited to the amount which are forecasted to result in earnings not to exceed authorized intrastate rates of return or to the current funding level amount for the year for which HCF is being requested, whichever amount is lower.” Additionally, D.17-09-016 states that “Annual support and/or adjustments cannot be used to boost utility earnings to levels which exceed those authorized by this Commission.”[footnoteRef:18] For the purpose of this resolution, staff is not reviewing or considering any GRC applications addressing a 2021 TY. [18: D.17-09-016 at p. 5.]

Calendar Year After Test Year

D.91-09-042 states “Such a forecasted rate of return shall not be applied to determine a company’s HCF funding levels following 12 months after a decision or resolution is rendered by the Commission in a company’s general rate review proceeding.”[footnoteRef:19] In the interim, Staff will consider adjustments for CY 2021 for Small ILECs whose TY was 2019 or earlier with incorporating a means test limit, pending further Commission consideration.[footnoteRef:20] [19: D.91-09-042, Appendix at p. 3. However, the Commission issued a recent ruling in D.17-09-016 that granted a limited review to re-evaluate.] [20: This issue of means test applicability during the first year after a GRC is being considered in Phase 2 of the R.11-11-007 CHCF-A Rulemaking. ]

Staff Analysis of Protests and Response

After reviewing protests and the Small LECs’ response, staff has concluded the following:

1. While the Small LECs correctly note that financial data included in the CY 2021 means tests covers a different period than the 2019 Annual Reports, staff agrees with Public Advocates that some of the deviations are significant enough to raise questions. However, the annual CHCF-A AL process is currently designed to be ministerial and does not allow for the development of the record necessary to determine the accuracy of each of the revenues and expenses included in the means test. Currently, these issues are better addressed in a GRC where a sufficient record can be developed. The 4th Scoping Memo in R.11-11-007 included modification and clarification of D.91-09-042 as one of the issues to be addressed in this proceeding, including modification to the means test rules. Therefore, if Public Advocates has concerns about the transparency or effectiveness of the means test, staff suggests that they propose modifications to the process within R.11-11-007. Since staff does not currently have sufficient evidence to determine that the protested means test inputs for Sierra, Calaveras, Ducor, Siskiyou, and Volcano were inaccurate, staff will continue to use the companies’ inputs for 2021.

2. Sierra filed a supplement to AL 472 on November 3, 2020 to correct their means test by moving $11,000 of uncollectible revenues from the interstate jurisdiction to the intrastate. However, this modification reduces Sierra’s rate of return and therefore has no effect on CY 2021 CHCF-A support. Additionally, Sierra provided justification for the allocation factor used, and therefore staff accepts the jurisdictional allocations submitted in the revised means test. Similarly, Ducor provided sufficient explanation in response to Public Advocates’ protest of several allocation issues.

3. The Small ILECs provided an explanation of why they added, instead of subtracted, uncollectible revenues to total operating revenues in Sierra’s and Siskiyou’s means tests. Staff has not been able to verify that this explanation is valid; however, modifying the means tests to subtract uncollectible revenues from total operating revenue would only further decrease the rates of return and therefore would not affect the results of the means tests. Thus, this item does not affect the amount of CY 2021 CHCF-A support for either company.

4. In response to Public Advocates’ protests and data requests, the Small ILECs provided official supporting documentation that validated the requested adjustments for Sierra’s and Ponderosa’s Pro-Rata Changes and Sierra’s BCM. Therefore, staff recommends allowing these requested adjustments. Staff also agrees with Public Advocates that this information is necessary to evaluate the requested adjustments. Therefore, going forward all of the Small ILECs requesting adjustments due to the BCM or Pro-Rata Changes should include official documentation from NECA or USAC in their annual AL filing to support each one of the numbers included in their workpapers.

5. Line 2 is intended to reverse adjustments approved in the prior year’s resolution. Therefore, Volcano was correct to show amounts under line 2 (Reverse Prior Year Non-Recurring Adjustments) that are consistent with those approved under line 3 (Year 2019 Impacts Non-Recurring) in the 2019 resolution [footnoteRef:21]. Additionally, staff does not recommend making additional adjustments to those amounts approved in Resolution T-17682. [21: Res T-17682]

6. The supplemental AL that Volcano filed on September 29, 2020 eliminates the inconsistency between Volcano’s request amount of CHCF-A support in their AL and the supporting workpapers.

CHCF-A Support Summary by Carrier

Staff reviewed the AL filings made by the thirteen Small ILECs for CY 2021 CHCFA funding. Staff’s recommended support amount for each of the Small ILECs is summarized below and itemized in column B of Appendix A-1 through A-13.

Calaveras, Appendix A-1

Calaveras’ CY 2021 CHCF-A revenue requirement is $3,052,744.04 (at Line 6 of Appendix A-1).

In AL 379, Calaveras requested adjustments totaling $32,814.00 (the sum of lines 3 and 4 of Appendix A-1). The net interstate expense adjustment due to the difference between 2020 and 2021 projections is $18,208.33 (at line 5c). Staff proposes allowing these adjustments.

