The Louisiana Public Service Commission has issued a General Order, dated February 9, 2009, once again adopting a new basis for its state Universal Service Fund or “state USF.” In short, the revised state USF effectively maintains the subsidies that have been provided to Louisiana’s rural incumbent local exchange carriers or “rural ILECs” under previous Commission mechanisms.

The state USF has been through several iterations. The state USF was originally created to make up for the loss of revenues the rural ILECs stated they would experience due to the introduction of 1+ presubscription (i.e., the ability of a customer to choose his or her local toll provider). The amount of the fund, then called the Interim Local Optional Service (LOS) Preservation Plan, was based on this potential loss to the rural ILECs, and was designed to subsidize the rural ILECs in the amount of that potential loss. See Order No. U-23267, dated December 3, 1998, adopting the Interim LOS Preservation Plan. Only the rural ILECs were eligible to draw from the fund. As for its funding, the Order provided, “[t]he plan is funded by BellSouth Telecommunications, Inc. and IXCs [long distance companies] and includes access reductions from BellSouth Telecommunications, Inc. to each IXC equivalent to the IXC’s contribution.” Under Section 101(B)(1) of the Order, no competitive local exchange carrier or “CLEC”, wireless carrier, or rural ILEC was required to contribute to the Plan.

Shortly after its adoption, the Commission amended the state USF requiring the rural ILECs to report their level of LOS services. These reports were to enable the Commission to assess the continued need for the LOS subsidies being provided to the rural ILECs.

The state USF was subject to a legal challenge, but the Louisiana Supreme Court upheld the Commission’s General Order.

Finally, because the level of LOS being provided by the rural ILECs was declining, and faced with the issue of whether the subsidy of ILECs’ LOS should be reduced, the LPSC once again changed the underlying basis for the state USF. Under the revised state USF, as adopted by the LPSC in its February 9, 2009 General Order, the underlying basis for the fund was changed to the rural ILECs’ loop costs as submitted to the National Exchange Carrier Association and the federal Universal Service Administration Company. The General Order also restricted disbursements from the state USF to a single facilities-based provider that is also the state-designated carrier of last resort in each of Louisiana’s rural study areas, effectively limiting disbursements to the rural ILECs only. Like in the last iteration of the state USF, the LPSC also expanded the category of carriers obligated to contribute to the fund, this time including VoIP providers and other carriers using IP technologies that meet the Federal Communications Commission’s definition of interconnected VoIP services as found in 47 CFR §9.3.

In summary, while the underlying basis for the subsidies provided to the rural ILECs through various state funds has changed, along with the scope of carriers required to contribute to the fund, the subsidies being provided to the rural ILECs operating in Louisiana have generally remained the same. 
 

[1]Jean-Baptiste Alphonse Karr, Les Guêpes, January 1849
 

“Shreveport and Bossier City and Caddo and Bossier parishes have been working on a comprehensive set of ordinances to give local governments leverage in controlling drilling in the Haynesville Shale natural gas field,” reports the Shreveport Times. According to the report, “the ordinances are aimed at protecting water, limiting road damage, and controlling noise, lighting and hours of operation at drilling sites. The Shreveport area has taken queues [sic] from Fort Worth, Texas, where the local government drew up similar laws for Barnett Shale production.”

Read the Shreveport Times article here.

For further information go to the Haynesville Shale blog here, hosted by the Louisiana Oil and Gas Association.

The Louisiana Oil and Gas Association also has a Haynesville Shale Education Center and is hosting the first ever Haynesville Shale Golf Classic on April 13, 2009, to bring together companies and individuals involved in the Haynesville Shale.

The United States Court of Appeals for the District of Columbia Circuit affirmed an order of the Federal Energy Regulatory Commission approving a new long-term allocation of power-generating capacity among the affiliates of the Entergy system. Facing a complaint from New Orleans, which asserted that it was bearing unusually high production costs, Entergy submitted to FERC a proposed reallocation of generating capacity. Under the proposed allocations, Entergy Arkansas and Entergy Gulf States’ cheaper generation capacity would be “sold” to Entergy New Orleans and Entergy Louisiana. As described by the Court, this would thereby allow New Orleans to “pass costs from its more expensive generators on to the now-undersupplied Entergy Gulf States. These paper transfers of power would lower costs for New Orleans and Louisiana but raise costs for Gulf States.” The Louisiana Commission opposed the allocations as discriminatory. But, granting deference to FERC, the Court found there was not enough evidence to second-guess FERC’s decision.

