20041112Final Order No 29631.pdf

Office of the Secretary
Service Date
November 12, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
(IN THE MATTER OF THE PETITION FROM
THE RESIDENTS OF THE SHOUP AREA
REQUESTING EXTENDED AREA SERVICE
INTO SALMON, IDAHO.ORDER NO. 29631
CASE NO. GNR-OI-
On February 21 , 2001 , the Idaho Public Utilities Commission received a Petition
from approximately 26 residents of the Shoup, Idaho area requesting toll-free extended area
service (EAS) into Salmon, Idaho. Located in northern Lemhi County, the Shoup exchange is
served by Rural Telephone Company and does not presently have toll-free calling to any other
exchange. On April 3 , 2001 , the Commission issued a Notice of Petition and Intervention
Deadline. Order No. 28694. Having concluded its investigation, Staff recommended approval
of the Petition for EAS between the Shoup exchange and the Century Telephone exchanges of
North Fork and Salmon. In its Notice of Modified Procedure and Comment Deadline issued
October 13, 2004, the Commission sought comment on whether the EAS petition should be
approved in light of the relatively modest rate increases it would require. Order No. 29613. The
Commission received 20 comments from the public in addition to those filed by the Commission
Staff. Based on the comments, the law and the record, the Commission grants the EAS Petition
as described in greater detail below.
BACKGROUND
The Shoup exchange is served by Rural Telephone Company and is comprised of
approximately 42 residential and 15 business telephone customers. There is presently local
calling only within the exchange. Salmon is the county seat of Lemhi County and is served by
CenturyTel of Idaho. CenturyTel has approximately 4 200 customers in Lemhi County and
operates three adjoining exchanges with Salmon North Fork and Leadore. The Salmon
extended area exchange runs from Leadore to the Montana border and interconnects with the
Shoup exchange approximately 22 miles north of Salmon. The petitioners have requested local
calling with the North Fork and Salmon exchanges.
The petitioners allege that one of the many reasons they are requesting toll-free EAS
to Salmon and North Fork is that it is prohibitively expensive for Shoup residents to dial outside
ORDER NO. 29631
their exchange area to contact local physicians, the local medical facility, schools, social
services, Internet providers, law enforcement, and emergency services.
PUBLIC COMMENTS
In response to its request for public input, the Commission received 20 comments:
in favor of the proposed EAS , one opposed the accompanYing rate increase necessitated by EAS
and two comment forms that were signed but left blank. Of these 20 comments, two comments
in favor of EAS were filed by out-of-area sportsmen from Preston, Idaho, and North Logan
Utah. No comments were received from Salmon residents.
The Commission received ten comments from North Fork customers located in the
Shoup exchange, all of whom favored EAS into Salmon. One comment "overwhelmingly in
favor of the IPUC approving this case" was in the form of a petition from a residential
subdivision board and its 31 homeowner members located 13.5 miles downriver from North
Fork. These homeowners were "willing to pay a reasonable rate increase" for toll-free status
with the North Fork/Salmon exchanges so as to better conduct normal business, government
medical, law enforcement, and emergency matters. Comments from Rural Telephone North
Fork customers in the Shoup exchange noted that every business and medical call is long
distance and Internet access is prohibitively expensive. Several commenters run businesses out
of their homes and indicated that long distance business calls to Salmon are quite costly under
the present service arrangement.Although the base rate would increase, one North Fork
customer on a fixed income indicated that EAS "would be a big help" and hopes "it can go
through quickly." Another customer thought service to North Fork and Salmon ("the shopping
town ) should be without charge, but indicated that $2.50 was better than no service -
particularly "since satellite phones won t work in these mountains.Although in favor of the
EAS petition, one customer/first responder wrote that North Fork customers in the Shoup
exchange "have been paying more than their fair share since day one" for the service they
receive and that it is wrong for them to have to pay long distance to call 911.