CY 2021 is the third year after Calaveras’ 2018 TY, and it is therefore subject to a means test. After applying the means test, Calaveras’ revenue requirement is unchanged at $3,052,744.04 (at Line 9, of Appendix A-1). Additionally, pursuant to D.91-09-042, Appendix Section D (§ D of the Implementation Rules ) and D.20-08-011, Calaveras’ waterfall is set at 100%.

Thus, Calaveras should receive monthly CHCF-A support of $254,395.34, i.e. one-twelfth of $3,052,744.04, for January through December 2021.

Cal-Ore, Appendix A-2

Cal-Ore’s CY 2021 CHCF-A revenue requirement is $1,447,129.72 (at Line 6 of Appendix A-2).

In AL 393, Cal-Ore requested adjustments totaling $2,003.09, excluding the adjustment for the change in A-CAM support (the sum of lines 3 and 4 of Appendix A-2). As a transitional A-CAM carrier, Cal-Ore’s A-CAM support is reduced each year and a portion of that reduction is assigned to the intrastate jurisdiction. Therefore, Cal-Ore’s AL reflects a net interstate expense adjustment of $42,631.22 (line 5c) due to the difference between 2020 and 2021 support amounts. Staff proposes allowing these adjustments.

CY 2021 is the third year after Cal-Ore’s 2018 TY, and it is therefore subject to a means test. After applying the means test, Cal-Ore’s revenue requirement is unchanged at $1,447,129.72 (at Line 9, of Appendix A-2). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Cal-Ore’s waterfall is set at 100%.

Thus, Cal-Ore should receive monthly CHCF-A support of $116,874.62 $120,594.14, i.e. one-twelfth of $1,447,129.72 for January through December 2021.

Ducor, Appendix A-3

Ducor’s CY 2021 CHCF-A revenue requirement is $1,333,154.31 (at Line 6 of Appendix A-3).

In AL 393, Ducor requested adjustments totaling $4,386.32, excluding the adjustment for the change in A-CAM support (the sum of lines 3 and 4 of Appendix A-3). Ducor’s AL requested a net interstate expense adjustment of a negative $198,355.00 due to a difference in the intrastate allocation of A-CAM support between 2020 and 2021 (line 5c). In their response to a Data Request from Public Advocates, Ducor reveals that the total amount of A-CAM support that they received and will receive in 2019, 2020, and 2021 is constant and that the net interstate expense adjustment amount shown in their AL 393 is a result of the methodology they use to allocate the A-CAM support between the intrastate and interstate jurisdictions. Ducor states that the allocation of A-CAM support was not determined in their latest GRC because the company elected A-CAM after the record closed in the proceeding. Staff is concerned about the appropriateness of a methodology that results in fluctuating amounts of intrastate A-CAM support each year when in fact the total amount of A-CAM support received by Ducor is unchanged.

Staff proposes allowing the adjustments for CY 2021. However, Ducor shall file a Tier 2 AL in which it proposes an A-CAM allocation methodology and intrastate amount that will be used in their annual CHCF-A filings until either their next GRC is completed, the total amount of A-CAM support is revised, or a decision within R.11-11-007 provides other direction.[footnoteRef:22] [22: R.11-11-007 is considering modifications to D.91-09-042, including reevaluating what types of adjustments are recoverable through the annual advice letter filing. Thus, the treatment of A-CAM support in the annual CHCF-A AL filing may be further addressed in R.11-11-007.]

CY 2021 is the second year after Ducor’s 2019 TY, and it is therefore subject to a means test. Ducor’s revenue requirement is unchanged at $1,333,154.31 (at Line 9, of Appendix A-3). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Ducor’s waterfall is set at 100%.

Thus, Ducor should receive monthly CHCF-A support of $111,096.19, i.e. one-twelfth of $1,333,154.31 for January through December 2021.

Foresthill, Appendix A-4

Foresthill’s CY 2021 CHCF-A revenue requirement is $2,508,335.24 (at Line 6 of Appendix A-4).

In AL 358, Foresthill requested adjustments of $37,144.99 (the sum of lines 3 and 4 of Appendix A-4). The net interstate expense adjustment due to the difference between 2020 and 2021 projections is $140,503.75 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the second year after Foresthill’s 2019 TY and is therefore subject to a means test. Foresthill’s revenue requirement is unchanged at $2,508,335.24 (at Line 9, of Appendix A-4). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Kerman’s waterfall is set at 100%.

Thus, Foresthill should receive monthly CHCF-A support of $209,027.94, i.e. one-twelfth of $2,508,335.24 for January through December 2021.

Happy Valley, Appendix A-5

Happy Valley’s CY 2021 CHCF-A revenue requirement is $2,880,293.75 (at Line 6 of Appendix A-5).

In AL 383, Happy Valley reflected an adjustment of $7,352.08 for 5% recurring reduction Intercarrier Compensation.

Happy Valley stated in its AL that it is not requesting CHCF-A funding. Its waterfall funding level is already at 0%. Thus, Happy Valley will not receive CHCF-A support for CY 2021.

