20090902order_no_30894.pdf

Office of the Secretary
Service Date
September 2 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL
REVISION OF THE UNIVERSAL SERVICE
FUND SURCHARGES TO BECOME
EFFECTIVE OCTOBER 1, 2009.ORDER NO. 30894
CASE NO. GNR-09-
On July 16 2009, Alyson Anderson, the Administrator ofthe Idaho Universal Service
Fund (USF), filed her Annual Report to the Commission for the period of July 2008 through
June 30, 2009, including a proposed USF 2009-2010 Administrative Budget. The USF 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 USF 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 USF 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 USF surcharge rates in 2007, and last year reduced the
business line surcharge rate. Order No. 30635. The current USF monthly surcharge rates are
10 per residential line
, $.
17 per business line, and $.003 per intrastate MTS/WTS billed minute.
Surcharge revenue for the year ending June 30, 2009, totaled $1 658 656.
THE 2009 ANNUAL REPORT
The Administrator reported that surcharges on local exchange services contributed
$968 594 (58%) to the USF, and $690 061 (42%) was contributed by MTS/WATS services
representing a decrease in local exchange surcharge revenue of approximately $177 863 (from
146 457 in 2008) and a decrease in MTS/W A TS surcharge revenue of approximately
$202 257 (from $892 318 in 2008). Annual disbursements from the USF 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, 2009. The ending cash balance in the fund
after applying bank charges, administrative expenses, and interest received, was $207 678 on
ORDER NO. 30894
June 30, 2009. Ms. Anderson proposed an annual administrative budget of $16 750 including
the Administrator s salary, other administrative expenses such as office supplies and bank fees.
This amount is $6 650 less than the administrative budget for the previous year, which included
cost for an independent audit that will not be in next year s budget.
Telephone companies reported an inventory of 371,114 residential lines and 225 161
business lines, for a total of 596 275 lines as of May 1 , 2009. This is a net decrease in lines of
approximately 55 105 (8.5%) with residential lines decreasing by nearly 11%, while business
lines decreased by almost 3% from the prior year. The newly calculated statewide weighted
average local service rates and threshold average rates are:
2008 Current 2009 Statewide 125% Statewide 125% Statewide
Weighted Weighted Weighted Average Weighted Average
Average Rate Average Rate Rate - 2008 Rate - 2009
Residential $19.47 $20.$24.$25.
Business Services $32.$32.43 $41.19 $40.
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 and 2008. 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 304 154 937 compared to the 2008 reported minutes of 313 436 250, a 6% decrease. The
statewide average switched access rate increased slightly from last year s $0.0476 to a 2009
average of $0.05. The Administrator reported that if current surcharge levels are maintained and
the disbursements remain the same, the USF balance is estimated to be $64 534 on June 30
2010. Surcharge revenue from MTS/W A TS services would comprise approximately 50% of the
total revenue and local exchange services surcharges would contribute approximately 50%.
COMMISSION FINDINGS
For a company to continue to receive USF 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 A
31.46.01.106. In addition, a company s rate for switched access service must be revised if it is
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
ORDER NO. 30894
000. IDAP A 31.46.01.106.02. Last year the Commission concluded that "the eight
companies who receive USF 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." Order No. 30635, p. 3.
The USF Administrator noted in her Annual Report that none of the eight companies
currently receiving USF funding currently meet the eligibility requirements established by Idaho
Code ~ 62-610 and Commission USF Rule 106. The residential and business service rates for
each company are more than 3% below the threshold rate to maintain USF eligibility.
Accordingly, the Administrator recommended the Commission maintain the current USF
surcharge rates , but adjust the funding levels for each of the eight companies.
The Commission s rules provide that the Commission may by Order change a
telephone company s funding from the USF after issuing notice that USF funding is at issue and
providing an opportunity to be heard in person or in writing. IDAP A 31.46.01.106.04. Idaho
Code ~ 62-610 requires the Commission to adjust the funding received by the eight eligible
telecommunications carriers.The Commission therefore will issue a notice to the eight
companies that the USF funding is at issue and provide an opportunity for them to file written
comments in response to the notice.
The Administrator recommended that the Commission slightly decrease the access
rates for Albion Telephone Company (A TC) and Inland Telephone Company. The Commission
does not believe the slight adjustment to ATC's and Inland's access rates are necessary. As we
noted last year, access surcharge revenues vary by minutes of use, and intrastate MTS/W A
usage has fluctuated up and down over the past years, it is possible that A TC' s and Inland'
small deviation from the statewide average for access revenue 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 USF threshold of the 100% statewide weighted average rate for MTS/W A TS.
The Commission finds it reasonable and prudent to maintain the business line
surcharge at $.17 and the residential surcharge rate at $.10 per line and $.003 per intrastate
MTS/W A TS minute. The Administrator projects that leaving the existing rates in place while
adjusting USF disbursements as required by law will result in a fund balance of approximately
$327 306 on June 30, 2010, providing a reasonable two-month reserve balance in the USF.
ORDER NO. 30894
ORDER
IT IS HEREBY ORDERED that the monthly USF surcharge rate for residential lines
shall be unchanged at $.10 per residential line , and business lines at $.17 per business line
effective October 1 , 2009. The USF surcharge on MTS/W A TS shall also be unchanged at $.003
per minute.
IT IS FURTHER ORDERED that notice will be issued to the eight companies
receiving USF disbursements that their rates do not meet the USF eligibility requirements and
that their USF funding is at issue.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
/:;f'
day of September 2009.~d f:
. KEMPTO PRE DENT
Li~
MARSHA H. SMITH, COMMISSIONER
MACK A. REDFORD, COMMISSIONER
ATTEST:
(jp;l
Commission Secretary
bls/O:GNR-O9-05 ws2
ORDER NO. 30894