20010529_WOZ.doc

May 29, 2001

James E.Wozniak
Director of Policy and Law
Qwest Corporation
999 Main Street, 11th Floor
Boise, ID 83702

Re: Refund of Toll Restriction Charges

Dear Mr. Wozniak:

This correspondence sets forth Staff’s understanding of Qwest’s proposal to resolve the improper collection of toll restriction charges by U S WEST/Qwest Corporation from October 27, 1998 through February 12, 2001. The Commission issued Order No. 27785 on October 27, 1998 in Case No. USW-S-96-5 that, among other things, limited Qwest’s ability to charge customers for toll restriction service. Specifically, the Order and Stipulation approved by it provide that “residential customers requesting toll restriction service [when] they initiate local service for the first time would not be charged the $13.50 non-recurring fee on a single residential line.” The Order also limited recurring charges for some customers: “Customers eligible for Idaho Telephone Service Assistance Program (ITSAP) shall receive toll restriction without recurring or non-recurring charges.” The Order also resolved litigation over the regulatory status of toll restriction service. However, the terms of Order No. 27785 include a sunset provision, and are set to expire as of November 17, 2001.

In December last year, Staff learned after investigating a customer complaint that Qwest improperly charged certain toll restriction fees after Order No. 27785 was issued. After bringing this matter to Qwest’s attention, Qwest investigated its records and provided information to Staff regarding toll restriction charges since October 1998. According to the information Qwest provided, approximately 98,000 customers ordered toll restriction service since October 1998 that were charged the set-up fee of $13.50, which totals approximately $1.3 million. Qwest is not able to distinguish between customers that were properly charged the fee (customers that ordered toll restriction sometime after initiating service), and those who were improperly charged (customers that ordered toll restriction when initiating service). Approximately 38,000 customers currently receive toll restriction service. Qwest has informed Staff that as of February 12, 2001, it has corrected its service procedures to prevent imposition of improper toll restriction charges.

To correct the charges inappropriately imposed by Qwest, Qwest will refund the $13.50 toll restriction fee to all current toll restriction customers that were charged the fee. Those credits will appear on customers’ accounts in their June 2001 billing statements. Because Qwest cannot determine whether the toll restriction was added to the line when the service was initiated or subsequent thereto, all current toll restriction customers who paid the fee will receive a credit, resulting in refunds to more customers than may actually be warranted. In addition, Qwest will provide refunds to those individuals who currently are Qwest customers and who paid the set-up fee after October 27, 1998, but who do not currently receive toll restriction service.

Finally in regard to the set-up fee, there is a group comprised of customers that paid the fee but now cannot be identified, because they simply are no longer customers of Qwest and/or the lines that were charged the fee have been disconnected or reassigned. Qwest will identify that number of lines and agrees to deposit to an account identified by the Commission the amount it is not able to refund directly to customers. In that way, Qwest will not retain any part of the toll restriction set-up fees it improperly collected after October 1998.

In addition to the set-up fee problem, Qwest identified 32 customer lines belonging to ITSAP customers who were incorrectly billed a 25¢ monthly toll restriction charge. Qwest also has agreed to refund the recurring charges to ITSAP customers and those refunds will appear in their May or June billing statements.

Finally, Qwest will sign a Stipulation to extend the terms of Order No. 27785 through calendar year 2002. By its terms, Order No. 27785 was set to expire as of November 17, 2001.

Once the numbers regarding the refunds have been identified, Qwest will report the final numbers to Staff. At that point, Staff and Qwest will sign a Stipulation asking the Commission’s approval of this arrangement to correct the overcharges by Qwest and extend the terms of Order No. 27785.

Please let me know whether this correspondence accurately sets forth the agreement between Staff and Qwest. If so, Staff will present this issue to the Commission at a decision meeting after the final numbers regarding the refunds are provided to Staff and the Stipulation has been signed. Staff will recommend the Commission approve the Stipulation without asking for the imposition of fines or penalties.

Please contact me immediately if you have any questions or concerns.

Sincerely,

Weldon B. Stutzman
Deputy Attorney General

cc: Commissioners
Beverly Barker
Don Howell

Vld/L:Wozniak_ws
Jim Wozniak
May 29, 2001
Page 2