Hornitos, Appendix A-6

Hornitos’ CY 2021 CHCF-A revenue requirement is $595,473.12 (at Line 6 of Appendix A-6).

In AL 354, Hornitos reflected an adjustment of $1,984.74 for 5% recurring reduction Intercarrier Compensation.

In its AL, Hornitos stated that it is not requesting CHCF-A funding. Its waterfall funding level is already at 0%. Thus, Hornitos will not receive CHCF-A support for CY 2021.

Kerman, Appendix A-7

Kerman’s CY 2021 revenue requirement is $3,512,740.94 (at Line 6 of Appendix A-7).

In AL 436, Kerman requested adjustments totaling $51,908.12 (the sum of lines 3 and 4 of Appendix A-7). The net interstate expense adjustment due to the difference between 2020 and 2021 projections is negative $55,366.43 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the fifth year after Kerman’s 2016 TY, and it is therefore subject to a means test. After applying the means test, Kerman’s revenue requirement is unchanged at $3,512,740.94 (at Line 9, of Appendix A-7). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Kerman’s waterfall is set at 100%.

Thus, Kerman should receive monthly CHCF-A support of $292,728.41, i.e. one-twelfth of $3,512,740.94 for January through December 2021.

Pinnacles, Appendix A-8

Pinnacles’ CY 2021 CHCF-A revenue requirement is $436,560.25 (at Line 6 of Appendix A-8).

In AL 298, Pinnacles requested adjustments totaling $247.61 (the sum of lines 3 and 4 of Appendix A-8). Staff proposes allowing these adjustments. Pinnacles receives a constant amount of ACAM support and thus there is no difference between 2020 and 2021 support amounts, which results in a net interstate expense adjustment of $0 (line 5c).

CY 2021 is the second year after Pinnacles’ 2019 TY, which typically means that they would be subject to a means test. However, the decision approving Pinnacles’ TY 2019 GRC was delayed and the Commission approved D.19-12-011 on December 5, 2019 which is less than 12 months before the CY 2021 AL deadline of September 15, 2020. Pinnacles AL 298 states that according to the D.91-09-042, Pinnacles therefore will not be subject a means test when determining CY 2021 support[footnoteRef:23]. [23: On November 20, 2020, Communications Division (CD) received a response from Pinnacles to Data Request 202101. Pinnacles’ response to the Data Request (DR) included seven months of annualized financial data for calendar year 2020, as would typically be included in the means test. This resolution does not take into account the data included in Pinnacles’ DR response because there was insufficient time to review. CD reserves the right modify Pinnacles’ CHCF-A support amount for CY 2021 after reviewing the data.]

Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Pinnacles’ waterfall is set at 100%.

Thus, Pinnacles should receive monthly CHCF-A support of $36,380.02, i.e. one-twelfth of $436,560.25 for January through December 2021.

Ponderosa, Appendix A-9

Ponderosa’s CY 2021 CHCF-A revenue requirement is $3,482,859.41 (at Line 6 of Appendix A-9).

In AL 485, Ponderosa requested adjustments totaling $79,825.01 (the sum of lines 3 and 4 of Appendix A-9). The net interstate expense adjustment due to the difference between 2020 and 2021 projections is negative $356,674.65 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the third year after Ponderosa’s 2018 TY and thus it is subject to a means test. After applying the means test, Ponderosa’s revenue requirement is unchanged at $3,482,859.41 (at Line 9, of Appendix A-9). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Ponderosa’s waterfall is set at 100%.

Thus, Ponderosa should receive monthly CHCF-A support of $290,238.28, i.e. one-twelfth of $3,482,859.41 for January through December 2021.

Sierra, Appendix A-10

Sierra’s CY 2021 CHCF-A revenue requirement is $10,754,931.43 (at Line 6 of Appendix A-10).

In AL 472, Sierra requested adjustments totaling $57,861.53 (the sum of lines 3 and 4 of Appendix A-10). The net interstate expense adjustment due to difference between 2020 and 2021 projections is negative $1,197,785.56 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the third year after Sierra’s 2018 TY and thus it is subject to a means test. After applying the means test, Sierra’s revenue requirement is unchanged at $10,754,931.43 (at Line 9, of Appendix A-10). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Sierra’s waterfall is set at 100%.

Thus, Sierra should receive monthly CHCF-A support of $896,244.29, i.e. one-twelfth of $10,754,931.43 for January through December 2021.

Siskiyou, Appendix A-11

Siskiyou’s CY 2021 CHCF-A revenue requirement is $4,667,191.97 (at Line 6 of Appendix A-11).

In AL 434, Siskiyou requested adjustments totaling $118,290.52 (the sum of lines 3 and 4 of Appendix A-11). The net interstate expense adjustment due to the difference between 2020 and 2021 projections is $7,470.59 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the fourth year after Siskiyou’s 2017 TY and thus it is subject to a means test. After applying the means test, Siskiyou’s revenue requirement is unchanged at $4,667,191.97 (at Line 9, of Appendix A-11). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Siskiyou’s waterfall is set at 100%.

