20060817final_order_no_30114.pdf

Office of the Secretary
Service Date
August 17, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL
REVISION OF THE UNIVERSAL SERVICE
FUND SURCHARGES TO BECOME
EFFECTIVE OCTOBER 1, 2006 ORDER NO. 30114
CASE NO. GNR- T -06-
On July 19, 2006, the Administrator of the Universal Service Fund (USF) filed the
Annual Report for the previous USF fiscal year from July 1 2005 , through June 30, 2006. Based
upon the Commission s review of the Annual Report and the recommendation of Staff and the
fund Administrator, the Commission finds that the USF surcharges should remain set at the
current levels. The Commission orders that the current Idaho USF monthly surcharge of $.
per residential line and $.20 per business line remain in effect. The Commission also orders the
present Idaho USF surcharge of $.004 per MTS/W A TS minute should remain in effect. These
surcharges become effective on October 1 , 2006.
BACKGROUND
The Idaho Telecommunications Act of 1988 created a Universal Service Fund (USF)
for the purpose of maintaining the universal availability of local exchange service at reasonable
rates and to promote the availability of message telecommunication service (MTS) at reasonably
comparable prices throughout the state of Idaho.Idaho Code ~ 62-610(1). The USF is funded
from surcharges levied upon local exchange service and intrastate MTS (long-distance) and wide
area telecommunication services (W A TS). Funds are distributed to qualifying high-cost local
exchange telephone companies to supplement their annual revenue requirements. In that way,
distributions from the USF offset a certain amount of revenues that necessarily would come from
customers in the absence ofthe fund. See Idaho Code ~ 62-610(2)-(4).
In July of each year the USF Administrator provides an Annual Report to the
Commission reviewing the fund balance and recommending changes, if any, in the surcharges to
maintain adequate funding levels. Following its review of the report, the Commission issues an
Order prescribing USF surcharges for the next 12 months beginning October 1. See Rules 104
through 106 ofthe Commission s USF Rules; IDAPA 31.46.01.104-106.
THE 2006 REPORT
The Administrator reported that surcharge revenue for the past year totaled
082 684. Fifty-two percent (52%) of that amount was derived from surcharges on local
ORDER NO. 30114
exchange services and 48 percent (48%) was derived by surcharges on MTS/W A TS services.
Disbursements to the eight qualifying local exchange carriers decreased slightly to a total
943 523. As of June 30, 2006, the ending fund cash balance was $193 664.
The USF is currently funded through surcharges of $.12 per residential line per
month, $.20 per business line per month, and $.004 per intrastate toll minute. The
Administrator s Report indicated that the total USF surcharge revenue has increased by
approximately $465 000, as compared to 2005.
The Fund Administrator presented four funding options to the Commission in order
to meet the projected annual disbursements and expenses for the coming year: (1) maintain the
status quo; (2) adjust funding to meet statewide averages and maintain surcharge rates; (3)
decrease surcharge rates and maintain funding levels; and (4) adjust funding levels per Rule 106
and decrease surcharge rates. The Administrator noted that Midvale Telephone Company could
slightly increase switched access rates pursuant to IDAP A 31.46.01.106 and thus decrease the
USF draw by approximately $6 635. The Administrator recommended Option 1 , which would
maintain the current surcharge rates and maintain a four-month reserve balance of approximately
$675,354 by June 30, 2007.
DISCUSSION
The USF surcharge rates were decreased in 2002, Order No. 29101 , and were not
changed in 2003. Order No. 29324. The surcharge rates were increased in 2004 to avoid a
negative balance in the fund. Order No. 29570. The 2004 surcharge rates resulted in a year-end
cash balance of $65 265 in the fund, which was an historically low reserve balance for the fund.
The surcharge rates were increased to their current levels last year.Order No. 29860.
Commission Staff recommended that the level of uncertainty in the market suggests that the
surcharge rates should remain unchanged to provide an adequate funding cushion to address any
downward adjustments and changes in the threshold levels that may occur as companies submit
their reports in the next year. Staff also recommended that making slight adjustments to the
access rates of Midvale Telephone Company is not necessary at this time. Staff recommended
adopting the Administrator s Option 1 , that is, maintaining the current surcharge rates.
After reviewing the Administrator s Report and the analysis provided by Staff, the
Commission finds that the USF surcharges should remain unchanged for the upcoming year to
provide a reasonable reserve, and to ensure that the fund will continue to operate for the benefit
ORDER NO. 30114
of universal telephone service in the State of Idaho. The Commission finds that a monthly
surcharge of $.12 per residential line and $.20 per business line is adequate and in the public
interest to help ensure the continuing solvency of the USF. The Commission further finds that
the surcharge for MTS/W A TS usage should remain unchanged at $.004 per minute in order to
maintain an appropriate balance between local and toll revenues, and to maintain a reasonable
funding level for the USF. The Commission will not order that individual company access rates
be increased or reduced at this time.
Idaho Code ~ 62-610 establishes the eligibility requirements for local exchange
companies to draw funds from the USF, and requires participating companies' toll access rates to
be at least 100% of the statewide average. The Commission s Rules require a participating
company to revise its rates if: (1) the difference between the Company s rates and a statewide
threshold rate is more than 3%; and (2) the difference in the amount of revenue collected under
the company s rates and the threshold rate is greater than $6 000. See IDAPA 31.46.01.106.02.
The Commission Staff may investigate individual company access rates and report to the
Commission whether adjustments are necessary in order for the companies to remain eligible for
USF support.
ORDER
IT IS HEREBY ORDERED that the Universal Service Fund local exchange service
surcharge shall be $.12 per month for each residential line and $.20 per month for each business
line.
IT IS FURTHER ORDERED that the Universal Service Fund MTS/WATS
surcharge shall be $.004 per minute.
IT IS FURTHER ORDERED that these USF surcharges shall be effective October 1
2006.
THIS IS A FINAL ORDER. Any person interested in this Order 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. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
ORDER NO. 30114
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 17#.
day of August 2006.
~~
J!~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
iff,. D. Jewell
Co I mission Secretary
O:GNR-O6-03 dw
ORDER NO. 30114