10 REGULATION OF UTILITIES

The fundamental objectives of this program are to ensure that customers have safe, reliable utility service at reasonable rates, protect against fraud, and promote the health of California's economy, which depends on the infrastructure the utilities and the PUC provide. Californians spend more than $38 billion annually for services from industries regulated by the PUC. This includes 11 electricity utilities (80 percent of electric load in California), 1,821 telecommunications carriers, 156 water and sewer utilities, and 6 natural gas utilities.

The program also includes the Division of Ratepayer Advocates, which advocates on behalf of public utility customers to obtain the lowest possible rate for service consistent with reliable and safe service levels. The Division balances the interests of all ratepayers to ensure that all consumers are treated equitably. The Division is funded by the Public Utility Ratepayer Advocate Account, which funds are utilized exclusively by the Division in the performance of its duties as determined by the director.

In the area of energy regulation, the PUC has a number of programs in place to help consumers, the economy, and the environment. The PUC is working to protect the environment from climate change, and is leading the nation in reducing utility greenhouse gas (GHG) emissions. The PUC is implementing a GHG cap on the regulated electric utilities, including consideration of a GHG performance standard. The PUC is also committed to renewable power and has adopted ambitious renewable energy goals for utilities. Through its California Solar Initiative, the PUC will provide more than $2 billion in incentives over the next decade for solar installations on existing residential homes and existing and new commercial, industrial, and agricultural properties. The PUC has also launched the most ambitious energy efficiency and conservation campaign in the history of the utility industry in the U.S. by authorizing energy efficiency plans and $2 billion in funding for 2006-2008 for the state's utilities, reaffirming that cost-effective energy efficiency is the state's first line of defense against power shortages.

The Commission oversees the safety of electric, communications, natural gas, and propane gas utility systems and also performs operation and maintenance audits, outage inspections and investigations of incidents at electric generation facilities.

To ensure that consumers have access to sufficient information to make informed telecommunications choices, the PUC created a Telecommunications Consumer Education Initiative called Cal Phone Info, designed to help consumers navigate the increasingly competitive telecommunications market and to learn how to avoid becoming victims of consumer fraud. Cal Phone Info provides consumers with information on issues such as understanding phone bills, slamming, cramming, buying wireless telephone service, choosing telecommunications companies and services, prepaid phone cards, and avoiding telephone fraud and misleading advertising.

The Commission also administers the issuance of state franchises for the provision of video service in California. The Commission is responsible for monitoring video service provider compliance with the anti-discrimination, anti-redlining, and build-out requirements of California's state franchise law.

15 UNIVERSAL SERVICE TELEPHONE PROGRAMS

The PUC oversees nearly $1 billion in telecommunications consumer programs including the California Lifeline Fund, California Teleconnect Fund, Deaf and Disabled Telecommunications Program, and California High Cost Funds, all of which provide much-needed services to the state's consumers and communities. The objectives of these 'universal telephone service' programs are to: (1) ensure that basic telephone service remains available and affordable to all Californians regardless of geography, language, cultural, ethnic, physical or income differences; (2) encourage consumer choice among competitive telephone companies; (3) modify, as necessary, the basic telephone service definition to incorporate new technology for all residential subscribers; and (4) ensure that consumers have access to sufficient information to make informed choices about basic service and universal lifeline telephone services. Specifically, the California High-Cost Fund A program provides supplemental funding to 17 small local telephone companies to minimize rate disparities which otherwise would occur in basic telephone service costs between rural and metropolitan areas. The California High-Cost Fund B program provides supplemental funding to large telephone companies to minimize disparities which otherwise would occur between high-cost and metropolitan areas. The Deaf and Disabled Telecommunications program provides assistance to deaf, hearing impaired and disabled residents. The Payphone Service Providers program provides payphones to the general public at no charge in the interest of public safety and at locations where payphones otherwise would not be found. The California Teleconnect Fund program provides discounted telecommunication services to qualifying schools, libraries, hospitals and community-based organizations.

20 REGULATION OF TRANSPORTATION

The PUC oversees the safety of all railroads, six major rail transit agencies, five smaller transit systems, and more than 16,000 public and private crossings. The PUC's specially trained and federally certified inspectors inspect all tracks (annually), all train equipment and facilities (semi-annually), investigate all rail accidents that result in loss of life and property damage, and ensure the safe transportation of hazardous materials. The PUC has exclusive authority to approve or disapprove all highway-rail crossings. The Transportation program also oversees passenger carriers, including privately owned for-hire passenger transportation companies and household goods carriers. The program regulates rates and services, issues certificates and other licenses, and enforces safety standards and insurance requirements.