In contrast to the Court’s deference to FERC on the long term allocation issue, the Court found that FERC’s statements that short term, off system capacity sales by Entergy of cheap power did not trigger right-of first-refusal provisions among the Entergy operating companies under the System Agreement was, in fact, nothing more than dicta in the case at hand and would not preclude the Louisiana Commission from presenting this issue in a different proceeding.

Louisiana Public Service Com'n v. F.E.R.C., --- F.3d ----, 2008 WL 5396704 (C.A.D.C. 12/30/08).
 

In an action exceeding the requirements of Louisiana’s new, stricter ethics laws, pushed through the Legislature by Governor Bobby Jindal, the Louisiana Public Service Commission voted to forbid commissioners and their staff from accepting any food, beverage or entertainment paid for by companies regulated by the Commission or that have business pending before the Commission. Current state law allows state officials to accept meals provided the cost does not exceed $50 – the expenditure must also be reported.

The proposed meal ban has been pushed by Commissioner Foster Campbell for years, during which time the media has criticized the LPSC and its staff for accepting meals from regulated utilities. Other elected officials will continue to be governed under the more lenient state law.
 

For the text of the motion made by Commissioners Field and Boissiere, and adopted by the LPSC, click here.

For additional news articles relating to the LPSC’s recent decision, see http://www.2theadvocate.com/news/37621559.html and http://www.nola.com/news/index.ssf/2009/01/psc_decides_to_refuse_free_mea.html
 

On December 20, 2007, the Federal Energy Regulatory Commission approved a final rule in docket no. RM07-10-000 to require certain natural gas market participants to file an annual report reflecting wholesale, physical natural gas transactions. In a related action, the Commission issued a notice of proposed rulemaking in docket no. RM08-2-000 that would require interstate and certain major, non-interstate pipelines to post daily information on capacity, actual flows and scheduled flows.   Both actions are taken under the Commission’s authority under the Energy Policy Act of 2005 to facilitate transparency of price and availability of supply in natural gas markets. 

In docket no. RM08-2-000, the Commissions seeks comment on a proposal to require both interstate and certain “major,” non-interstate pipelines to post on a daily basis capacity, scheduled flow information and actual flow information for mainline and major receipt and delivery points. Currently, interstate pipelines post daily capacities and scheduled flows, but are not required to post actual flow information. Non-interstate pipelines are not currently required to post any information regarding capacity, scheduled flows or actual flows.

The proposed rule considers “major” non-interstate pipelines to be those with annual throughput exceeding 10 million MMBtus, measured in average receipts or deliveries for the prior three years. The proposal provides two exemptions from the daily posting requirement:

1.     Pipelines located entirely upstream of a processing plant;

2.     Pipelines that delivered more than 95 percent of the natural gas they flowed directly to end-users.

It is unclear whether the applicability of these exemptions will be determined by considering discrete assets or the entirety of a pipeline company’s assets. The proposed rule requires posted information for “major” receipts points and delivery points, as well as mainline segments. The Commission seeks input from stakeholders as to how it should define “major” receipt and delivery points.      

The Federal Communications Commission has issued a Report and Order prohibiting cable operators from enforcing or executing any provision in a contract that grants an operator the exclusive right to provide cable services to apartment buildings, condominiums and certain other multiple dwelling units (MDUs) in an effort to bring the benefits of competition to the increasing number of residents living in MDUs.  The FCC found that cable operators’ use of exclusivity clauses in MDU cable service contracts constitutes “an unfair method of competition or an unfair act or practice” proscribed by the federal Communications Act.  

The Federal Energy Regulatory Commission has recently issued a notice of proposed rulemaking which seeks to increase the Commission’s oversight over intrastate natural gas pipelines and other non-jurisdictional sellers of natural gas. FERC Docket Nos. RM07-10-000 and AD06-11-000. Specifically, the proposed regulations would require that intrastate natural gas pipelines post, on a daily basis, the capacities of and volumes flowing through major receipt and delivery points and mainline segments. Additionally, the new regulations would require annual filings by buyers and sellers of natural gas in the United States wholesale markets. Traditionally, intrastate natural gas pipelines were not subject to oversight by the Federal Energy Regulatory Commission, unless and to the extent that such intrastate pipeline elected to transport gas in interstate commerce pursuant to the provisions of Section 311(a)(2) of the Natural Gas Policy Act of 1978. The proposed rulemaking marks a significant advancement of FERC’s jurisdiction over non-jurisdictional intrastate pipelines as the proposed rule applies to all intrastate pipelines, not merely those that perform service pursuant to Section 311(a)(2) of the Natural Gas Policy Act of 1978.