Thus, Siskiyou should receive monthly CHCF-A support in the amount of $388,932.66, i.e. one-twelfth of $4,667,191.97 for January through December 2021.

Volcano, Appendix A-12

Volcano’s CY 2021 CHCF-A revenue requirement is $3,969,621.58 (at Line 6 of Appendix A-12).

In AL 417, Volcano requested adjustments totaling $43,191.04 (the sum of lines 3 and 4 of Appendix A-12). Additionally, the net interstate expense adjustment due to the between 2019 and 2021 projections is negative $147,578.77 (line 5c). Staff proposes allowing these adjustments.

CY 2021 is the fourth year after Volcano’s 2017 TY and thus it is subject to a means test. After applying the means test, Volcano’s revenue requirement is unchanged at $3,969,621.58 (at Line 9, of Appendix A-12). Additionally, pursuant to D.91-09-042, Appendix, Section D of the Implementation Rules and D.20-08-011, Volcano’s waterfall is set at 100%.

Thus, Volcano should receive monthly CHCF-A support in the amount of $330,801.80, i.e. one-twelfth of $3,969,621.58 for January through December 2021.

Winterhaven, Appendix A-13

Winterhaven’s CY 2021 CHCF-A revenue requirement is $315,485.76 (at Line 6 of Appendix A-13).

In AL 276, Winterhaven reflected an adjustment of $1,485.85 for 5% recurring reduction Intercarrier Compensation.

In its AL, Winterhaven stated that it is not requesting CHCF-A funding. Its waterfall funding level is already 0%. Thus, Winterhaven will not receive any CHCF-A support for CY 2021.

Evaluation of CHCF-A Support Level to CHCF-A Budget

In the Enacted Budget for FY 2020-21, the Legislature appropriated $44.264 million for FY 2020-21 and staff estimates $44.264 million for FY 2021-22 (Resolution to be issued in 2021) for the CHCF-A program budget. Of the appropriated amounts, $42.913 million is allocated for Local Assistance to the Small ILECs for FY 2020-21. There are sufficient funds in both the FY 2020-21 budget and estimated FY 2021-22 budget to cover CY 2021 CHCF-A support payments to the Small ILECs. The adopted and proposed budgets and the associated program support payments are contingent on the availability of funds, and the FY 2021-22 proposed budget is contingent on State’s adoption of the CHCF-A budget.

Summary

As shown in Table 4 and Appendix A, the total approved CY 2021 CHCF-A draw for Calaveras, Cal-Ore, Ducor, Foresthill, Kerman, Pinnacles, Ponderosa, Sierra, Siskiyou, and Volcano is $35,165,268.89. Table 4 also shows Small ILECs customer counts as of December 31, 2018, and subsidy per customer for CY 2021. The Commission finds Staff’s recommended CHCF-A support amounts for the ten Small ILECs for CY 2021 to be reasonable.

Staff, in concert with Administrative Services Division, shall make the monthly support payments within 30 days after the close of each calendar month subject to the availability of CHCF-A funds and final appropriations adopted in the annual Budget Act.[footnoteRef:24] In the event that the monthly support payments due to the Small ILECs are not paid within 30 days after the close of each calendar month, Staff shall include in those payments interest equal to the three-month commercial paper rate. [24: The January 2021 CHCF-A monthly support will be paid in February 2021 and the December 2021 CHCF-A monthly support will be paid in January 2022.]

SAFETY CONSIDERATIONS

The Small ILECs are required to adhere to all Commission rules, decisions, General Orders and statutes including P.U. Code § 451 by undertaking all actions “necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public.” The CHCF-A subsidy provides the Small ILECs with financial resources to provide safe, reliable, and affordable telephone service to their customers in rural, high cost areas.

Reliable telephone service is essential in rural, remote, and isolated areas that the Small ILECs serve. The CHCF-A fund provides rural customers with access to 211 for essential community services, 311 for non-emergency municipal services, 511 for traffic and transportation information, 811 for public infrastructure underground location information, and 911 to reach police, fire and emergency medical responders when fire, natural disasters, medical emergencies, or other crises occur.

The CHCF-A fund also promotes customer access to advanced services and deployment of broadband-capable facilities. It has allowed the Small ILECs to locate their facilities underground and use fiber optic cable which protects equipment in case of fire and allows for the quicker deployment of broadband-capable facilities. In some Small ILEC territories, emergency responders set up emergency command centers and the Small ILECs must quickly provide responders with access to high quality voice communications and broadband. This Resolution addresses safety by continuing the application of CHCF-A program subsidies to promote the goals of universal service by funding essential communications links in high cost, rural communities.

COMMENTS

Public Utilities Code section 311(g)(1) requires that a draft resolution be served on all parties and be subject to a public review and comment period of 30 days or more, prior to a vote of the Commission on the resolution. A draft of today’s resolutions was distributed for comment to the utilities and other interested parties.

FINDINGS AND CONCLUSIONS

1. The California High Cost Fund (HCF) was implemented by Decision (D.) 88-07-022, as modified by D.91-05-016 and D.91-09-042, to provide a source of supplemental revenues for Small Incumbent Local Exchange Carriers (ILECs) whose basic exchange access line service rates would otherwise be increased to levels that would threaten universal service.

