HomeMy WebLinkAbout20020213Decision Memo.pdfDECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
RANDY LOBB
JOE CUSICK
TERRI CARLOCK
JOE LECKIE
WAYNE HART
LYNN ANDERSON
GENE FADNESS
WORKING FILE
FROM:WELDON STUTZMAN
DATE:FEBRUARY 13,2002
RE:CASE NO.RUR-T-01-01;APPLICATION OF RURAL TELEPHONECOMPANYFORANINCREASEINITSUSFFUNDING
On May 30,2001,Rural Telephone Company (Rural)filed a Motion for an Order to
increase the amount it receives each year from the Idaho Universal Service Fund (USF).Rural's
request for increased USF support followed implementation of extended area service (EAS)local
calling area approved by the Commission between Rural's exchanges and Qwest's Boise calling area.
When it approved EAS,the Commission stated Rural would recover some of the implementation costs
through higher rates,but recognized that some EAS costs might be recovered through increased USF
support.Rural increased local rates as directed by the Commission,and asserts in its Application that
the resulting increase in revenue is not sufficient to cover the costs of implementing the EAS.Rural
initiallyrequested an increase in annual USF funding in the amount of $125,562.Rural subsequently
revised its request after reviewing and discussing with Staff the effect of an FCC order issued in May
2001.In late August,2001,Rural revised its request to be an additional $81,043 per year.
On January 15,2002,the Commission issued a Notice of Application and Notice of
Modified Procedure.Written comments were filed by the Commission Staff;Rural filed Reply
DECISION MEMORANDUM l
Comments on February 7,2002.Staff s comments state that,after completing an audit,Staff
concluded Rural was entitled to an increase of $57,535.69per year from the USF.After reviewing the
result of the audit,the Company and Staff reached an agreement that Rural's USF funding should be
increased by the amount of $68,274 per year.Thus there is no dispute between Staff and the Company
regarding the amount that Rural is entitled to receive from the USF.The parties do disagree,however,
on the effective date that the increase should accrue to Rural.
Staff identified four options for the beginning date of increased payments to Rural,
including the date the Commission issues an order approving increased USF funding.In fact,Staff
noted the relevant statute requires that "distributions from the [USF]shall be made monthly,"Idaho
Code §2-610(4),arguably precluding distribution of a lump sum to a retroactive effective date.Staff
contended that deviation from the statutory mandate should occur only under compelling
circumstances.
Nonetheless,considering Rural's expectationin recovery of EAS costs,Staff recommended
the effective date of increased USF funding for Rural should be no earlier than July 30,2001,the
earliest date the Commission could have acted on Rural's application.Staff argued that the Company
bears at least some responsibility for timely prosecution of its claim,noting that the EAS construction
"was essentially completed in October of 2000,"but that the Company's Application was not filed
until May 30,2001.In its Reply Comments,Rural took exception to Staff's characterization of the
Company's diligence in presenting its Application and relevant information.Rural contends Staff
misstated key facts by noting that construction was "essentially completed in October of 2000."The
Company stated that the final costs charged to the EAS project were not booked until mid December
2000.Rural asserts that "there is simply no excuse for a one year delay between an EAS cutover and
recovery of the resultant revenue deficiency,"and blames "Staff's plottingconduct of its audit"for the
delay rather than its own conduct.
If July 1,2001 is the beginning date for increased USF draws,Rural would be entitled to a
one-time payment of $45,546.08,representing eight monthly payment amounts (July 2001 through
February 2002).Beginning March 2002,the monthlyincrease would be $5,693.26 for 28 months,for
a total of 36 months at that amount.Thereafter the amount would decrease by $855.67,removing the
component for recovery of case costs.
DECISION MEMORANDUM 2
Commission Decision
Should the request by Rural for an increase of $68,274 in its annual USF funding be
approved?Should the Commission approve a retroactive disbursement of USF funds to Rural?If so,
to what date?
Weldon Stutzman
vid/M:RURT0101 ws
DECISIONMEMORANDUM 3