28732.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

BOB JESSEN,

Complainant,

vs.

QWEST CORPORATION,

Respondent.
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CASE NO. QWE-T-01-10

ORDER NO. 28732

In a letter dated February 1, 2001, Mr. Bob Jessen of Boise Air Service questioned Qwest Corporation’s practice of billing in advance for basic monthly telephone service instead of billing in arrears. Attempts to resolve the complaint informally were unsuccessful. Having exhausted his informal complaint remedies, Mr. Jessen on March 13, 2001, filed a “formal” complaint pursuant to the Commission’s Procedural Rules 24 and 54. See IDAPA 31.01.01.24, .25 and .54. Mr. Jessen argues that Qwest should not demand advance payment for monthly telephone service from anyone with good credit and a long-standing record of prompt payment. The Commission directed that Qwest formally respond to the complaint.
In a letter dated March 3, 2000, the Company responded to Mr. Jessen’s complaint. Qwest noted that this billing practice has been sanctioned by the Commission for many years and is used by numerous local exchange companies in Idaho in addition to Qwest. Qwest Response at 1. The Company also asserted that in its last rate case, the Commission reduced the Company’s rate base, and consequently its revenue requirement, to reflect that local service customers are billed in advance for local service. Qwest argued that if not permitted to bill in advance, it would be permitted to charge more for the service it provides. Id. at 2. Thus, Mr. Jessen receives the benefit of advance payment through lower local exchange rates. After reviewing the complaint and the Company’s response, we issue this Order.

FINDINGS OF FACT
The Commission has reviewed the formal complaint and the Company’s response. We find that the complaint and the response set out sufficient facts for us to issue a decision in this matter. The Commission has jurisdiction over this matter pursuant to Idaho Code §§ 61-612 and 61-507.
Several factors prompted the Commission to approve Qwest’s advance billing practices during its last general rate case. Because Qwest provides regulated local exchange service in Idaho, it is allowed to earn a rate of return on the services it provides. Billing in advance reduces Qwest’s uncollectable expenses, which decreases its revenue requirement and subsequent customer rates. Billing in arrears would increase the amount of uncollectables. To the extent it loses revenues by billing in arrears, Qwest would be allowed to recover those revenues by increasing rates. The end result is that the customers will ultimately pay the same overall amount to the Company. Additionally, billing in advance reduces the need to collect deposits from customers. This makes it easier and less expensive for new customers to get service.
A number of adjustments would need to be made to accommodate a change to billing in arrears. As the Company pointed out, this Commission has formulated its policies regarding customer deposits and termination practices within the context of advance billing. Should this practice be reversed, these rules and regulations would have to be amended to properly reflect the increased risk of nonpayment that would result. Id.. Qwest’s counsel also noted that the Commission does not permit Qwest to impose late payment charges because its risk of nonpayment is mitigated by billing in advance for local service. Id. Consequently, if the Commission were to allow billing in arrears, late payment charges would arguably be justified.
The Commission finds that advance billing is a reasonable business practice that provides comparable benefits to both Qwest and its customers. This method of billing has been in effect for numerous years and is not contrary to law or Commission rule.
O R D E R
IT IS HEREBY ORDERED that the complaint of Bob Jessen against Qwest Corporation as more particularly described above be dismissed.

THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. QWE-T-01-10 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 or in interlocutory Orders previously issued in this Case No. QWE-T-01-10. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of May 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O: QWET0110_ln
See Case No. USW-T-96-5.

ORDER NO. 28732 1

Office of the Secretary
Service Date
May 18, 2001