20070831final_order_no_30419.pdf

Office of the Secretary
Service Date
August 31, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL
REVISION OF THE UNIVERSAL SERVICE
FUND SURCHARGES TO BECOME
EFFECTIVE OCTOBER 1, 2007.ORDER NO. 30419
CASE NO. GNR-07-
On July 19, 2007, the Administrator of the Universal Service Fund (USF) filed the
Annual Report for the previous USF fiscal year from July 1 , 2006, through June 30, 2007. 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 be reduced. The
Commission orders that the current Idaho USF montWy surcharge of $.12 per residential line and
$.20 per business line be reduced to $.10 for residential lines and $.19 for business lines. The
Commission also orders the present Idaho USF surcharge of $.004 per MTS/WATS minute
should be reduced to $.003. The reduced surcharges become effective on October 1 , 2007.
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 ofIdaho.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 of the 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.
ORDER NO. 30419
THE 2007 REPORT
The Administrator reported that surcharge revenue for the past year totaled
164 119. Fifty-five percent (55%) of that amount was derived from surcharges on local
exchange services and 45 percent (45%) was derived from surcharges on MTS/W A TS services.
Disbursements to the eight qualifying local exchange carriers remained unchanged at a total of
943 523. As of June 30, 2007, the ending fund cash balance was $417 972.
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 $90,400, as compared to 2006.
The Fund Administrator presented four funding options to the Commission in order
to meet the proj ected 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 recommended Option 4, which would decrease
the current surcharge rates to $.11 per residential line
, $ .
19 per business line, and $.003 per
intrastate MTS/W ATTS billed minute. The Administrator noted that under this option ATC
Communications and Cambridge Telephone Company would reduce access rates slightly,
thereby increasing USF funding for these companies by a total of $4 565.
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 then 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, a historically low reserve balance for the fund.
Consequently, the surcharge rates were increased to the current levels of $.12 per residential line
20 per business line, and $.004 per MTS/W ATS minute in 2005. Order No. 29860. These
rates were continued unchanged for 2006. Order No. 30114. For this year, Commission Staff
recommended adopting the Administrator s Option 3 - which would decrease the surcharge
levels.
After reviewing the Administrator s Report and the analysis provided by Staff, the
Commission finds that the USF surcharges should be reduced for the upcoming year. The
ORDER NO. 30419
Commission finds that a monthly surcharge of $.1 0 per residential line and $.19 per business line
is adequate and in the public s interest to help ensure the continuing solvency of the USF. The
Commission further finds that the surcharge for MTS/W A TS usage should decrease to $.003 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 IDAP A 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 $.10 per month for each residential line and $.19 per month for each business
line.
IT IS FURTHER ORDERED that the Universal Service Fund MTS/W A TS
surcharge shall be $.003 per minute.
IT IS FURTHER ORDERED that these USF surcharges shall be effective October 1
2007.
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. 30419
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :3 0
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day of August 2007.
ATTEST:
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Barbara Barrows
Assistant Commission Secretary
O:GNR-07-03 dw
ORDER NO. 30419
PAUL
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MARSHA H. SMITH, COMMISSIONER
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MACK A. REDFORD, CO ISSIONER