2. Currently there are 13 Small ILECs eligible for California High Cost Fund-A (CHCFA) funding, of which ten currently request CHCF-A support.

3. During September 2020, all 13 Small ILECs submitted their respective annual CHCFA Advice Letters (ALs), in accordance with D.91-09-042. Ten of these 13 Small ILECs requested a total Calendar Year (CY) 2021 CHCF-A support of approximately $36.650 million.

4. On October 5, 2020, Public Advocates Office protested Calaveras Telephone Company AL 379, Ducor Telephone Company AL 393, The Ponderosa Telephone Company AL 485, Sierra Telephone Company AL 472, Siskiyou Telephone Company AL 434, and Volcano Telephone Company AL 417.

5. On October 19, 2019, the Small ILECs filed their response to the Public Advocates Office protests.

6. Official supporting documentation from the Federal Communications Commission (FCC), Universal Administrative Company (USAC), or National Exchange Carrier Association (NECA) is necessary to validate the accuracy of requests for adjustments related to Pro-Rata Changes or the Budget Control Mechanism.

7. It is reasonable to establish a methodology to allocate Ducor’s Alternative Connect America Cost Model (A-CAM) support between the interstate and intrastate jurisdictions until either their next GRC is completed, the total amount of A-CAM support is revised, or a decision within R.11-11-007 provides other direction

8. The $1.485 million differential between the ten Small ILECs’ cumulative request of CY 2021 support of $36.650 million and Communications Division’s (Staff) recommended CHCF-A support of $35.165 million is due to the final Net Interstate Expense Adjustment data provided by the National Exchange Carrier Association.

9. The Implementation Rules from D.91-09-042, Appendix, states, “Utilities shall be eligible for support from the fund limited to the amount which are forecasted to result in earnings not to exceed authorized intrastate rates of return or to the current funding level amount for the year for which HCF is being requested, whichever amount is lower.”

10. D.17-09-016 states that “Annual support and/or adjustments cannot be used to boost utility earnings to levels which exceed those authorized by this Commission.”

11. D. 20-08-011 froze the waterfall provision for each of the Independent Small LECs until their next filing deadline under the revised GRC schedule.

12. There are sufficient funds from the Fiscal Year (FY) 2020-21 and estimated FY 2021-22 budgets to cover CY 2021 CHCF-A support payments to the Small ILECs.

13. Communications Division Staff’s recommended CHCF-A support for CY 2021 of $35.165 million for the ten Small ILECs as summarized in Appendix A of this Resolution is reasonable and should be adopted.

14. The monthly support payments from January 2021 through December 2021 shall be paid by Staff in concert with the Administrative Services Division within 30 days after the close of each calendar month.

15. The CHCF-A support payments are subject to the availability of CHCF-A funds and final appropriations in the annual Budget Act.

16. If monthly support payments due to the Small ILECs are not paid within 30 days after the close of each calendar month, Staff should include in those payments interest equal to the three-month commercial paper rate.

17. This Resolution addresses safety by continuing the application of CHCF-A program subsidies to promote the goals of universal service by funding essential communications links in high cost, rural communities.

18. In compliance with Public Utilities (P.U.) Code § 311(g), the Commission emailed a notice letter on December 11, 2020, and provided notice to the thirteen Small ILECs, the CHCF-A Administrative Committee, parties of record in R.11-11-007, informing them that this proposed Resolution is available at the Commission’s website https://www.cpuc.ca.gov and is available for public comment.

THEREFORE, IT IS ORDERED that:

1. The California High Cost Fund-A support for the Small Incumbent Local Exchange Carriers presented in Appendix A of this Resolution and summarized in the table below, is adopted.

2. Communications Division, in concert with the Administrative Services Division, shall pay monthly support payments to the ten Small Incumbent Local Exchange Carriers as shown in the above table for January 2021 through December 2021 within 30 days after the close of each calendar month. Late payments shall accrue interest based on three-months commercial paper rate.

3. Beginning with the Calendar Year 2022 Advice Letter filing (submitted September 2021), each Small Incumbent Local Exchange Carrier that requests adjustments due to Pro-Rata Changes or the Budget Control Mechanism must submit official supporting documentation from Federal Communications Commission (FCC), Universal Administrative Company (USAC), or National Exchange Carrier Association (NECA).

