19991222Decision Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
DON HOWELL
STEPHANIE MILLER
TERRI CARLOCK
WORKING FILE

JOE CUSICK
LYNN ANDERSON
WAYNE HART
BIRDELLE BROWN
TONYA CLARK
BEV BARKER
CAROL COOPER
FROM:

DATE: December 22, 1999

RE: CASE NOS. CEN-T-99-3/CGS-T-99-4; IN THE MATTER OF THE JOINT AP
APPLICATION OF CENTURY TEL FOR RATE REBALANCING

On September 27, 1999, Century Tel of the Gem State (CGS), which provides local exchange service in the Richfield, Bruneau, Grandview and Grasmere/Riddle exchanges, filed a Joint Application to reduce access rates and to rebalance other rates for telecommunications services (Case No. CGS-T-99-4). A similar Application was filed simultaneously for Century Tel of Idaho, which shares the same parent company for its exchanges in the Salmon area (Case No. CEN-T-99-3).
These Applications were filed after consultation with Staff and designed to address the requirements of Idaho Code § 62-623 requiring that the Commission identify and quantify implicit subsidies within the rates of incumbent telephone corporations in Idaho.
On October 20, 1999, the Commission issued a Notice of Application/Modified Procedure/Public Meeting and Order No. 28171 in these combined cases establishing a comment period and scheduling public meetings in Grandview, Salmon and Richfield. The Commission Staff filed two separate sets of comments, one pertaining to each case, prior to the public meetings. Staff’s comments are attached to this memorandum for the Commission’s review. In addition, the following section of this memorandum summarizes what transpired at the three public meetings. It might be best if the Commission first reviews Staff comments before reading the following section.

SUMMARY OF PUBLIC MEETINGS
Approximately 350 people attended the public meeting in Grandview, Idaho on November 15, 1999. A total of 196 written comments were received from the communities of Grandview, Bruneau, Murphy and Oreana during the course of this proceeding. Of those, 185 people requested that their calling region be extended not just to include the cities of Mountain Home and Melba but the entire Boise Treasure Valley region as well. Six of the requests received opposed inclusion into the Boise region primarily because of the added cost that would be incurred and because they indicated they had no reason to call into Boise.
It is Staff’s opinion that the focus of the meeting was not on the rate increase itself. The topic that seemed of most concern was the expansion of the calling region. The majority of the people in attendance made it clear that they desired that the entire Boise Treasure Valley calling area be included within their EAS region and were willing to pay an additional $8 for that privilege. There were five customers at the meeting, however, who handed written comments opposing the expansion of their EAS region to include the Boise Treasure Valley area for the reasons stated above.
An analysis of the written comments themselves reflects much of the same information that was received at the Grandview meeting. Many customers stated that they did not feel that expanding the calling area only to Mountain Home and Melba would be of much benefit to them. Several customers commented that they live in a farming community and that the fertilizer companies, equipment dealerships and fuel companies are all located in the Boise area and are not available in Mountain Home. Seventeen of the 196 comments were received from the community of Murphy whose customers live on the northwest fringe of Century Tel’s service area. Although several letters from Murphy expressed gratitude for the consideration of adding the Melba exchange since their children attend school in Melba and worship there, they wanted to remind the Commission that their community is linked more directly, both geographically and economically, to the Nampa-Caldwell region and that they have little or no ties to Mountain Home.
Approximately 50 people attended the public meeting held in Salmon on November 16. Staff anticipated a larger turn out. Several attendees left early to attend other significant meetings being held in the area that evening. The Salmon group posed many questions but few were related to the rate rebalancing itself. Instead, much of the focus was directed toward the corporate earnings of Century Tel or its long-distance services. Staff utilized the opportunity to educate the customers on a variety of topics. Several of the comments made at the meeting related to the fact that rates were too high already and, because this is an economically depressed area, people could not afford an increase in rates.
Six written comments were received Century Tel customers in Salmon, Leador and North Fork. All six opposed any type of rate increase. The comments received by the public in the Salmon area can be explained by the fact that Century Tel is not opposing any EAS in the Salmon region. As Staff’s comments note, Century Tel’s Application might benefit some customers in the Salmon area, while having a negative impact on others. Some customers expressed concern that they would be subject to rate increases without any commensurate enhancement to their service.
Finally, approximately 50 people attended the Richfield meeting held on November 17. The group was very congenial. Their most significant complaint was that they did not want to have to wait a year before being able to call into the Magic Valley toll free. The second most often expressed complaint was that customers viewed the rate rebalancing as a way to pay for the EAS expansion for an entire year before it, would be available to them. They felt that this was unfair considering that Magic Valley customers were not subject to a rate increase prior to the expansion of their calling area. Staff has received only two written comments from the Richfield community: one in favor of approval and the other against.

