28474.phg.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE INVESTIGATION TO DETERMINE AN APPROPRIATE COST MODEL USING FORWARD-LOOKING ECONOMIC COSTS FOR CALCULATING THE COSTS OF BASIC TELECOMMUNICATION SERVICES IN IDAHO
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CASE NOS. GNR-T-97-22
GNR-T-00-2

SCHEDULING ORDER,
VACATING HEARING AND
DATE FOR REBUTTAL
TESTIMONY, SETTING
PREHEARING CONFERENCE

ORDER NO. 28474
IN THE MATTER OF THE INVESTIGATION TO ESTABLISH THE IDAHO HIGH COST FUND AS REQUIRED BY IDAHO CODE §62-610A THROUGH F.
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Pursuant to Commission Rule 256.03 (IDAPA 31.01.01.256.03) GTE Northwest Incorporated (GTE/Verizon) filed a Motion to Suspend Docket on August 2, 2000, requesting the Commission to suspend the dockets for eight weeks, including the filing deadline for rebuttal, in light of its appeal of the Fifth Circuit Opinion in GTE Service Corp. v. FCC, 183 F.3d 393 (5th Cir. 1999) to the United States Supreme Court and the recent Eighth Circuit opinion on remand in Iowa Utilities Board v. FCC. On August 2, 2000, due to the current schedule, the Commission ordered all parties to respond to GTE/Verizon’s Motion by August 7, 2000. Order No. 28471.
Staff, Verizon Wireless and U S WEST Communications [now Qwest] filed responses. Based on those responses and the motion itself, the Commission vacates the hearing currently scheduled to begin on August 22, 2000, schedules a prehearing conference for 9:30 a.m. Tuesday, August 22, 2000, and suspends the date for filing rebuttal testimony. All parties should attend the prehearing conference and come prepared to discuss the implications of GTE/Verizon’s appeal to the Supreme Court on the use of the FCC Synthesis Model to establish the Idaho High Cost Fund.
COMMISSION FINDINGS
GTE/Verizon argues that its appeal of the Fifth Circuit decision creates a legal impediment for the Commission to use the FCC Synthesis Model in implementing the Idaho High Cost Fund. However, Qwest opposes granting GTE/Verizon’s motion and argues that only the unconstitutionality of the Idaho law would justify a decision not to proceed with implementing the Idaho High Cost Fund. While Staff suggests that nothing in either decision or GTE/Verizon’s appeal affects the legality for using the FCC Synthesis Model, both make its use problematic. Verizon Wireless agrees and urges postponement. According to the Staff, if the United States Supreme Court finds that the FCC’s use of this model is constitutionally flawed and requires the FCC to materially change the model, many of the advantages for adopting it no longer exist and would create practical problems for the Commission if it were to adopt the FCC model without knowing the outcome of the appeal. The Commission agrees that the practical implications are a significant concern.
On the other hand, Qwest asserts that if the method adopted by the Commission is “later shown to yield Constitutionally inadequate support, that defect can be remedied by increasing the fund draws of participating carriers.” Qwest Response at p. 10. The Commission disagrees. That is not an adequate remedy and ignores the practical implications of making decisions regarding the size of the fund or amount of support that depend on a model that is no longer used. Moreover, this also ignores the possibility that the methodology may provide more support than necessary – thus, imposing a larger surcharge on customers than is necessary. The Commission is loathe to impose a surcharge on customers that may be too large. Qwest is suggesting the Commission simply create a fund now in the face of potential problems in the future.
Qwest also argues that “[d]elaying the implementation of the Idaho High Cost Fund will not benefit Eligible Telecommunications Carriers (ETC). Every day that passes without explicit support in high cost areas is a day that the outmoded and unsustainable system of implicit subsidies must attempt to fill the gap.” Qwest Response at 8-9. The Commission disagrees.
The Commission finds that only the incumbent local exchange carriers (ILECs) have been designated as ETCs and are thus the only carriers that are eligible to receive support from the new fund. No competitive local exchange carriers in Idaho have been designated ETCs. The Commission further finds that all the ILECs are rate regulated and, indeed, Qwest only recently completed a rate case. Therefore, the Commission can assume that these ILECs, including Qwest, are being given the opportunity to earn their fair rate of return and recover costs. If Qwest is not, it is incumbent on Qwest to apply to the Commission for relief. The Idaho High Cost Fund is not intended to substitute for rate regulation.
While Commission Staff took no position on whether the dockets should be suspended for eight weeks, Staff recommended that the Commission vacate the present hearing dates and schedule a prehearing conference for August 22, 2000. Staff further suggested that the Commission require the parties to advise the Commission what effect each party believes these rulings may have on the potential use of the FCC Synthesis Model to determine the Idaho High Cost Fund. In addition, the Staff suggested that if the parties believe adoption of the FCC Synthesis Model is affected by these rulings, the parties should be required to identify what action should be taken, including whether there are areas that can be decided in the absence of adoption of a cost model. Staff suggested that all parties bring their calendars prepared to agree to a new hearing schedule. Finally, Staff recommended that the Commission suspend the date for filing rebuttal testimony until after the prehearing conference.
The Commission agrees with Staff. This middle of the road approach allows all the parties to discuss the implications of the appeal and potentially to identify areas that are clearly not affected by the appeal. The Commission is sensitive to the need to timely complete this task and notes that only Qwest previously requested extensions of time. However, the Commission finds it is important that before this Commission imposes a new surcharge on all Idaho telecommunications customers, the Commission be convinced that the surcharge is an appropriate amount and does not over or under charge customers. This produces certainty for competitive entrants, promoting competition and ultimately is fair to customers. Customers have the right to expect that they will not be charged any more than is necessary in the form of a new Idaho High Cost Fund surcharge.

