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Home My WebLink About20020207Reply Comments.pdfConley Ward,ISB #1683 GIVENS PURSLEY LLP 277 North 6th Street,Suite 200 P.O.Box 2720 Boise,ID 83701 Op(208)388-1200 (208)388-1201 (fax) Attomeys for Rural Telephone Company S:\MACS\CEW\RURALTELEPHONE\commentsusf funding.doc BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF RURAL TELEPHONE COMPANY FOR CASE NO.RUR-T-01-01 AN ORDER INCREASING USF FUNDING. REPLY COMMENTS OF RURAL TELEPHONE COMPANY I I Rural Telephone Company ("Rural"),by and throughits attorneys,Givens Pursley LLP,files these Reply Comments in response to the Staff s January 29,2002 Comments in the above entitled case. In its Comments,Staff acknowledgesthat Rural will experience an annual revenue deficiency of $68,274 as a result of implementing extended area service ("EAS") in accordance with the terms of Commission Order No.28114.Staff further agrees that Rural is entitled to some retroactive fundingfrom the Idaho Universal Service Fund ("USF")for its unrecovered cost of providing EAS.Staff argues,however,that retroactive fundingshould be limited to the period from July 1,2001 through February 2002,rather than extending back to the actual EAS cutover date of February 14,2001. Staff's rationale for limitingRural's recovery is that "Rural was perhaps dilatory in presenting its request [for USF funding],and Staff believes awarding USF funds retroactively could unfairly reward tardy business practices."Staff Comments at 2.Staff RURAL TELEPHONECOMPANY'S REPLYCOMMENTS-1 bases this argument on two instances of allegedly dilatory conduct by Rural.It first states that EAS construction was "essentially completed in October of 2000,"but the Company did not file for increased USF funding until May 30,2001.Staff Comments at 3.Staff also complains that "nearly four months passed"before Rural revised its revenue requirement calculations in response to a May 22,2001 FCC order that impacted Rural's revenue deficiency by freezingjurisdictional allocation factors.Id.Staff therefore proposes to punishRural for these supposed delays by limitingits recovery to the period after July 1,2001.The July 16'date is arbitrarily selected on the grounds that it is 30 days after Rural filed its formal motion for increased fundingon May 30,2001. There are two major problems with the Staff s proposal.In the first place,it clearly misstates key facts.EAS construction was not "essentially completed in October of 2000."The final costs charged to the project were not incurred until mid December, 2001 and cutover was not completed until February 14,2001.Nor was there a four months'gap in the Company's response to the FCC's order. Even worse than the factual errors is the misleading and unfair tenor of the Staff's Comments.The Staff s selective recitation of events implies that the inexcusable one year delay between the EAS cutover and the fundingof the correspondingrevenue deficiency is due to a lack of diligence on Rural's part.As the followingchronology demonstrates,this is a gross mischaracterization. The timeline that appears below captures the key activities in this case over the last fourteen months.It does not attempt to list all the numerous informal contacts between Rural and its consultants and the PUC staff,nor does it indicate the magnitude of the effort required to respond to Staff requests for documents and information.If the RURAL TELEPHONECOMPANY'S REPLYCOMMENTS-2 Commission wishes to capture the full flavor of this proceeding,it can review the audit files in the Staff's possession or,alternatively,Rural can provide a copy of its files. November 28,2000.GVNW files revised tariff reflecting EAS rates to be effective on the cutover date. December 11,2000.Last invoice applied to EAS work orders. December 15,2000.Last labor charge applied to EAS work orders. January 30,2001.EAS work orders closed and initial cost compiled. February 14,2001.Boise River,Prairie and Tipanuk connected to Qwest and EAS implemented. Late February-earlyMarch,2001.GVNW and Wayne Hart agree it would be appropriate for GVNW to submit a preliminarycalculation of the EAS revenue requirement for Staff review before a formal filing. March 28,2001.GVNW submits its initial calculations and supporting documents to Mr.Hart. April ?,2001.Mr.Hart reviews the calculations and makes suggestions.He also submits the documentation to Terri Carlock for review,and she makes additional suggestions. April 25,2001.GVNW sends Ms.Carlock a revised revenue deficiency calculation incorporating Staff's suggestions. May 3,2001.Staff concurs