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Public utilities

California Public Utilities Commission Initiates Rulemaking to Update Surcharge Mechanisms

Strategic Insights

— 1 min read

The California Public Utilities Commission (CPUC) has issued a ruling to initiate a rulemaking proceeding, Order Instituting Rulemaking 21-03-002, to update surcharge mechanisms and ensure equity and transparency in fees, taxes, and surcharges assessed on customers of telecommunications services in California. This proceeding aims to address the need for a sustainable and cost-effective method to fund California's Universal Service Public Purpose Programs (PPPs) and review the reasonableness of charges appearing on customer bills. The CPUC has addressed funding issues for universal service PPPs in Phase 1, which concluded with the adoption of a funding mechanism based on access lines.

Key Takeaways:

  • The CPUC has initiated a rulemaking proceeding, Order Instituting Rulemaking 21-03-002, to update surcharge mechanisms and ensure equity and transparency in fees, taxes, and surcharges assessed on customers of telecommunications services in California.
  • The proceeding aims to address the need for a sustainable and cost-effective method to fund California's Universal Service Public Purpose Programs (PPPs) and review the reasonableness of charges appearing on customer bills.
  • The CPUC has determined the issues and initial schedule for this proceeding, set forth in the scoping memo and ruling.
  • The proceeding will include a review of the reasonableness of the PPP surcharges and user fees that telecommunications service providers impose on end users, as well as additional taxes, fees, and surcharges assessed by federal, state, and local governments.
  • LifeLine customers and incarcerated persons will continue to be exempt from paying the surcharges.
  • The mechanism for collecting and reporting the user fee will be considered in Phase 2 of the proceeding.

Statistics:

  • The CPUC has initiated a proceeding to update surcharge mechanisms, Order Instituting Rulemaking 21-03-002.
  • The proceeding aimed to address the need for a sustainable and cost-effective method to fund California's Universal Service Public Purpose Programs (PPPs).
  • The CPUC adopted a funding mechanism based on access lines in Decision 22-10-021.
  • The decision defined "access line" and updated the surcharge to a single consolidated line item for all six PPPs.
  • The decision exempted LifeLine customers and incarcerated persons from paying the surcharges.

Sources:

  • Order Instituting Rulemaking to Update Surcharge Mechanisms, COM/ARD/HCF/cg7/smt 05/14/2025.
  • Decision (D.) 22-10-021, California Public Utilities Commission.

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