Volcano Telephone Company General Rate Case


 

Background 

Because Volcano Telephone receives a subsidy from the California High-Cost Fund-A, the company is required to justify the reasonableness of its business expenditures through a regular General Rate Case before the CPUC. The purpose of the High Cost Fund is to minimize the rate disparity of basic telephone services between rural and metropolitan areas. The fund is subsidized by all California telephone customers via a surcharge on their bill.  

In December 2015, Volcano Telephone Company filed an Application requesting CPUC approval to modify its rate design:    

  • Increase revenue its subsidy by $3.9 million (or 126%) from the California High-Cost Fund-A for a total of nearly $7 million.       
  • Receive a14.51% return on Rate Base, which is being determined in the Cost of Capital proceeding.      

 

On February 18, 2016 the CPUC issued a Ruling setting the scope and schedule for the proceeding.   

 

Settlement Agreement

On June 23, 2016, ORA and Volcano submitted a Settlement Agreement that would resolve all issues in the proceeding. The following table compares the results of the settlement to parties' litigated positions:  

  

Siskiyou Proposal 

ORA
Recommendation
 

Settlement 

Revenue Requirements 

$11,647,597

$10,920,481

$11,148,636
based on an assumed
rate of return of 14.51%

CHCF-A Subsidy 

$6,960,938

$5,983,207

  $6,180,949

 

*Actual rate of return to be determined in Cost of Capital proceeding. 

 

A Public Participation Hearing was held on April 11, 2016 at 5pm at the Jackson Rancheria Casino Resort, Ballroom B, 12222 New York Ranch Road, Jackson, CA.   

 

A final CPUC Decision is expected by the end of 2016. The new rate is proposed to begin January 1, 2017.    

 

  

ORA’s Position 

ORA performed an in-depth analysis of Volcano’s Application to ensure that its request complies with state goals. ORA supports the Settlement Agreement because it will provide safe and reliable telephone service at the lowest rates, in order to keep telephone service affordable for all Californians.  

ORA’s review included ensuring that Volcano's request complies with state law that its subsidy for the California High Cost Fund-A is not excessive. ORA recommends that the CPUC should:       

  • Approve a total of approximately $6 million in High Cost Fund subsidy, compared with Volcano's $7 million request (the final total recommendation will be determined by the outcome of the Cost of Capital proceeding).    
      
  • Deny modification to FCC corporate expense caps, which determine total corporate expenses.  
       
  • Allocate costs proportional to affiliates’ benefits.      

 

See ORA's: 

April 25, 2016 Testimony with its full report on Volcano's Application. 

 

January 4, 2016 Protest to Volcano’s Application. 

   

 

CPUC Proceeding Docket 

See the Proceeding docket. 

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