PHRGCONF.docx

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF REVIEWING U S WEST COMMUNICATIONS’ SOUTHERN IDAHO REVENUE SHARING PLAN FOR THE COMPLETED 1994 SHARING YEAR.
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CASE NO. USW-S-95-1
NOTICE OF PREHEARING CONFERENCE
In 1989 the Commission authorized the implementation of a “Revenue Sharing Plan” as a method of allocating costs between the fully regulated (Title 61) and partially regulated (Title 62) portions of U S WEST Communication’s southern Idaho operations.(footnote: 1)  On May 1, 1995, U S WEST filed its revenue sharing report for the completed 1994 sharing year.  On May 15, 1995, the Commission issued its Notice of Report Filing outlining the results of the 1994 sharing year.  As is customary, the Staff has examined the underlying data contained in the Company’s sharing report.  After completing its audit, the Staff asserts that this case is ready for further processing.
THE REVENUE SHARING PLAN
In simple terms, the operation of the Sharing Plan measures the relative changes in the proportion of Title 61 and Title 62 revenues since 1987.  The Sharing Plan uses 1987 data to determine the average revenue per telephone access line served by U S WEST in southern Idaho.  This figure represents the base-year calculation.  In subsequent calendar sharing years (e.g., 1994), the same calculation is made using the actual sharing year data to determine the average revenue per access line for the sharing year.  If the sharing year revenue per line is greater than the base-year revenue per line (i.e., comparing the years 1987 and 1994), a proportion of the growth in revenue will be “shared” or attributed to Title 61 regulated services.  The portion of the increased/decreased revenues assigned to Title 61 and Title 62 services is determined by the ratio of the actual/adjusted revenues generated by such services for the year being calculated.  In other words, the sharing ratio mirrors the ratio of Title 61 service revenues to Title 62 service revenues.  Allocations under the sharing plans are made annually with the end-of-year operational report due no later than May 1 of each year.  The Commission determines the appropriate disposition of the revenue growth “shared” with Title 61 customers as calculated according to the Revenue Sharing Plan.
The Sharing Plan is not affected by an increase or decrease in the Company’s operating expenses except in two instances.  First, changes in intrastate expenses attributed to jurisdictional “separations” procedures proscribed by the Federal Communications Commission will be reflected in the net calculation of sharing year revenues.  Second, net revenues in the sharing year may also be adjusted for changes in Idaho and federal income tax rates, structures, or methods of calculation.  The Sharing Plan has also undergone a number of other modifications in prior years.  See Order Nos. 23951 and 24506.
THE 1994 SHARING REPORT
The Company reported that the adjusted number of telephone access lines in southern Idaho for the 1994 sharing year was 383,008.  This represents an increase of 20,430 lines or 5.63% growth from 1993.  The Company calculated that the average revenue per access line in 1994 was $522.11.  Based upon the Title 61/62 revenue ratio, the Company claimed that 41.82% of the increased revenue was attributable to Title 61 services.  Consequently, the Company stated that $5.448 million was available for revenue sharing purposes.  This sharing amount does not include any accrual of interest since January 1, 1995.
STAFF AUDIT COMMENTS
The Staff examined the Company’s revenue sharing report and supporting data.  After verifying the underlying data, the Staff discovered only one significant error.  U S WEST had inadvertently omitted reporting all its telephone directory revenue.  The Staff determined that the Company had under-reported directory revenue by $1.057 million.  On July 17, 1995, U S WEST submitted a revised report summary adopting the Staff’s proposed directory adjustment.  This adjustment results in an increase in the amount of Title 61 sharing funds of $442,037, or a total sharing amount of $5,890,709.  See the attached revised sharing report.
In addition to the sharing amount of $5.89 million, the sharing plan also requires that interest accrue on the sharing amount at a rate of 11.9% from January 1, 1995 until such time as the sharing funds are dispersed per Commission Order.  From January 1 to July 1, 1995, the sharing amount has accrued $350,497 in interest.  Consequently, the total amount of Title 61 sharing funds at present is approximately $6.2 million.  Until the Commission rules on the appropriate disposition of the Title 61 sharing funds, interest will continue to accrue at the rate of approximately $58,000 per month.

