20010130Comments.doc

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF QWEST'S TARIFF ADVICE
NO. 00-02-N AND TRANSMITTAL NO. 00-07-PL ADJUSTING THE EQUAL ACCESS RECOVERY CHARGE FOR NORTHERN AND SOUTHERN IDAHO.
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CASE NO. QWE-T-00-4

COMMENTS OF THE
COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Weldon B. Stutzman, Deputy Attorney General, in response to Order No. 28587
the Notice of Filing and Notice of Modified Procedure in Case No. QWE-T-00-4 issued on December 20, 2000, submits the following comments.

BACKGROUND
In response to Federal Communications Commission Order No. FCC-99-54, U S WEST Communications, Inc. (now Qwest) filed its Application for approval of an intrastate, intraLATA toll dialing parity plan with the Idaho Public Utilities Commission on April 22, 1999. U S WEST’s plan was approved on June 22, 1999, by Order No. 28072 and the Company was given 30 days to implement intraLATA toll dialing parity.
Order No. 28072 also established several other requirements. First, Qwest was given three years to recover implementation costs through an Equal Access and Network Reconfiguration Charge (EANRC) beginning July 1999. The EANRC is designed to recover the costs associated with implementing intraLATA toll dialing parity and is charged per minute-of-use to all providers of intraLATA long distance. Also, Order No. 28072 requires Qwest to report all implementation costs within one year of implementation. Finally, the Order states that “a cost recovery docket will be opened to review specific costs and allow for a true-up of the EANRC in the event that recovery by [Qwest] is too high or too low.”
On August 1, 2000, Qwest filed revisions to its Northern Idaho Access Service Tariff and its Access Service Catalog for southern Idaho. In its filings, the Company proposes to reduce the EANRC from $0.001861 to $0.001338 per minute in northern Idaho and increase the EANRC from $0.001861 to $0.003560 per minute in southern Idaho. Qwest asked for an effective date of September 1, 2000, but the Commission suspended the requested effective date for both filings and opened Case No. QWE-T-00-4 to review the total implementation costs and evaluate the EANRC recovery rate. (Order No. 28495).

DISCUSSION
On January 26, 2001, Qwest and AT&T submitted to the Commission a Settlement and Stipulation that resulted from EANRC related negotiations between these parties. No other parties petitioned to intervene in this case. The parties agree that the EANRC recovery rate should be $0.001081 per originating intraLATA minute in northern Idaho and $0.02598 per originating intraLATA minute in southern Idaho. Other points addressed in the Settlement and Stipulation include the cost of money, reporting intervals, and the total amount of costs to be recovered.
Staff has reviewed Qwest’s submitted total incremental costs and supporting workpapers. In response to production requests, Qwest has proposed to recover almost $700,000 of Idaho-related dialing parity costs. Examples of related costs include software right-to-use fees, computer support system modifications, customer notification, and labor. Qwest has been collecting the tariffed EANRC rate since July 1999, and has used the actual originating intraLATA minutes to forecast the amount of minutes remaining in the recovery period. This forecast is used to determine the new per-minute recovery rate. Staff reviewed Qwest’s projected minutes of use and believes them to be appropriate.
Despite the Commission’s statement in Order No. 28072 that “U S WEST should be prepared to separately identify the implementation costs for its operations in northern and southern Idaho”, the Company’s Idaho cost study was not separated. In response to production requests, the Company proposed to separate total Idaho implementation costs according to the number of lines in its northern and southern Idaho operations. Staff considered Qwest’s method of allocating costs and explored other allocation methods such as the number of central offices and the amount of originating intraLATA minutes. According to Staff’s estimates, the impact that using other allocation factors might have were minimal. Therefore, Staff accepts Qwest’s method of allocating total dialing parity costs between northern and southern Idaho according to line counts.
Staff also compared Qwest’s total implementation costs to those submitted by other Idaho companies such as GTE (now Verizon), Citizens, and several independent companies, and found Qwest’s costs to be consistent with costs submitted by other companies. In addition, Staff compared Qwest’s costs in Idaho to those submitted in other states where the Company operates. Again, Qwest’s costs in Idaho appeared consistent with those approved in other states.
Staff supports the Settlement and Stipulation reached between Qwest and AT&T. Staff supports the proposed changes to the EANRC in both northern and southern Idaho and also supports true-ups in July 2001, and a final true up in July 2002 as described in the Settlement. Staff also believes that, in accordance with FCC Orders (see FCC 96-333 released August 8, 1996 and DA 98-2534 released March 23, 1999, CC Docket No. 96-98), Qwest’s method of recovery from all intraLATA toll providers is competitively neutral and that these incremental costs would not have been incurred “but for the implementation of dialing parity”. Because dialing parity creates equal access to intraLATA toll, Staff believes that cost recovery based on intraLATA toll usage is appropriate.

STAFF RECOMMENDATION
Staff recommends that the Commission adopt the Settlement and Stipulation, and order Qwest's EARNC recovery rates to be modified from $0.001861 to $0.001081 per minute in northern Idaho and from $0.001861 to $0.002598 per minute in southern Idaho.
Based on the timing of this case and the fact that Qwest continues to collect the EANRC at the current rates, Staff recommends that the proposed adjusted recovery rates be effective upon approval by the Commission.

DATED at Boise, Idaho, this day of January 2001.

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Weldon B. Stutzman
Deputy Attorney General
Technical Staff: Doug Cooley

DC:gdk:umisc/comments/qwet004.wsdc
STAFF COMMENTS 1 JANUARY 30, 2001