HomeMy WebLinkAbout19970807Decision Memo.doc DECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER NELSON
COMMISSIONER SMITH
MYRNA WALTERS
TONYA CLARK
DON HOWELL
STEPHANIE MILLER
DAVE SCHUNKE
WAYNE HART
CAROLEE HALL
JOE CUSICK
DAVID SCOTT
WORKING FILE
FROM: BRAD PURDY
DATE: AUGUST 7, 1997
RE: CASE NO. FIL-T-97-1: FILER MUTUAL TELEPHONE COMPANY=S MOTION FOR INTERIM UNIVERSAL SERVICE FUNDING,
On June 24, 1997, the Filer Mutual Telephone Company filed an Application for authority to receive disbursements from the Idaho Universal Service Fund (USF). Filer Mutual is a mutual non-profit telephone company providing local exchange service and related telecommunications services in Idaho and Nevada.
In Case No. USW-T-96-4, the Commission determined that the public interest required U S WEST to implement three new extended area service (EAS) regions within its southern Idaho service territory. One of those new regions includes the Magic Valley which is comprised of a number of U S WEST exchanges including, among others, Buhl and Twin Falls. With the implementation of EAS earlier this year, all telephone calls between communities in the Magic Valley EAS area became toll free.
Filer Mutuals Filer and Hollister exchanges are contiguous to the Magic Valley EAS. In fact, the Filer exchange is located between U S WESTs Twin Falls and Buhl exchanges. Filer Mutual states that many of its customers/owners, as well as U S WEST customers in adjacent exchanges, have requested Filer Mutuals inclusion in the Magic Valley EAS. Filer Mutuals Board of Directors consequently voted to be included within the Magic Valley EAS.
In its Application for USF funding, Filer Mutual contends that being included in the Magic Valley EAS will have a substantial adverse impact on its net income. The Application states that, based on 1996 reported revenues, intrastate access charge and billing and collection revenue losses were estimated at $312,923 and $173,735, respectively, for an annual revenue loss of $486,658. According to Filer Mutual, this represents a 27% reduction in the Companys total revenue for 1996. In addition, the Company culculates that the reduction in total toll minutes will cause a shift in separated expenses from the interstate jurisdiction to Idaho thus increasing local exchange costs by an additional $40,166 per year resulting in a net impact of $526,824.
Filer Mutual states that in order to partially meet its post EAS revenue requirement, it intends to increase its local exchange rates to a level slightly in excess of 125% of the weighted statewide average local exchange rate. Rates will increase from $6 to $15.50 per month for residential customers and from $8 to $33.50 per month for business customers. This increase will produce $306,552 of additional annual revenue. At the same time, Filer Mutual states that it will reduce its access charges to a level equal to 100% of the weighted statewide average access charge resulting in a further revenue reduction of $59,825 per year.
The realignment of rates described above will purportedly leave Filer Mutual with a residual annual revenue requirement of $222,887. Filer Mutual contends that it is entitled to recover not less than 75% nor more than 100% of this residual revenue requirement from the Idaho Universal Service Fund annually pursuant to Idaho Code 62-610 and Rule 106 of the Rules for Idaho Universal Service Fund.
On July 17, 1997, Filer Mutual filed a Motion for interim relief seeking immediate, partial funding from the USF upon implementation of EAS with the Magic Valley region and upon revision of its rates as outlined above. Filer Mutual states that it is prepared to implement EAS immediately and is informed and believes that U S WEST will be able to implement EAS on or about September 1, 1997. Filer Mutual notes that the Staffs investigation of the Companys Application and the Commissions hearing calendar may result in the postponement of a final order on the Application until late in the year. Filer Mutual acknowledges that it has the legal authority to implement EAS without a Commission order but, as a practical matter, does not have the financial resources to do so until the Commission confirms its statutory right to receive its residual revenue requirement from the Idaho EAS.
In its Motion, Filer Mutual contends that a delay in implementing EAS until late 1997 is contrary to the public interest and detrimental to Filer Mutuals customers and patrons. Consequently, Filer Mutual moves the Commission for an interim order authorizing it to receive monthly disbursements from the USF beginning on the date EAS is implemented and Filer Mutuals rates are revised as set forth in the Application. Filer Mutual requests that the authorized monthly disbursements be set at an amount equal to 1/12 of its residual revenue requirement of $222,887 with all disbursements to be retroactively trued-up in accordance with the Commissions final order in this matter.
Filer Mutual argues that its Motion does not raise any issues of fact and requests an expedited hearing in the form of oral argument on the Motion. Filer Mutual further recommends that oral argument be scheduled in conjunction with a pre-hearing conference to establish a schedule of proceeding in this matter.
More than fourteen days has expired since the filing of Filer Mutuals Application as required by Rule 57 of the Commissions Rules of Procedure, IDAPA 31.01.01. No party filed a response to Filer Mutuals Motion. Staff agrees that the motion should either be resolved through oral argument or through written briefing and that a prehearing conference should be scheduled.
Commission Decision:
Does the Commission wish to schedule an oral argument briefing schedule and pre-hearing conference to resolve Filer Mutuals Motion and to schedule this matter for hearing?
Brad Purdy
cm\M:filt971.bp
DECISION MEMORANDUM 1