FURTHER PROCEEDINGS
Every revenue sharing case has two components.  First, the Commission examines and verifies the data contained in the Revenue Sharing Report.  Second, the Commission determines the appropriate disposition of the Title 61 sharing funds.  In the first two years of the plan’s operation, the Commission directed that the available sharing funds be returned to Title 61 customers in the form of a one-time credit.  This resulted in credits of $5.49 and $7.98 for the 1989 and 1990 sharing years, respectively.  During the last three years, the Commission used approximately $14.2 million of the Title 61 sharing amounts to fund local network improvements in U S WEST’s small rural exchanges.  This modernization program, called Tech II, was completed in 1994.  The Commission also used the sharing funds as credits against the $3.19 monthly rural zone charges for 55,000 U S WEST rural customers.
NOTICE OF PREHEARING CONFERENCE
YOU ARE HEREBY NOTIFIED that the Commission has scheduled a prehearing conference in this matter to commence at 9:00 A.M. ON FRIDAY, AUGUST 25, 1995 AT THE COMMISSION HEARING ROOM, 472 WEST WASHINGTON STREET, BOISE, IDAHO [phone].  The purpose of the hearing will be threefold.  First, the Commission is interested in determining whether there is general agreement concerning the calculation of the sharing amount for 1994.  Second, there is consensus on the disposition of the Title 61 revenue sharing funds.  Finally, should further proceedings in this case be set for hearing or may this case be processed under Modified Procedure?  Parties attending the prehearing conference should be prepared to discuss these issues with other parties and accordingly advise the Commission.
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter for the purpose of presenting evidence or cross-examining witnesses at hearing must file a Petition to Intervene with the Commission pursuant to this Commission's Rules of Procedure 72 and 73, IDAPA 31.01.01072 and -073. Persons intending to participate at the hearing must file a Petition to Intervene on or before August 20, 1995.  Persons desiring to present their views without parties' rights of participation and cross-examination are not required to intervene and may present their comments without prior notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the prehearing conference in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act.  Persons needing the help of a sign language interpreter or other assistance of the kind that the Commission is obligated to provide under the Americans with Disabilities Act in order to participate in or to understand the testimony and argument at a public hearing may ask the Commission to provide a sign language interpreter or other assistance at the hearing.  The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO  83720-0074
[phone]  (TELEPHONE)
[phone]  (TEXT TELEPHONE)
YOU ARE FURTHER NOTIFIED that the 1994 Revenue Sharing Report with its supporting data has been filed with the Commission and is available for public inspection during regular business hours at the Commission offices.
YOU ARE FURTHER NOTIFIED that all hearings will be conducted pursuant to the Rules of Procedure adopted by the Idaho Public Utilities Commission.  IDAPA 31.01.01000 et seq.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this matter pursuant to provisions of Titles 61 and 62, and specifically Idaho Code § 61-622A.
DATED at Boise, Idaho this            day of August 1995.
Myrna J. Walters
Commission Secretary
vld/N-USW-S-95-1.dh
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF REVIEWING U S WEST COMMUNICATIONS’ SOUTHERN IDAHO REVENUE SHARING PLAN FOR THE COMPLETED 1994 SHARING YEAR.
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CASE NO. USW-S-95-1
ERRATA
NOTICE OF PREHEARING CONFERENCE
On August 1, 1995, IPUC Notice of Prehearing Conference was issued by this Commission.  The following change(s) should be made to that Order.
Page 4, continued paragraph, 1st sentence
READS:
“Second, there is consensus on the disposition of the Title 61 revenue sharing funds.”
SHOULD READ:
“Second, is there consensus on the disposition of the Title 61 revenue sharing funds?”   
DATED at Boise, Idaho this                 day of August 1995.
Myrna J. Walters
Commission Secretary
vld/O-USW-S-95-1.dh/lst pg
FOOTNOTES
1:
The Commission’s traditional regulatory authority is found in Title 61 of the Idaho Code.  The Idaho Telecommunications Act of 1988 added a new chapter to Title 62 and created a modified form of regulation for telephone companies providing other than basic local exchange services in Idaho.  Basic local exchange service for residential and small business customers (five or fewer access lines) remains under the Commission’s Title 61 ratesetting authority.  In March 1989, U S WEST elected to remove its non-basic local services from the Commission’s Title 61 authority.  U S WEST’s non-basic services provided in southern Idaho are now subject to the Commission’s Title 62 jurisdiction.