BATT.docx

December 1, 1997
The Honorable Philip E. Batt
Governor
Statehouse
Boise, ID 83720-0001
The Honorable Jerry T. Twiggs
President Pro Tem
955 W. 100 S.
Blackfoot, ID 83221
The Honorable Michael K. Simpson
Speaker of the House
786 Hoff Dr.
Blackfoot, ID 83221
Re:Report to the Legislature
Gentlemen:
Attached for your information and review is the Public Utilities Commission’s Legislative Report required by House Bill 313 and codified at Idaho Code § 62-623(4).  This report contains an evaluation of implicit subsidies in local telephone rates and the process for removing implicit subsidies.  In addition, we have enclosed proposed legislation as directed by Idaho Code § 62-623.
As 1997 draws to a close, much has been accomplished in the area of telecommunications.  This year the Commission has certified nine companies as local competitors; approved eleven interconnection or resale agreements; recently completed the U S WEST rate case establishing new local rates; and issued an arbitration order resolving disputed issues between AT&T and U S WEST.  In addition, U S WEST implemented the Commission approved toll-free calling regions for nearly 400,000 access lines in southern Idaho.
Despite these accomplishments, much remains to be done.  As set out in greater detail in the Report, the Commission anticipates selecting the cost of service model to determine local exchange companies forward looking costs.  Selection of an appropriate cost model is the first step in readjusting rates to eliminate implicit subsidies.  The Commission intends to address access rates and other subsidies on a company by company basis after adoption of a cost model.
Finally, the Report contains proposed legislation addressing a new universal service fund for high cost telecommunications areas and necessary changes to the existing telephone assistance program (ITAP).  The proposed legislation may change before the session because we are still receiving comment.  It is our understanding that there is industry consensus on the ITAP legislation.
We look forward to working with you in the upcoming Legislative session.  If you have any questions, please do not hesitate to contact me at [phone].
Sincerely,
Dennis S. Hansen
President
bls/L-batt.dh