4. Ducor Telephone Company shall file a Tier 2 Advice Letter to propose a methodology to allocate their Alternative Connect America Cost Model (A-CAM) between the interstate and intrastate jurisdictions until either their next General Rate Case is completed, the total amount of A-CAM support is revised, or a decision within Rulemaking11-11-007 provides other direction.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed, and adopted at a conference of the Public Utilities Commission of the State of California held on ___________________, the following Commissioners voting favorable thereon:

Rachel Peterson

Acting Executive Director

Resolution T-17710DRAFT Agenda ID# 19054

CD/HS3

Resolution T-177101/14/2021

CD/HS3

354363978

22

Appendix A

Resolution T-17682

CD/HS3/KS1

APPENDIX A-1

Resolution T-17682

CD/HS3/KS1

A-12

A-1

APPENDIX A-2

A-2

APPENDIX A-3

A-4

APPENDIX A-4

A-5

APPENDIX A-5

A-6

APPENDIX A-6

A-6

APPENDIX A-7

A-8

APPENDIX A-8

A-8

APPENDIX A-9

A-9

APPENDIX A-10

A-10

APPENDIX A-11

A-11

APPENDIX A-12

A-13

APPENDIX A-13

A-14

End of Appendix A

Advice

Letter No.

Filed By:Date Filed:

CY 2021 CHCF-A

Support

Requested:

379Calaveras Telephone Company9/15/2020$3,034,535.71

393Cal-Ore Telephone Company9/15/2020$1,447,129.72

393Ducor Telephone Company9/15/2020$1,333,154.31

358Foresthill Telephone Company9/15/2020$2,367,831.49

383Happy Valley Telephone Company9/9/2020$0.00

354Hornitos Telephone Company9/9/2020$0.00

436Kerman Telephone Company9/15/2020$3,568,107.37

298Pinnacles Telephone Company9/15/2020$436,560.25

485The Ponderosa Telephone Company9/15/2020$3,839,534.06

472Sierra Telephone Company9/16/2020$11,952,716.99

434Siskiyou Telephone Company9/14/2020$4,553,052.22

417Volcano Telephone Company9/16/2020$4,117,200.35

276Winterhaven Telephone Company9/9/2020$0.00

TOTAL$36,649,822.47

Table 1 - Advice Letter Requests

(A)(B)(C)(D)(E)

Small ILECs

Small ILECs

Requested

Support

CD Proposed

Adjustments

CD Proposed

Support

CD Proposed

Monthly

Support

Calaveras$3,034,535.71$18,208.33$3,052,744.04 $254,395.34

Cal-Ore$1,447,129.72$0.00$1,447,129.72 $120,594.14

Ducor$1,333,154.31$0.00$1,333,154.31 $111,096.19

Foresthill$2,367,831.49$140,503.75$2,508,335.24 $209,027.94

Happy Valley$0.00$0.00$0.00 $0.00

Hornitos$0.00$0.00$0.00 $0.00

Kerman$3,568,107.37($55,366.43)$3,512,740.94 $292,728.41

Pinnacles$436,560.25$0.00$436,560.25 $36,380.02

Ponderosa$3,839,534.06($356,674.65)$3,482,859.41 $290,238.28

Sierra$11,952,716.99($1,197,785.56)$10,754,931.43 $896,244.29

Siskiyou$4,553,052.22$114,139.75$4,667,191.97 $388,932.66

Volcano$4,117,200.35($147,578.77)$3,969,621.58 $330,801.80

Winterhaven$0.00$0.00$0.00$0.00

Total$36,649,822.47 ($1,484,553.58)$35,165,268.89 $2,930,439.07

Table 2 - Small ILEC Requested Support and CD Proposed Support

CY 2021

Small ILECGRC Test YearCY 2021

Calaveras2018100%

Cal-Ore2018100%

Ducor2019100%

Foresthill2019100%

Happy Valley19970%

Hornitos19970%

Kerman2016100%

Pinnacles2019100%

Ponderosa2018100%

Sierra2018100%

Siskiyou2017100%

Volcano2017100%

Winterhaven19970%

Table 3 - Waterfall

Small Incumbent Local

Exchange Carrier

Yearly Support

2021

Number of

Customers *

Subsidy per

Customer

Calaveras$3,052,744.04 3,513 868.98$

Cal-Ore$1,447,129.72 1,812 798.64$

Ducor$1,333,154.31 989 1,347.98$

Foresthill$2,508,335.24 2,514 997.75$

Kerman$3,512,740.94 4,591 765.14$

Pinnacles$436,560.25 242 1,803.97$

Ponderosa$3,482,859.41 7,545 461.61$

Sierra$10,754,931.43 17,982 598.09$

Siskiyou$4,667,191.97

3,656 1,276.58$

Volcano$3,969,621.58 9,384 423.02$

$35,165,268.89 52,228

*Number of customers as of 12/31/2017

Table 4 - Subsidy per Customer for Small ILECs Receiving Support

Small Incumbent Local Exchange Carrier

Monthly

Support 2021

Yearly

Support 2021

Calaveras Telephone Company$254,395.34 $3,052,744.04

Cal-Ore Telephone Company$120,594.14 $1,447,129.72

Ducor Telephone Company$111,096.19 $1,333,154.31

Foresthill Telephone Company$209,027.94 $2,508,335.24

Kerman Telephone Company$292,728.41 $3,512,740.94

Pinnacles Telephone Company$36,380.02 $436,560.25

The Ponderosa Telephone Company$290,238.28 $3,482,859.41

Sierra Telephone Company$896,244.29 $10,754,931.43

Siskiyou Telephone Company$388,932.66 $4,667,191.97

Volcano Telephone Company$330,801.80 $3,969,621.58

Total

$2,930,439.07 $35,165,268.89

Adopted CY 2021 CHCF-A Support

Year 2021 CHCF-A Requirement

(On Annual Basis)

