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Home My WebLink About19980608Decision Memo.doc DECISION MEMORANDUM TO: COMMISSIONER HANSEN COMMISSIONER NELSON COMMISSIONER SMITH MYRNA WALTERS TONYA CLARK STEPHANIE MILLER DAVID SCHUNKE DON HOWELL JOE CUSICK BEVERLY BARKER DAVID SCOTT WORKING FILE FROM: BIRDELLE BROWN AND CHERI COPSEY DATE: JUNE 8, 1998 RE: CTC-T-98-3, CITIZENS TELECOMMUNICATIONS OF IDAHOS APPLICATION TO REBALANCE ITS RATES FOR TELECOMMUNICATIONS SERVICES On May 15, 1998, Citizens Telecommunications of Idaho filed an Application to rebalance its rates for telecommunications services in Idaho. Citizens proposes to reduce its access rates, expand some EAS areas, add optional calling plans, simplify toll rates and residually price basic services rates to make up the revenue shortfall. Citizens also proposes optional EAS plans in its Application. These proposed optional plans would resolve EAS petitions on file with the Commission. A Notice of Application and Notice of Intervention Deadline was issued on June 5, 1998. CITIZENS APPLICATION In February 1998, Citizens filed and the Commission approved Tariff Advice ID-98-02 that reduced Citizens access rates (specifically carrier common line charges) by $0.03, beginning March 1, 1998. This tariff advice was filed in response to a Staff audit that revealed that such a reduction would correct any over earning that Citizens was experiencing. At that time, Citizens stated it would file a rebalancing tariff that would again reduce access rates, thus furthering federal and state policy objectives to reduce access charges and remove subsidies from rates. This rebalancing proposal will reduce access rates from approximately $0.12 to approximately $0.06 per minute. Proposed local rates are to increase from $9.85 for residential lines to $17.50 per month and from $19.75 for business lines to $35.10 per month. Current EAS increments, which average $2.08 for residents and $5.50 for businesses, are proposed to be eliminated. Expanded calling areas within Citizens serving area will be included in the basic local rates and optional local calling plans (LCPs) will be available for $1.20 for residential and $1.80 for business customers and regional calling plans (RCPs) to areas outside of Citizens serving area will be offered for $8.10 residential and $12.15 business per month. Citizens proposed local rates ($17.50/$35.10) are slightly higher than U S WESTs rates ($16.99/$32.00) but lower than the negotiated rates for independent companies like Rockland ($24.10/$42.00). They are lower than 125% of statewide average. Citizens proposed access rates of just over $0.06 are approximately equivalent to statewide average and in line with their interstate access rates. Citizens affirms that the proposed rate design is revenue neutral  the reduction in access rates is to be offset by increases in other rates, including an increase in basic exchange service rates. Citizens asserts that granting its Application is in the public interest. Citizens suggests that its Application furthers state and federal legislative goals for removing implicit subsidies and lowering access rates and resolves outstanding EAS cases. Moreover, approval of Citizens Application will not require Universal Service Funds. Citizens stated it can implement this service within 120 days of an order, with optional calling plans phased in during an additional period of 90 days. Because the plan is revenue neutral, Citizens requests modified procedure as a means to resolve these plans expeditiously Access Rates Citizens proposed reductions in access rates are reflected in the table that follows. Citizens reports that transport rates were averaged to reflect actual present disaggregation of traffic among four mileage bands, and peak and off peak, and in aggregate reflects a minor price decrease. The differential between peak and off peak times was eliminated. The overall average reduction for calls originating and terminating within the Citizens serving area is $.06/min, which when combined with the March 11 reduction, is an overall reduction from $.12/minute  a reduction of more than 50%. Citizens suggests that these reduced access rates should result in lower toll rates for its customers. OLD RATES EFFECTIVE 3/1/98 PROPOSED NEW RATES OVERALL REDUCTION Carrier Common Line Originating $0.05576 $0.02576 $0.01100 $0.04476 Terminating $0.05576 $0.02576 $0.01100 $0.04476 Switching Peak $0.03300 $0.01980 $0.01320 Off Peak $0.01980 $0.01980 $0.00000 Transport - Peak 0-25 miles $0.05830 $0.16500 $0.04180 25-50 miles $0.08850 $0.16500 $0.07200 51-100 miles $0.22460 $0.16500 $0.20810 > 100 miles $0.39180 $0.16500 $0.37530 Transport - Off Peak 0-25 miles $0.03498 $0.16500 $0.01848 25-50 miles $0.05310 $0.16500 $0.03660 51-100 miles $0.13476 $0.16500 $0.11826 > 100 miles $0.23508 $0.16500 $0.21858 Toll Rates Citizens proposes to reduce its toll rates approximately 1.8% for an average toll call. Citizens also proposes to eliminate the separate first minute rate difference from the other minute rates for intraLATA calls, so that all minutes of calling will be charged the same