20080909final_order_no_30635.pdf

Office of the Secretary
Service Date
September 9, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL
REVISION OF THE UNIVERSAL SERVICE
FUND SURCHARGES TO BECOME
EFFECTIVE OCTOBER 1 , 2008.ORDER NO. 30635
CASE NO. GNR-08-
On July 18 2008 , Alyson Anderson, the Administrator of the Idaho Universal Service
Fund (IUSF), filed her Annual Report to the Commission for the period of July 1 2007 through
June 30, 2008, including a proposed IUSF 2008-2009 Administrative Budget. The IUSF was
established under the general legal authority of the Telecommunications Act of 1988, Chapter 6
Title 62, Idaho Code, and the specific authority of Section 62-610, Idaho Code. The purpose of
the fund is to maintain the universal availability of local exchange service at reasonable rates and
promote the availability of message telecommunications service (MTS) at reasonably
comparable rates throughout the State of Idaho. The IUSF is funded through a statewide end
user surcharge on local exchange services and intrastate MTS and Wide Area Telephone Service
(W A TS) type services. The IUSF Administrator submits an annual report to the Commission
that details the program activities of the previous year and provides recommended surcharge
rates to meet the next year funding requirements.
The Commission reduced all IUSF surcharge rates in 2007. Order No. 30419. The
current IUSF monthly surcharge rates are $.10 per residential line
, $.
19 per business line, and
003 per intrastate MTS/WTS billed minute, and surcharge revenue for the year ending June 30
2008 totaled $2 038 774.
THE 2008 ANNUAL REPORT
The Administrator reported that surcharges on local exchange services contributed
146 457 (56%) to the IUSF, and $892 318 (44%) was contributed by MTS/W ATS services
representing a decrease in local exchange surcharge revenue of approximately $37 000 (from
183 242 in 2007) and a decrease in MTS/W ATS surcharge revenue of approximately $89 000
(from $980 877 in 2007). Annual disbursements from the IUSF are made to eight qualifying
incumbent local exchange carriers (ILECs) and the amount disbursed last year remained
unchanged at $1 943 523 as of June 30, 2008. The ending cash balance in the fund, after
applying bank charges, administrative expenses, and interest received, was $514 211 on June 30
ORDER NO. 30635
2008. For the next year, beginning July 1 , 2008, annual disbursements are expected to remain
the same. Ms. Anderson proposed an annual administrative budget of $25,500 including the
Administrator s salary, other administrative expenses such as office supplies and audit and legal
fees. This amount is $200 less than the administrative budget for the previous year.
Telephone companies reported an inventory of 418 844 residential lines and 232 536
business lines, for a total of 651 380 lines as of May 1 , 2008. This is a net decrease in lines of
approximately 2 400 (.37%) with residential lines decreasing by nearly 9%, while business lines
increased by almost 19% from the prior year. The newly calculated statewide weighted average
local service rates and threshold average rates are:
2007 Current 2008 Statewide 125% Statewide 125% Statewide
Weighted Weighted Weighted Average Weighted Average
A verage Rate A verage Rate Rate - 2007 Rate - 2008
Residential $17.$19.47 $22.$24.
Business ServIces $31.88 $32.$39.$41.19
The increase in the weighted average rate for residential lines is largely due to the residential line
increases imposed by Qwest and Verizon in 2007. These two companies make up a combined
inventory of almost 84% of the total residential lines in Idaho.
Long-distance service providers reported intrastate MTS/W A TS total billed minutes
of 313 436 250 compared to the 2007 reported minutes of 304 175 225 , a 3% increase. The
statewide average switched access rate decreased slightly from last year s $0.047 to a 2008
average of $0.0476. The Administrator reported that if current surcharge levels are maintained
and the disbursements remain the same, the IUSF balance is estimated to be $560 823 on June
2009. Surcharge revenue from MTS/WATS services would comprise approximately 52% of
the total revenue and local exchange services surcharges would contribute approximately 48%.
The Administrator reported that no significant changes are anticipated in the coming year that
may substantially impact the IUSF fund.
COMMISSION FINDINGS
For a company to continue to receive IUSF funding its average one-party, single-line
service rate must be revised if the difference in the company s average rate and the statewide
average threshold rate (125% of the statewide average) is greater than three percent. IDAP
31.46.01.106. In addition, a company s rate for switched access service must be revised if it is
ORDER NO. 30635
more than three percent below the weighted statewide average rate, and the difference in the
company s annual revenue for switched access service and the statewide average is greater than
000. IDAP A 31.46.01.106.02. The eight companies who receive IUSF support all have
average residential rates that differ from the threshold rate by less than .9 percent (.9%) and
therefore do not need to adjust their residential line rates to continue to be eligible to receive
IUSF funding.
The Administrator recommended that the Commission maintain the current surcharge
rates of $.003 per MTS/W A TS billed minute
, $.
10 per residential line, and $.19 per business
line. Ms. Anderson also recommended that the Commission slightly decrease the access rates
and increase the IUSF funding for one IUSF recipient company, Albion Telephone Company
(A TC). Under this proposal, the IUSF disbursements would increase to $1 975 859 and the fund
balance on June 30, 2009 would be approximately $554 187. MTS/W A TS services would
contribute 52% of the total surcharge revenue and local exchange services contribution would be
48%.
The Commission does not believe the slight adjustment to A TC' s access rate and a
corresponding increase to the company s IUSF distribution are necessary.Because access
surcharge revenues vary by minutes of use, and intrastate MTS/W A TS usage has fluctuated up
and down over the past years, it is possible that ATC's small deviation from the statewide
average for access revenue that occurred last year will not exist next year. It is difficult to
project access rate revenues and make small adjustments for a single company to stay at or below
the IUSF threshold of the 100% statewide weighted average rate for MTS/W A TS.The
Administrator should include in her report next year whether A TC' s access rates continue to be
below 100% of the statewide average rate.
Assuming the total telephone line counts remain relatively stable during the next year
the Commission finds that the IUSF balance will grow to an excessive amount by the end of June
2009 if the surcharge rates remain unchanged. The Commission therefore finds it reasonable and
prudent to decrease the business line surcharge to $., while maintaining the residential
surcharge rate at $.10 per line and $.003 per intrastate MTS/W A TS minute. This will result in a
fund balance of approximately $505 015 on June 30, 2009, providing a reasonable three-month
reserve balance and assuring stability of the IUSF.
ORDER NO. 30635
ORDER
IT IS HEREBY ORDERED that the monthly IUSF surcharge rate for residential
lines shall be unchanged at $.10 per residential line, and the IUSF surcharge on business lines
shall be reduced to $.17 per business line, effective October 1 , 2008. The IUSF surcharge on
MTS/W A TS shall be unchanged at $.003 per minute.
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 9 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this rrl-
day of September 2008.
MACK A. REDFORD, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
O:GNR-08-03 ws
ORDER NO. 30635