NOTICE OF PREHEARING CONFERENCE
YOU ARE HEREBY NOTIFIED that the Commission will convene a prehearing conference in this case on TUESDAY, AUGUST 22, 2000 AT 9:30 A.M. IN THE COMMISSION HEARING ROOM, 472 WEST WASHINGTON, BOISE, IDAHO, and continuing until completed.
YOU ARE FURTHER NOTIFIED that all hearings will be conducted pursuant to the Rules of Procedure adopted by the Idaho Public Utilities Commission. IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that all hearings and pre-hearing conferences in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act. Persons needing the help of a sign language interpreter or other assistance of the kind that the Commission is obligated to provide under the Americans with Disabilities Act in order to participate in or to understand the testimony and argument at a public hearing may ask the Commission to provide a sign language interpreter or other assistance at the hearing. The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (TELEPHONE)
[phone] (TEXT TELEPHONE)
[phone] (FAX)

O R D E R
IT IS HEREBY ORDERED that a prehearing conference is scheduled to begin at 9:30 a.m. Tuesday, August 22, 2000.
IT IS FURTHER ORDERED that the hearings that are scheduled to begin August 22, 2000, are suspended pending the outcome of the prehearing conference.
IT IS FURTHER ORDERED that the August 11, 2000, date for filing rebuttal testimony is suspended
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of August 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

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Texas Office Of Public Utility Counsel, et al v. FCC 183 F.3d 393 (5th Cir. 1999), cert. granted sub nom, GTE Service Corp. v. FCC, 120 S.Ct. 2214 (June 5, 2000).

Iowa Utilities Board, et al. v. Federal Communications Commission, No. 96-3321, 2000 WL 979117, (8th Cir. July 18, 2000), on remand, 525 U.S. 366 (1999).

SCHEDULING ORDER, VACATING HEARING
AND DATE FOR REBUTTAL TESTIMONY,
SETTING PREHEARING CONFERENCE
ORDER NO. 28474 -1-

Office of the Secretary
Service Date
August 9, 2000