(Col A)(Col B)(Col C)

Calaveras

AL 379

Staff

Proposed

Commission

Adopted

12020 CHCF-A Requirement $2,965,426.36$2,965,426.36$2,965,426.36

(Resolution T-17682, Appendix A-1, Line 7)

2Reverse Prior Year Non-Recurring Adjustments$36,295.35$36,295.35$36,295.35

3Year 2020 Impacts (Non-Recurring)$28,832.99$28,832.99$28,832.99

aPro-Rata Changes (FCC 14-190, VI.A) $17,210.99$17,210.99$17,210.99

bBudget Control Mechanism 2016 Reform Order (FCC 16-33, Section

II.B.6) and 2018 Report and Order (FCC 18-176 Sections III.C.1.a and

III.C.4)$11,622.00$11,622.00$11,622.00

4Year 2021 Impacts (Recurring)$3,981.01$3,981.01$3,981.01

aFCC National Broadband Plan(5% reduction Intercarrier Compensation

(FCC11-161, Paragraph 851)$3,981.01$3,981.01$3,981.01

5Net Interstate Expense Adjustment

aProjected 2020 USF-HCLS (Per NECA)$1,356,877.92$1,356,877.92$1,356,877.92

bProjected 2021 USF-HCLS (Per NECA)($1,356,877.92)($1,338,669.59)($1,338,669.59)

c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$0.00$18,208.33$18,208.33

62021 CHCF-A Revenue Requirement $3,034,535.71$3,052,744.04$3,052,744.04

(sum of lines 1, 2, 3 and 4 and 5c)

7

Total 2021 Revenue Requirement$3,034,535.71$3,052,744.04$3,052,744.04

(Beginning CHCF-A Revenue Requirement for 2021)

82021 Revenue Requirement eligible for CHCF-A Support$3,034,535.71$3,052,744.04$3,052,744.04

92021 Revenue Requirement after Means Test$3,034,535.71$3,052,744.04$3,052,744.04

10Waterfall effect100.00%100.00%100.00%

112021 Revenue Requirement after Waterfall$3,034,535.71$3,052,744.04$3,052,744.04

122021 CHCF-A Support$3,034,535.71$3,052,744.04$3,052,744.04

13Monthly Payment for Periods Jan - Dec 2021$252,877.98$254,395.34$254,395.34

(Line 13/12)

Calaveras


(On Annual Basis)


Cal-Ore

AL 393

Staff

Proposed

Commission

Adopted



2Reverse Prior Year Non-Recurring Adjustments$0.00$0.00$0.00

3Year 2020 Impacts (Non-Recurring)$0.00$0.00$0.00

aPro-Rata Changes (FCC 14-190, VI.A) $0.00$0.00$0.00



III.C.4)$0.00$0.00$0.00



(FCC11-161, Paragraph 851)$2,003.09$2,003.09$2,003.09


aProjected 2020 USF A-CAM Allocation$682,099.59$682,099.59$682,099.59

bProjected 2021 USF A-CAM Allocation($639,468.37)($639,468.37)($639,468.37)

c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$42,631.22$42,631.22$42,631.22



7







122021 CHCF-A Support$1,447,129.72$1,447,129.72$1,447,129.72


(Line 13/12)

Cal-Ore


(On Annual Basis)


Ducor

AL 393

Staff

Proposed

Commission

Adopted



2Reverse Prior Year Non-Recurring Adjustments($12,699.88)($12,699.88)($12,699.88)





III.C.4)$0.00$0.00$0.00



(FCC11-161, Paragraph 851)$4,386.32$4,386.32$4,386.32


aProjected 2020 USF A-CAM Allocation$392,336.00$392,336.00$392,336.00

bProjected 2021 USF A-CAM Allocation($590,691.00)($590,691.00)($590,691.00)

c Net Interstate Expense Adjustment (sum of lines 5a and 5b)($198,355.00)($198,355.00)($198,355.00)


(sum of lines 1, 2, 3 and 4 and 5c)..

7







122021 CHCF-A Support$1,333,154.31$1,333,154.31$1,333,154.31


(Line 13/12)

Ducor


(On Annual Basis)


Foresthill

AL 358

Staff

Proposed

Commission

Adopted








III.C.4)$12,989.00$12,989.00$12,989.00



(FCC11-161, Paragraph 851)$4,563.71$4,563.71$4,563.71




c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$0.00$140,503.75$140,503.75



7







122021 CHCF-A Support$2,367,831.49$2,508,335.24$2,508,335.24


(Line 13/12)

Foresthill


(On Annual Basis)


Happy Valley

AL 383

Staff

Proposed

Commission

Adopted








III.C.4)$0.00$0.00$0.00



(FCC11-161, Paragraph 851)$7,352.08$7,352.08$7,352.08


aProjected 2020 USF-HCLS (Per NECA)$0.00$0.00$0.00

bProjected 2021 USF-HCLS (Per NECA)$0.00$0.00$0.00

c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$0.00$0.00$0.00



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92021 Revenue Requirement after Means Test$0.00$0.00$0.00


