19990827Comments.doc

CHERI C. COPSEY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5142

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 THE TARIFF ADVICE SUBMITTED BY RURAL TELEPHONE COMPANY INTRODUCING VACATION SERVICE. )
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) CASE NO. RURT991

STAFF COMMENTS

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Cheri C. Copsey, Deputy Attorney General, in response to Order No. 28113 and submits the following comments.
BACKGROUND
On February 9, 1999, Rural Telephone Company submitted revisions to its Local Tariff IPUC No. 2 to the Commission to add a vacation service. Currently, Rural does not offer vacation service. All residential customers presently pay one rate. In its Tariff Advice, Rural proposes to price vacation service at one half the total monthly network access line rate and to bill any additional items as a fixed monthly service or surcharge. The service would only be available for residential customers. A line connection charge would apply to suspension or restoration of service. Rural requested an effective date of March 12, 1999.

On March 4, 1999, in Order No. 27956, the Commission suspended the operation of this Tariff Advice for six (6) months to allow Staff to investigate and analyze the reasonableness of this proposed tariff. On August 6, 1999, the Commission issued a Notice of Modified Procedure. Order No. 28113.
STAFF ANALYSIS
Rural’s exchanges are high cost, rural exchanges and telephone service in its exchanges are highly subsidized by Idaho Universal Service funds (USF). All of its exchanges are located in sparsely populated and expensive to serve areas. Prairie, Boise River and Atlanta are located in northern Elmore County, in fairly rugged and mountainous terrain. The Shoup exchange is located on the Salmon River. The other two exchanges, Tipanuk and Three Creek are also located in rural areas. On a per line basis, Rural receives more support from the Universal Service Fund (USF) than all but one other Idaho telephone company. On this same basis, it would probably compare similarly when it comes to federal support as well. The level of subsidy is a direct indication of the high cost for providing service in these remote areas.
Rural provides service in some of the more remote areas of the state that are also popular recreation areas. Rural’s largest exchange, Boise River, covers the Pine and Featherville area along the South Fork of the Boise River and serves an area that is very popular for recreational property owners. According to Census data, 80% of the occupied buildings are used as vacation or seasonal homes. The Shoup exchange is also prime recreational area. The other two exchanges, Tipanuk and Three Creek, are remote but they are not prime recreational property. They consist more of small farms or ranches.
Significantly, Boise River, Rural’s largest exchange, contains slightly less than half of Rural’s customers. Shoup, Prairie and Atlanta each contain slightly less than ten percent (10%) of the Rural’s customers and these four exchanges combined account for over seventy-five percent (75%) of Rural’s customers.
On August 20, 1999, the Commission granted petitions for expanded area service (EAS) for Tipanuk, Boise River and Prairie customers that will significantly impact their rates and Rural’s revenues. Order No. 28114. Likewise, that decision will cause Rural to increase its USF draw.

STAFF RECOMMENDATION
With the high level of vacation homes in these exchanges, Staff believes the subscription rate for any vacation option would be high enough to have serious impacts on basic service revenues. A take-up rate of fifty percent (50%) in these exchanges could reduce Rural’s total revenues from basic service by more than thirty percent (30%). These revenues would need to be replaced by revenues from the USF. Staff does not believe the purpose for the USF is to provide lower cost service to vacation homes owners.
Therefore, Staff recommends this Tariff Advice be denied.

DATED at Boise, Idaho, this day of August 1999.

_______________________________
Cheri C. Copsey
Deputy Attorney General

Technical Staff: Wayne Hart

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STAFF COMMENTS -1- AUGUST 27, 1999