To facilitate the transparency and competition mandated by the Energy Policy Act of 2005, the Commission proposed two new reporting requirements. First, intrastate pipelines would be required to post daily to the internet the capacities of, and volume flowing through, their major receipt and delivery points and mainline segments. These postings would be required within 24-hours from the close of the gas day in which the gas flowed. The Commission does not address whether the reporting required of “intrastate pipelines” would be required of pipelines that are considered to be performing the primary function of natural gas gathering, as opposed to transmission. It would seem that natural gas gathering pipelines would not be required to report such information since those pipelines, for the most part, deliver gas into either intrastate or interstate transmission lines, in which case the capacities and flowing volumes would be reported by the receiving intrastate or interstate pipeline. The Commission also did not address what constitutes a major receipt point or delivery point and solicited comment on same.[2] Interestingly, the Commission proposes to require that the intrastate pipelines report daily capacity and volumes that actually flow. Interstate pipelines are currently required to publish daily capacities and scheduled (as opposed to actual) volumes. The Commission reasoned that intrastate pipeline operations may not be scheduled as formerly as interstate pipelines and may have more wellhead supply attached to them, which does not lend itself to standard scheduling.

The second reporting requirement imposed on non-jurisdictional companies is an annual report by persons who purchase or sell more than de minimis amounts of natural gas in wholesale markets. The manner in which the Commission proposes to amend this regulation would require the annual report to be filed only by an entity that possesses a blanket marketing certificate issued pursuant to 18 CFR Part 284, Subpart L, which on its terms applies to the purchase and sale of natural gas in interstate commerce by a person that is not an interstate pipeline. Thus, the annual report does not appear to be required by an entity that purchases and sells gas strictly on an intrastate basis. However, if a person or entity buys or sells any gas in interstate commerce, that person is deemed to have a blanket marketing certificate and would have to report both its interstate and intrastate volumes on the annual report. A suggested sample of the report is attached to the NOPR and would require, on an aggregated basis, reporting of:

1.   the number of transactions and associated volumes transacted in the prior year;

2.   the number and volume of transactions transacted for next-day delivery;

3.   the number and volume of the next day transactions priced at a fixed price;

4.   the number and volume of the next day transactions priced at an index price;

5.   the number and volume of transactions for delivery in the next month;

6.   the number of transactions and volumes transacted for delivery in the next month that were at a fixed price;

7.   the number of transactions and volumes transacted for delivery in the next month that were priced at an index; and

8.   the number and volume of transactions for delivery beyond next day or next month that use next day or next month index prices.

The proposed rule does provide for an exception from the annual reporting requirement for those purchasers or sellers who make de minimis transactions over the course of the year. The rule proposes an annual threshold of 2.2 million MMBtus per year of purchase or sale transactions. The Commission determined that this threshold represented 1/10,000^th of what the Commission believed was of a 22 trillion cubic foot gas market. While the Commission recognized that the annual purchase or sale of 2.2 million MMBtus is insignificant in the overall market, that level of purchases could have a significant impact on prices if all purchases or sales were made at a particular point in a concentrated period of time.

While the scope of the proposed rule is subject to change during the rulemaking process, it is clear that the Commission intends to expand its reach into the affairs of non-jurisdictional companies. The proposed information reporting requirements may not be of much concern to many intrastate pipelines, but it may signal a continued blurring of the line between interstate and interstate gas pipelines.

The Louisiana Supreme Court issued a unanimous decision clearing the way for the City of Lafayette to issue bonds to finance its Fiber-to-the-Home (FTTP) Project. As described by the Court, FTTH technology delivers telecommunications services via fiber optic cables to every home and business in the covered area. In contrast, a more traditional system delivers services to a distant point, with the remaining distance to each home and business being covered by technically inferior and bandwidth-limiting copper (telephone) wires. The decision ends eighteen months of litigation, starting after the citizens of Lafayette voted 62% to 38% in a July 16, 2005 election to issue up to $125 million in bonds for the Project. Project opponents filing suit to block the bond issuance included the incumbent cable and telephone companies, as well as two Lafayette residents. For additional news articles relating to the decision, see http://www.theadvertiser.com/apps/pbcs.dll/article?AID=/20070223/NEWS01/702230321/1002 and http://www.2theadvocate.com/news/6008236.html  