with the revisions and GVNW sends the calculations and back up documentation to Givens Pursley for formal filing. May 22,2001.The FCC issues the order described above. May 30,2001.Rural files its Motion for Increased USF Funding with supporting testimony and exhibits. EarlyJune,2001.Joe Cusick contacts GVNW regarding the potential impact of the FCC order on Rural's request.GVNW agrees to research the issue and report back to Staff. June 26,2001.Staff mails its initial audit information request to Rural. July 20,2001.Rural responds to first audit request with requested information and documentation. Early August,2001.GVNW requests meeting with staff to discuss the implications of the FCC order. August 22,2001.GVNW meets with Staff and presents revised USF calculation with the jurisdictional shift in costs removed. August 31,2001.GVNW responds to request for rate case expense calculation. =September 15,2001.GVNW responds to request for further documentation of rate case expenses. September 26,2001.Staff submits another round of audit requests. October 16 &17,2001.Rural responds to 9/26 information request and other informal requests. October 23,2001.Staff submits another round of infornation requests. October 30,2001.Rural responds to 10/23 request and meets with Staff. RURAL TELEPHONECOMPANY'S REPLYCOMMENTS-3 November 12-16,2001.Rural and GVNW respond to additional infornal requests. January 15,2002.Staff issues draft audit report. January 16-18,2002.Parties discuss Rural's exceptions to draft report. January 22,2002.Parties agree to stipulate to a revised revenue requirement of $68,274. January 29,2002.Staff issues final audit report and files its Comments. As this chronologydemonstrates,the implication in the Staff Comments that this case has been unreasonably delayed is absolutely correct.There is simply no excuse for a one year delay between an EAS cutover and recovery of the resultant revenue deficiency. But the Staff's attempt to blame Rural for this fiasco is manifestly unjust.The simple fact is the Staff has taken ten months since it first received Rural's revenue requirement calculations,and eight months from the date of Rural's Motion for Increased USF Funding,to audit a relatively simple request.This is one to three months longer than Idaho's statutory maximum for the processing of the very largest utility rate cases!See Idaho Code §61-622. Rural did not contribute in any way to the Staff's plodding conduct of its audit.In every case,Rural responded to the Staff s requests within the time frame specified by the Staff.The only arguable exception occurred in the response to the first round of information requests when Rural requested,and was granted,a four day extension to deal with the volume and magnitude of the request. While it is true that it took Rural something in excess of two months to analyze the effect of the May 22nd FCC order,this was due in part to the complexityof the analysis,and in part to the fact that GVNW and Rural staff were fully occupied for nearly a month of this period in preparing a response to the Staff s first audit request.In any case,the results of this analysis had no bearing on the audit timeline,and even if it had, RURAL TELEPHONECOMPANY'S REPLY COMMENTS-4 there is no satisfactory explanation for the Staff taking more than five months to complete the audit after GVNW filed its written analysis removing the jurisdictional cost shift from its calculations. Under these circumstances it is unconscionable for the Staff to oppose Rural's recovery of its revenue deficiency from the date of the EAS cutover.Rural implemented EAS in good faith reliance on the Commission's Order,and it has already absorbed the unrecoverablecarrying cost on its investments prior to the cut over date.Rural therefore requests that it be authorized to recover an annual revenue deficiency of $68,274 from the Idaho Universal Service Fund with payments retroactive to February 14,2001. RESPECTFULLY SUBMITTED this 7th day of February,2002. Cohley Ward Givens Pursley LLP Attorneys for Rural Telephone Company RURAL TELEPHONECOMPANY'S REPLYCOMMENTS-5 CERTIFICATE OF SERVICE I hereby certify that on this 7'"day of February,2002,I caused to be served a true and correct copy of the foregoing by the method indicated below,and addressed to the following: Jean Jewell Secretary 472 W.Washington Street P.O.Box 83720 Boise,ID 83720-0074 U.S.Mail Fax x By Hand Weldon B.Stutzman Deputy AttorneyGeneral 472 W.Washington Street P.O.Box 83720 Boise,ID 83720-0074 U.S.Mail Fax x By Hand Conley E Ward RURAL TELEPHONECOMPANY S REPLYCOMMENTS-6