The Commission also received eight comments from Shoup residents - five in favor
of EAS , one opposed, and two that signed comment forms but left them blank. A member of the
Shoup quick response medical team indicated "each year we lose patients due to someone not
being able to dial 911 for help without looking for money to put into the payphone or use a
calling card." Moreover, toll-free EAS would be a "tremendous plus" for shopping and doing
ORDER NO. 29631
business in the major town of Salmon. The owners of a Shoup tree farm felt that the $2.47
increase to their phone bill would be minimal compared to their long distance bill now. One
Shoup resident who favored EAS wrote that he "would like to see free phone access provided to
Salmon, Idaho as free access was provided by the old ground return phone line to this area years
ago." Other Shoup residents indicated that they have "been waiting for two years now to be able
to get on the Internet." The one commenter who was not interested in toll-free EAS into Salmon
wrote that she is pleased with Rural Telephone service "as is" and uses a credit card for long
distance service. Moreover, the rate increase would put stress on her budget.
STAFF COMMENTS
Staff comments explained Rural Telephone was granted authority in 1990 to expand
its certificated area and provide telephone service in the Shoup area in Case No. RUR-89-
Prior to that, residents of the Shoup area received telephone service from a single magneto-
powered line which connected to the facilities of CenturyTel of Idaho at North Fork. The nature
of this line required that CenturyTel have operators available to manually connect calls to and
from the Shoup area.
Staff described Shoup as a community with many seasonal cabins and recreational
businesses related to fishing and floating the adjacent Salmon River. Shoup has a small cafe
which includes a post office and gasoline sales. There are two other small convenience stores in
the area located several miles apart from each other.For services such as health care
government agencies, schools, churches, businesses and almost all shopping, Shoup residents
must travel approximately 35 miles to Salmon. Staff is not aware of a school in the Shoup area.
However, the county does maintain the road into Shoup throughout the year. Unlike Shoup,
Salmon has at least one Internet Service Provider.
The most recent Shoup calling data collected in July 2004 indicates that most
business customers and many residential customers call into Salmon frequently. For example
86% of Shoup s business customers made at least one phone call to Salmon during the month
while over 60% of residential customers made at least one phone call to Salmon. During the
study month, 21 out of 61 Shoup customers averaged three calls to Salmon while 18 Shoup
customers averaged over 40 calls to Salmon. Calling data from May 200 1 indicated similar
calling volumes and distribution. In summary, it appears that one-third of Shoup customers
ORDER NO. 29631
make no calls to Salmon, another third make a few calls to Salmon, and the last third of Shoup
customers make many calls into Salmon in a given month.
Staff has received responses to production requests from both Rural Telephone
Company and CenturyTel of Idaho regarding the costs associated with the proposed EAS. Rural
Telephone has identified approximately $7 000 in increased annual costs and CenturyTel has
determined an approximate $4 500 increase in annual costs if EAS is implemented. If EAS is
approved, Staff noted that there are multiple options for recovering the related costs. For
example, Rural Telephone s EAS-related costs could be recovered entirely from an increase in
its Idaho USF draw or entirely from business and residential customers in Shoup, or some
combination of the two.
Recommendation:Having concluded its investigation, Staff recommends approval
of the Petition for EAS between the Shoup exchange and the exchanges of North Fork and
Salmon. Staff believes many Shoup customers would benefit from the ability to call
government, medical, community and Internet services without incurring toll charges and also
believes EAS can be implemented economically.
Because Shoup customers would benefit from EAS, Staff believes it is reasonable to
increase rates in Shoup to the! same level that other Idaho customers pay where EAS has been
implemented ($24.10 residential and $42.00 business). Remaining EAS costs can be off-set by
increasing Rural's annual USF draw by approximately $5,400. Therefore, Staff recommends that
Rural Telephone s rates for Shoup customers be increased from $21.63 per month for residential
service to $24.1 a and from $40.68 to $42.00 for business service. In addition, Rural Telephone
would increase its Idaho USF draw by approximately $5,400 (1.7%) annually to cover its
remaining EAS costs.
CenturyTel customers in Salmon and North Fork would also benefit from EAS to
Shoup. Because CenturyTel is not an Idaho USF recipient, Staff recommends that CenturyTel's
EAS costs be off-set by increasing the rates for customers in Salmon and North Fork from
$21.75 per month to $21.84 for residential service and from $39.77 per month to $39.86 for
business service. Staff indicated that it and the companies are in agreement regarding the
submitted costs of EAS and the proposed rate increases.