rate. These proposed changes are designed to simplify the rate structure. Basic Local Service Rates Citizens rates have not increased in 13 years, even through the network and service quality has been dramatically improved through the installation of 200 miles of fiber optic cable, digital upgrades of 11 central offices, provision of advanced calling services and broad band services, conversion of 4,000 customers to 1-party service, provision of intraLATA equal access (one of only two companies in Idaho to provide this service to date), and elimination of touch tone and zone charges. If this Application is approved, basic local service rates for residential customers will increase from $9.85 to $17.50 per month and for business customers will increase from $19.75 to $35.10 per month. Citizens will also enlarge the local calling scope of 13 of its 18 exchanges. Rates for PBX, Centrex and other lines will also be increased. EAS and Local Calling Plans Four EAS petitions involving Citizens customers have already been filed with the Commission and are awaiting Commission action. No hearings have been held. Moreover, two other petitions for EAS in Citizens service areas have been received and were included in this proceeding. All of these EAS petitions would be resolved if the Commission approves Citizens Application. The EAS petitions and case numbers that Citizens addresses in this Application are: FROM TO DATE FILED CASE # Aberdeen - Citz Blackfoot - U S WEST Nov 94 GNR-T-96-7 Riggins - Citz New Mead. - Citz New Mead. - Citz White Bird - Citz Grangeville - U S WEST Council - Cambridge McCall - Citz Kooskia - U S WEST Elk City - Citz Feb 94 GNR-T-96-8 Garden Valley - Citz (Horseshoe B. to Boise expected soon) Boise - U S WEST Horseshoe B. - Citz Id City - U S WEST Lowman - Cambridge Mar 96 GNR-T-96-2 Carey - Citz Blaine County - USWC Apr. 97 GNR-T-97-10 Springfield - Citz Eastern Idaho Dec. 97 Address with CTCs filing White Bird Riggins Feb., 97 Address with CTCs filing Staff proposes that all of these cases be considered and decided in this rebalancing case, CTC-T-98-3. If Citizens Application resolves these other EAS cases, then they can be closed, and if the Application does not resolve one or more of the cases, those unresolved cases numbers can be revived. The calling plans proposed by Citizens would establish EAS in most, but not all, routes requested for EAS in the several EAS petitions already received. For example, Citizens Application would not extend EAS from New Meadows/Riggins/White Bird to Grangeville/Elk City and Kooskia. Citizens does not propose establishing EAS on those routes because [a]nalysis of the traffic data and implementation costs indicate it is not economically feasible to offer expanded local calling at this time. Additionally, Staff notes that the Aberdeen plan for calling to Blackfoot and American Falls, which was approved and scheduled to be implemented June 10, has been delayed and Citizens proposes to revise the plan More specifically, Citizens proposes that existing EAS plans be retained and included in the basic service rates, making mandatory flat rate EAS uniform for Citizens exchanges that are located near each other. Additionally, Citizens proposes optional Local Calling Plans (LCPs) designed to allow customers to call exchanges of other independent LECs at reduced rates. Citizens also proposes Optional Regional Local Calling Plans that are the same as the local Calling Plans except that they provide options for calling to U S WEST exchanges instead of other independent companies. Each plan provides for calling to one or more of the U S WEST EAS regions that were implemented in Case No. USW-S-96-4 in November, 1996. Each of these calling plans have several options: Premium Flat Rate Options that provide toll-free calling to specified exchanges; Measured Service Options with lower fixed monthly rates plus a discounted per-minute usage rate; Basic Exchange Rate Option/Long Distance Toll Service permits the customer to pay only the monthly basic rate and all long distance calls will be charged the normal toll rate. Rates for these calling plans were developed using the same methodology used in the Homedale-Parma-Wilder and Aberdeen cases which were approved by the Commission. The proposed calling regions are shown on Exhibit 1 attached. STAFF RECOMMENDATION Because the Commission is not required to establish a revenue requirement, these matters do not require formal evidentiary hearings and, therefore, Staff recommends that this Application for rate rebalancing be handled under Modified Procedure with a twenty-one (21) day comment period. The Staff further recommends that public hearings to be held in the Parma-Wilder area, Aberdeen and McCall to accept public comment concerning the proposed rate rebalancing and establishment of EAS plans. COMMISSION DECISION 1. Does the Commission want to process this Application under Modified Procedure with a twenty-one (21) day comment period? 2. Does the Commission want to schedule Public Hearings in McCall, Parma-Wilder area, and Aberdeen? Birdelle Brown Cheri C. Copsey DECISION MEMORANDUM 1