More Transparency in California Broadband Fund Calls Sought
California’s Division of Ratepayer Advocates has no quarrel with projects underwritten by the state using its ratepayer-funded Advanced Services Fund, division officials told us. But the division does find fault with the mechanism by which the state’s Public Utilities Commission processes applications for those funds, they said. The division recently slammed as “another giveaway” a commission decision granting conditional approval of a $19 million grant sought by California Broadband Cooperative. The money would cover 19 percent of the cost of a project to bring broadband to the Eastern Sierra region, which at best has dialup service (CD Dec 7 p8).
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In the release that contested the conditional grant to the co-op, the division declared itself leery of the basis for the commission’s awarding of 36 other broadband grants since 2007. The money comes from the $100 million Advanced Services Fund, sustained by a 0.25 percent surcharge on nearly all phone bills in the state. While the surcharge sunsets Dec. 31, the fund itself is to stay in business until it’s exhausted.
“We're not beating up on the Eastern Sierra,” said Phyllis White, the division’s deputy communications director. “We just want to see the public’s money put to the most effective use. That $19 million might be going to good use there, but there’s not enough information being made available on which to base a decision about that.” The division has long contested the process by which the utilities commission makes Advanced Services Fund grants, said White and colleague Natalie Billingsley, the division’s supervisor of communications, in an interview.
“Our beef is with the guidelines and the process. The guidelines for grant-giving do not assure ratepayers of quality control,” White said. “The commission rules are not clear enough.” She likened the review process to a “black box,” far too scant on transparency, public input and accountability. As far as her office knows, she said, every application for an Advanced Services Fund grant has received Public Utilities Commission approval.
The advocates division has petitioned the commission to reform its handling of the broadband grants, a request the regulator denied. Division officials have the option of seeking a rehearing of their case, but are glum about their chances of effecting change, they said. “We can do that, but we're not positive of the outcome,” Billingsley said. Since the surcharge that underwrites the fund expires in only weeks, such a filing might not make any difference, she and White said. “The legal bar for a reconsideration is quite high,” White said. “The commission has made a decision,” said Billingsley. “We disagree. It’s not that easy to get the commission to reconsider a decision.”
White and Billingsley emphasized that the division is not questioning the validity of projects supported by the advanced services fund, only that it wants to understand how and why they're funded. “These projects may be worthy, but we can’t tell,” Billingsley said. “When you're talking about $100 million of other people’s money, you should be careful.”
The division was able to persuade the commission to add a scoring criterion to its review mechanism that gave points for projects located in low-income areas, White said. That the commission is making grants for technology the state is preempted from regulating complicates matters, she said. “We're spending money on a service over which we don’t have jurisdiction,” White said. “That’s not so great for our clients, the ratepayers.”
Matters are complicated further by the emergence of the federal broadband stimulus mechanism, White said. Originally, California Advanced Services Fund grants were to be for as much as 40 percent of project costs. Sponsors had to obtain or supply the balance. With the onset of ARRA and the grant and loan programs it authorized, the commission created a “hybrid” state grant, good for 10 percent of project costs if a sponsor got 80 percent of costs covered by an ARRA grant.
“That means a sponsor would have to put only 10 percent of the money down,” White said. “And with CBC, the commission ruled that its non-profit status and the unique nature of the project justified increasing the grant from 10 percent to 19 percent, so that the sponsor only has to provide 1 percent. We're not arguing the merits of the project, we're arguing that the process has to be more transparent, has to have more accountability and has to do something about the lack of controls that ratepayers can exercise.”