Commission Decision:
Access Rates:
Does the Commission approve the Access Rate Tariffs submitted which:
1. Allows CenturyTel to withdraw from the Idaho Rural Exchange Carrier tariff,

2. Expands local transport structure,

3. CenturyTel of Idaho

a. Reduces overall access rates by nearly $.10 per minute from the present $0.1599 to $0.06 per access minute.

b. Implements rate reductions in two steps – one now to a composite rate of $0.10934 and one a year from now to $0.06.
4. CenturyTel of the Gem State

a. Reduces overall access rates by nearly $.10 per minute from the present $.1365 to $0.06 per access minute.

b. Implements rate reductions in two steps – one now to a composite rate of $.0986 and one a year from now to $0.06.

Local Access Rates:
Basic Local Service
Does the Commission approve the proposed modifications of local service rates which:
1. Increase residential basic local service rates

a. CenturyTel of Idaho

i. Increase residential rates from $15.20 in Salmon, $16.50 in Leadore and $17.20 in North Fork to a common $19.34 in the first stage and to $21.28 in the second stage – an ultimate rate of 125% of the statewide average.

ii. Increase business basic local service rates from $29.20 in Salmon, $34.00 in Leadore and $36.00 in North Fork to a common $36.25 in all exchanges in the first stage and to $39.77 in the second stage – an ultimate rate of 125% of the statewide average.

b. CenturyTel of the Gem State

i. Increase residential rates from $4.75 in Grasmere/Riddle and $9.40 in the other exchanges to a common $12.76 in the first stage and to $21.28 in the second stage – an ultimate rate of 125% of the statewide average.

ii. Increase business local service rates from $7.75 in Grasmere/Riddle and $17.40 in the other exchanges to $23.84 in all exchanges in the first stage and to $39.77 in the second stage – an ultimate rate of 125% of the statewide average.

2. Convert all existing multi-party service to one-party service in the first stage.

Measured Local Service
1. Does the Commission approve CenturyTel’s local measured service plan which CenturyTel of Idaho would begin with the first stage but would offer local service at $8.00 less than the second stage rate ($13.28 for residential and $31.77 for business plus the $3.00 or $6.00 additive for rural zones), with a 90-minute free calling allowance and subsequent local calling minutes at $0.03/minute? Measured service for CenturyTel of the Gem State would be phased in at a rate that is $4.00 less than the interim rate ($8.76 urban or $11.76 rural).
2. Does the Commission agree that the Company should provide billing detail for measured service? Does the Commission agree that if billing detail is provided for a charge, the item should be reasonably priced and included in the tariff?
3. Does the Commission require a 90-day “free conversion period” during which customers can convert to or from measured service without incurring a one-time charge?
4. Does the Commission agree that the Company should restrict its measured service so that flat and measured service cannot be mixed at the same premises?
Rural Mileage Charges
1. Does the Commission agree that the existing rural mileage charges of $1.00/quarter mile (maximum $12.00) should be eliminated?
2. Does the Commission agree that a rural additive of $3.00 for residential and $6.00 for business customer customers be added to the basic rates of all customers living outside the base rate area?
Vertical and Miscellaneous Services
1. Does the Commission agree that the existing touch-tone charges of $0.70 should be eliminated?
2. Does the Commission approve CenturyTel’s proposal to increase directory assistance calls to $0.50 per call with no “free” allowance?
3. Does the Commission approve the proposed repricing of coin, key system and PBX service at local business rates?
4. Does the Commission approve the minor changes in rates of custom calling services as proposed, along with a few minor changes Staff has proposed to clarify the tariffs?

Customer Notification
1. Does the Commission agree that new customers entering the CenturyTel service area in the interim period between the first and second stages of the rate increase will receive the same rate as existing customers and will be fully informed of the impending increases to be implemented in stage two?
2. Does the Commission agree that the Company shall provide customer notice 30 days prior to the implementation of each phase of the rate changes in the form of a bill stuffer, separate mailing or a statement printed directly on the bills?
3. Does the Commission agree that notice should include information about the structure and rates for the measured service option?

Does the Commission wish to order CenturyTel to revise the proposed tariffs that are currently suspended to incorporate any modifications required and resubmit them for approval?

vld/M: CEN-T-99-3_CGS-T-99-4_bp

DECISION MEMORANDUM 1