Arnold’s Lame-Duck CPUC De-Regulates Lifeline

by Paul Hogarth on November 22, 2010

The California Public Utilities Commission (CPUC) voted on November 19th to do what advocates for the poor had successfully blocked them from doing for over a year – mess with Universal Lifeline Telephone Service. While they “froze” Lifeline rates for the next two years (a point they emphasized to an anxious crowd Friday morning), come 2013 low-income consumers will be at the mercy of telephone companies. Lifeline will no longer be a flat rate, but instead a percentage of the “market” rate. Two of the five CPUC Commissioners’ are stepping down at the end of the year – and a third (Nancy Ryan) was appointed by Governor Schwarzenegger after consumer activists successfully blocked Rachelle Chong from getting confirmed. If the State Senate does not confirm Ryan before January, Jerry Brown will select her replacement. In other words, a Commission of Schwarzenegger appointees has just gutted the Lifeline program – during Arnold’s final weeks.

Universal Lifeline is a state-mandated program that allows low-income people to get a discounted “no-frills” telephone landline – at a “flat rate” of $6.84. The program is paid for by other consumers, who pay an extra fee on their phone bills – and it doesn’t cost the taxpayers a dime. Phone companies like AT&T have long hated Lifeline, and nearly two years ago they tried getting their allies at the CPUC to quietly de-regulate the program.

But low-income customers – with invaluable help from TURN (The Utility Reform Network) – started showing up at CPUC hearings, a body used to only listening to attorneys from the industries they regulate. The Commissioners kept delaying action at each meeting, until they shelved the proposal – hoping to take it up after its sponsor, Rachelle Chong, was re-confirmed.

But advocates took their fight to Sacramento, and Chong became the first Commissioner in nearly 30 years to be kicked off the CPUC. Now, with Schwarzenegger on his way out, they again wanted to de-regulate Lifeline – with lame-duck Commissioner John Bohn taking it up.

As advocates for the poor, elderly and disabled filed into the CPUC hearing room for the 9:00 a.m. meeting, Commission Chair Michael Peevey – perhaps unaware that the mike had already been turned on – said, “these are just agitprops. People in wheelchairs.”

When the meeting started, Peevey tried to pre-empt public comment by telling the crowd: “there’s a freeze for the next 2 years. It is inaccurate to say we are raising Lifeline rates.”

But advocates were aware the CPUC was pulling a “bait-and-switch” – freeze Lifeline rates at $6.84/month until January 2013, but then link Lifeline rates to 50% of what the market will bear. And the proposal even said that rates in two years would start at $11.


Lifeline customers stand up to be counted. Photo by Luke Thomas.

“The question is whether this two-year rate freeze is really just a two-year warning of a rate increase,” said James Tracy of Community Housing Partnership (which provides low-income SRO housing in the Tenderloin) – and the first public speaker to comment.

“I don’t have a crystal ball,” said SRO resident Stephen Tennis, “so I don’t know what 2013 will bring. But I can tell you what it is like now – my Social Security income is $929/month, and I pay $638 in rent. Don’t make me choose between food and phone.”

Just like the earlier efforts to de-regulate Lifeline, the CPUC proposal would extend the program to cell phones – which prompted some young working people to come speak in favor. But while we don’t necessarily oppose expanding Lifeline to include cell phones as well, again this is a “bait-and-switch” where the landline service rate is de-regulated.

After public comment, much of the crowd left – because that’s what everyone was used to doing. In past meetings when de-regulating Lifeline was on the agenda, Commissioners invariably decided before the meeting to postpone the item – which was why there was no reason to stick around past public comment. But now, the CPUC took up the proposal right away – even though it was #55 on the agenda, leaving many to think it would take a long while.

With few advocates left in the room, Commissioner Timothy Simon accused TURN and other organizations of being engaged in a “misinformation campaign.” He spoke in favor of Commissioner Bohn’s decision, who he noted “inherited this proposal” from Chong.

A former Ambassador from the Reagan Administration, John Bohn took up the Lifeline proposal after Rachelle Chong was kicked off the CPUC – and with his term expiring at the end of the year, was the perfect “lame-duck” to carry it during the final days of the Schwarzenegger Administration. Commissioner Dian Grueneich is also on her way out.

Nancy Ryan, who Schwarzenegger appointed to replace Rachelle Chong, will also lose her seat on the CPUC when Jerry Brown steps in – unless the California State Senate decides to confirm her for a six-year term. Her comments at Friday’s meeting were also insensitive towards low-income Lifeline consumers. “One customer’s subsidy is another customer’s surcharge,” she said. “As a Commissioner, I have to represent all customers.”

State Senate President Darrell Steinberg showed great leadership by refusing to confirm Rachelle Chong – specifically citing her efforts to gut the Lifeline as a reason. Low-income consumers are now counting on him to do the same against Ryan.

And those who rely on Lifeline are counting on Governor-elect Jerry Brown to appoint new CPUC Commissioners who will fight for their interests. Lifeline rates may have been “frozen” for two years, but we can’t let a lame-duck CPUC full of Schwarzenegger appointees to gut and de-regulate the program in 2013 and beyond …

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