On November 17, 2006, the United States Court of Appeals for the District of Columbia Circuit vacated the Federal Energy Regulatory Commission’s Standards of Conduct as applied to interstate natural gas pipelines. These Standards of Conduct, which are set forth in Order No. 2004 and codified at 18 CFR Part 358, govern the relationship between an interstate natural gas pipeline and various affiliates. The Court found that FERC’s effort to expand the pre-existing standards of conduct beyond relationships between an interstate natural gas pipeline and its marketing affiliates was not supported by record evidence. It is not clear if or when the Commission will revisit Order 2004 and how it will attempt to address the infirmities cited by the Court. It is worth noting that the current Chairman of the Commission, Joseph Kelliher, issued a strong dissent when Order 2004 was originally enacted and argued in favor of keeping the Standards of Conduct applicable only to marketing affiliates of interstate pipelines.

 While the Court gave the FERC some guideposts as to what justification it would need to justify expansion of Order 2004 beyond marketing affiliates, the extent to which the FERC will attempt to reinstate Order 2004 as applied to natural gas pipelines is unclear. The strongly worded dissent written by then-Commissioner Kelliher would suggest that now Chairman Kelliher would favor limiting the Standards of Conduct to marketing affiliates. At the time of Order 2004’s passage, then-Commissioner Kelliher stated in his dissent: 

I do not see how a record of affiliate abuse limited to marketing affiliates argues in favor of expanding the scope of the rule beyond marketing affiliates. To my mind, it argues in favor of keeping the scope of the rule where it was. Indeed, there appears to have been no factual basis to support expanding the scope beyond marketing affiliates. 

However, if presented with sufficient evidence of abuse between interstate natural gas pipelines and non-marketing affiliates, the Commission could very well initiate proceedings designed to reinstate Order 2004 and apply it to marketing affiliates as well as all other “Energy Affiliates.”

The Louisiana Supreme Court has affirmed an order of the Louisiana Public Service Commission establishing a state universal service fee for telecommunications service providers operating in the state. T-Mobile, a wireless provider operating in Louisiana, appealed the LPSC’s order, arguing that the USF fee constituted a tax and, thus, the LPSC lacked jurisdictional authority to mandate the charge. The Supreme Court disagreed, finding that the charge constituted a fee, not a tax, and that the LPSC had the jurisdiction to impose a USF fee under both the Telecommunications Act of 1996, and the Louisiana Constitution.  A copy of the decision is available at the following link: http://www.lasc.org/opinions/2006/05ca2578.pdf

Governor Kathleen Blanco has reportedly vetoed the controversial Competitive Cable and Video Services Act, House Bill 699. There has been significant disagreement between BellSouth, the proponent of the bill, cable providers, who appeared to turn neutral as to its passage after the bill was amended, and Parish presidents and mayors, who urged the Governor to veto the bill. Of particular concern was the lack of any requirements for telecommunications companies to provide service to consumers in rural and poor neighborhoods, which cable providers typically must do under current franchise agreements. Local officials also argued that the bill would reduce or eliminate local governments' authority to manage their rights-of-way. Under Louisiana law, a bill vetoed by the Governor must subsequently be approved in a veto session by two-thirds of the elected members of both the House and Senate to become law. The bill originally passed both houses by a two-thirds vote before being sent to the Governor. For recent new articles regarding this matter, visit http://www.theadvertiser.com/apps/pbcs.dll/article?AID=/20060712/NEWS01/60712013  and http://www.2theadvocate.com/news/3248951.html?showAll=y

To say there has been consolidation in the telecom market over the last decade would obviously be an understatement. Competitive telecom companies, which entered the market by the hundreds after passage of the federal Telecommunications Act, have merged with each other (or have been acquired) as a means of survival or market penetration. The (then) giants of the telecom world have also consolidated into mega-regional communications companies. SBC acquired Pacific Telesis, Southern New England Telephone, Ameritech (which itself acquired Illinois Bell, Indiana Bell, Michigan Bell, Ohio Bell and Wisconsin Bell), and most recently AT&T. The new AT&T became the largest telecom company in the U.S. Now it is proposing to acquire BellSouth, currently the third largest telecom company in the U.S. (For more information on the history of telecom mergers, visit http://www.fcc.gov/wcb/armis/carrier_filing_history/COSA_History/)

http://news.com.com/Judge+looks+into+modifying+terms+of+phone+mergers/2100-1036_3-6091969.html