California Transforms CA Combined Surcharge; Effective April 2023, Access Line Based Contribution Methodology Replaces Revenue-Based System

On October 24, 2022, the California Public Utilities Commission (CPUC) released Decision 21-10-021 in Rulemaking Docket 21-03-002 wherein the CPUC adopted the Administrative Law Judge’s proposed order implementing a new surcharge mechanism that fundamentally transforms California’s universal service, lifeline and public interest programs, commonly known in the industry as the “California Combined surcharge” (CA Combined)(the PUC User’s Fee is unaffected and remains unchanged by the Decision). 

Since inception, the CA Combined surcharge has been calculated on the basis of a service provider’s telecommunications revenue. Decision 21-20-021 eliminates the revenue-based system and replaces it with an “access line” contribution methodology. 

The CPUC adopted an interim flat rate surcharge of $1.11 (which represents the aggregate contribution for the six PUC six programs that make up the CA Combined), which goes into effect on April 1, 2023. 

The PUC expects to have enough data to calculate a final surcharge rate for FY 2023-24 by no later than June 9, 2023, when carriers will report their access line counts.   For the remainder of 2022 and the first quarter of 2023, carriers will continue to report their intrastate telecommunications revenue through the existing collection system.  Lifeline customers and incarcerated persons are exempt from paying the surcharges.  Phase 2 of the proceeding will consider whether there are any statutory restrictions that require the PUC to assess the user fee based on the current intrastate revenue-based mechanism. 

Please contact Jonathan S. Marashlian at jsm@commlawgroup.com or the attorney assigned to your account with questions regarding the impact this change in contribution methodology will have on your business or for guidance on ensuring the change is implemented in a timely and accurate manner throughout impacted billing, accounting, tax calculation, and compliance reporting systems.

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