112021 Revenue Requirement after Waterfall$0.00$0.00$0.00

122021 CHCF-A Support$0.00$0.00$0.00

13Monthly Payment for Periods Jan - Dec 2021$0.00$0.00$0.00

(Line 13/12)

Happy Valley


(On Annual Basis)


Hornitos

AL 354

Staff

Proposed

Commission

Adopted

12020 CHCF-A Requirement $593,488.38$593,488.38$593,488.38







III.C.4)$0.00$0.00$0.00



(FCC11-161, Paragraph 851)$1,984.74$1,984.75$1,984.75





62021 CHCF-A Revenue Requirement $595,473.12$595,473.13$595,473.13


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Total 2021 Revenue Requirement$595,473.12$595,473.13$595,473.13


82021 Revenue Requirement eligible for CHCF-A Support$595,473.12$595,473.13$595,473.13




122021 CHCF-A Support$0.00$0.00$0.00


(Line 13/12)

Hornitos


(On Annual Basis)

(Col A)(Col B)(Col D)

Kerman

AL 436

Staff

Proposed

Commission

Adopted








III.C.4)$17,993.00$17,993.00$17,993.00



(FCC11-161, Paragraph 851)$7,315.74$7,315.74$7,315.74




c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$0.00($55,366.43)($55,366.43)



7




92021 Revenue Requirement after Means Test$3,568,107.373,512,740.94$ 3,512,740.94$



122021 CHCF-A Support$3,568,107.37$3,512,740.94$3,512,740.94


(Line 13/12)

Kerman


(On Annual Basis)


Pinnacles

AL 298

Staff

Proposed

Commission

Adopted








III.C.4)$0.00$0.00$0.00

4Year 2021 Impacts (Recurring)$247.61$247.61$247.61


(FCC11-161, Paragraph 851)$247.61$247.61$247.61


aProjected 2020 USF A-CAM Allocation$0.00$144,290.00$144,290.00

bProjected 2021 USF A-CAM Allocation$0.00($144,290.00)($144,290.00)




7




92021 Revenue Requirement after Means Test$436,560.25$436,560.25$436,560.25


112021 Revenue Requirement after Waterfall$436,560.25$436,560.25$436,560.25

122021 CHCF-A Support$436,560.25$436,560.25$436,560.25


(Line 13/12)

Pinnacles


(On Annual Basis)


Ponderosa

AL 485

Staff

Proposed

Commission

Adopted


Resolution T-17682, Appendix A-9, Line 7)






III.C.4)$26,361.00$26,361.00$26,361.00



(FCC11-161, Paragraph 851)$9,163.87$9,163.87$9,163.87







7







122021 CHCF-A Support$3,839,534.06$3,482,859.41$3,482,859.41


(Line 13/12)

Ponderosa


(On Annual Basis)


Sierra

AL 472 Staff Proposed

Commission

Adopted








III.C.4)$15,362.00$15,362.00$15,362.00



(FCC11-161, Paragraph 851)$18,799.84$18,799.84$18,799.84




c Net Interstate Expense Adjustment (sum of lines 5a and 5b)$0.00($1,197,785.56)($1,197,785.56)



7




92021 Revenue Requirement after Means Test$11,952,716.9910,754,931.43$ $10,754,931.43



122021 CHCF-A Support$11,952,716.99$10,754,931.43$10,754,931.43


(Line 13/12)

Sierra


(On Annual Basis)


Siskiyou

AL 434 Staff Proposed

Commission

Adopted








III.C.4)$44,421.00$44,421.00$44,421.00



(FCC11-161, Paragraph 851)$10,454.86$10,454.86$10,454.86




c Net Interstate Expense Adjustment (sum of lines 5a and 5b)($106,669.16)$7,470.59$7,470.59



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122021 CHCF-A Support$4,553,052.22$4,667,191.97$4,667,191.97


(Line 13/12)

Siskiyou


(On Annual Basis)


Volcano

AL 417Staff Proposed

Commission

Adopted








III.C.4)$12,883$12,883.00$12,883.00



(FCC11-161, Paragraph 851)$11,845.94$11,845.94$11,845.94







7




92021 Revenue Requirement after Means Test$4,117,200.353,969,621.58$ 3,969,621.58$



122021 CHCF-A Support$4,117,200.35$3,969,621.58$3,969,621.58


(Line 13/12)

Volcano


(On Annual Basis)


Winterhaven

AL 276

Staff

Proposed

Commission

Adopted








III.C.4)$0.00$0.00$0.00



(FCC11-161, Paragraph 851)$1,485.85$1,485.84$1,485.84







7







122021 CHCF-A Support$0.00$0.00$0.00


(Line 13/12)

Winterhaven

SUMMARY · Web viewThat Calaveras’, Ducor’s, Siskiyou’s, and Volcano’s means tests include...

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