ORDER NO. 29631
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. GNR-01-
including the Petition, the public comments and recommendations of the Commission Staff.
Based on our review of the record, we continue to find it appropriate to process this case
pursuant to Modified Procedure. IDAP A 31.01.01.204.
While EAS creates toll-free calling among exchanges, the costs associated with
converting a former long-distance toll route to a toll-free EAS route must be recovered from all
customers within those exchanges by increasing rates for local service. In Order No. 26311 , the
Commission adopted a set of standards or criteria to evaluate when EAS should be implemented.
Those criteria are: call volume and call distribution (how many customers in an exchange call the
other exchange); geographic proximity (distance between exchanges); the presence of
geographic or other physical barriers (mountains, rivers, valleys) between exchanges; county seat
relationship (are both exchanges in the same county); the relationship to school district (do both
exchanges share the same school district); the proximity to medical facilities and services; and
the willingness of customers to pay increased rates to cover the costs for converting those routes
to toll free routes. The Commission traditionally balances these community-of-interest standards
against the costs and rate impacts of providing EAS. When EAS costs are disproportionate to
customer needs and benefits, the Commission has denied requests for EAS.
The Commission finds that Shoup has a strong community-of-interest with the
Salmon and North Fork exchanges. We conclude that customers in these relatively isolated
exchanges rely heavily on Salmon schools, businesses and medical facilities to provide most of
the basic services customers use on a day-to-day basis but are not currently available without a
toll call. As raised in the public comments, the Commission gives particular weight to the fact
that EAS would facilitate toll free calling access to 911 by Shoup customers in an emergency.
Toll free calling to the Salmon exchange will also provide customers with greater access to their
county seat and to the Internet. Comparisons of Shoup s calling data to the EAS standards set
out in Commission Order No. 26311 support those community-of-interests. We also note that
commenters were generally aware of the rate increase that would be necessitated by EAS and
were willing to pay it.
The Commission finds it is just and reasonable to charge Rural Telephone customers
who receive the benefits of EAS more than the 125% of the statewide average just as other USF
ORDER NO. 29631
companies charge. Therefore, the Commission finds that, based on the unique facts presented in
this case, it is in the public interest to grant EAS for the Shoup exchange to call toll free into the
Salmon and North Fork exchanges provided those customers' rates are raised to $24.10 per
month for residential service and $42 per month for business service. The Commission further
finds that no measured rate should be offered because the revenue implications are not known.
The Commission is mindful of the fact that the USF is funded in whole by surcharges
paid by all telephone customers. Based on the strong community-of-interest demonstrated by
Shoup, North Fork and Salmon, however, the Commission finds that it is in the public interest to
support EAS for these exchanges in part by increased distributions from USF. The Commission
further finds the proposed $.09 rate increase for CenturyTel customers in Salmon and North
Fork to $21.84 for residential service and $39.86 for business service is reasonable.
It is the Commission s understanding that Rural Telephone and CenturyTel can
implement this EAS electronically in a two-month time period without having to install
significant physical plant. We direct the companies to advise us of the cut-over dates within
days of this Order.
ORDER
IT IS HEREBY ORDERED that the Petition requesting EAS between the Shoup
exchange and the Salmon and North Fork exchanges is granted.
IT IS FURTHER ORDERED that Rural Telephone Company and CenturyTel of
Idaho take the necessary actions to implement EAS, including updating their tariffs, as
authorized by this Order. The parties shall advise us of the cut-over dates within 14 days of the
service date of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order or in interlocutory
Orders previously issued in this case may petition for reconsideration within twenty-one (21)
days of the service date of this Order with regard to any matter decided in this Order or in
interlocutory Orders previously issued in this case. Within seven (7) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See
Idaho Code ~ 61-626.
CenturyTel is not an Idaho USF recipient.
ORDER NO. 29631
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
/ ;(
day of November 2004.
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
0J~s
Barbara Barrows
Assistant Commission Secretary
O:GNRTO103 In3
ORDER NO. 29631