28069.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PETITION FROM WEISER AND PAYETTE RESIDENTS REQUESTING EXTENDED AREA SERVICE (EAS) BETWEEN THESE COMMUNITIES. )
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CASE NO. USWS966
USW-T-96-6

ORDER NO. 28069

On April 20, 1999, Farmers Mutual Telephone Company filed a Petition for Clarification or Modification of Order No. 27774 pursuant to Idaho Code § 61-624 and Commission Rule 326, IDAPA 31.01.01.326. Order No. 27774 was issued in Case No. USW-S-96-6/USW-T-96-6 and authorized extended area service (EAS) between the U S WEST Communications exchanges of Weiser, Payette and New Plymouth and U S WEST Treasure Valley local calling region. In its Petition, Farmers requested that the Commission order U S WEST to implement two-way EAS between Farmers’ local exchanges and the U S WEST Treasure Valley calling region. Farmers serves the Fruitland and Nu Acres exchanges. These two exchanges are generally surrounded by the U S WEST exchanges of Payette and New Plymouth.
After oral argument, the Commission directed U S WEST and Commission Staff to submit a stipulation calculating all costs to U S WEST and any associated rate increase for U S WEST customers if the Commission were to grant Farmers’ request. Order No. 28053. The Commission also ordered the calling data for U S WEST customers calling into the Farmers’ exchanges be made part of the record. The Commission reserved final judgment on whether to grant Farmers’ Petition until the parties submitted the cost information and calling data.
On June 3, 1999, U S WEST and Staff filed a Stipulation and Staff filed Supplemental Testimony on June 4, 1999. Based on the entire record previously developed in this case, the Stipulation, the Supplemental Testimony, the law and the argument of counsel, the Commission grants Farmers’ Petition. U S WEST is directed to implement two-way EAS between the U S WEST Treasure Valley EAS region and the Farmers exchanges.

BACKGROUND
The joint USW-S-96-6 and T-96-6 case was initiated in November 1994, when the Commission received petitions from U S WEST customers living in Weiser and Payette for toll-free EAS calling between Weiser and Payette. Additional petitions were filed in late 1997 requesting EAS among the Midvale, Cambridge, Fruitland, and Ontario (Oregon) exchanges with the U S WEST Treasure Valley calling region exchanges. Midvale is served by the Midvale Telephone Exchange Company, Cambridge is served by the Cambridge Telephone Company, and Fruitland is served by Farmers.

A. The U S WEST EAS Case
On October 27, 1997, the Commission decided it would consider the extension of EAS to the Ontario, Cambridge and Midvale exchanges separately after examining EAS among the U S WEST exchanges. The Commission also determined it could not unilaterally grant the Petitions because the establishment of an EAS to Ontario, Oregon would cross a state boundary, requiring concurrence of the Oregon Public Utilities Commission and the approval of the Federal Communications Commission.
On August 26, 1998, the Commission consolidated the 96-6 case with Case No. USW-T-97-6 for public and technical hearings. Order No. 27680. Intervention was granted to Citizens Telephone Company and to the Idaho Telephone Association (ITA). Order Nos. 27725 and 27748. The technical hearing was held in September 1998, and testimony taken from Staff witness Wayne Hart, ITA witness Ray Hendershot, and U S WEST witness John Souba. Staff witness Hart testified regarding the estimated rate increase that would be necessary to accommodate EAS among the various exchanges. Hart did not testify regarding the costs for EAS with the two Farmers exchanges.
On October 7, 1998, a hearing was held in Payette to take public testimony regarding the Petitions. Jay Garrett, Farmers’ general manager, testified that if the Commission granted the request, Farmers’ members would want a similar EAS plan. Tr. pp. 251-55. Farmers is a telephone cooperative and, with a few exceptions, its operations are not regulated by the Commission. Idaho Code §§ 61-104 and 61-121. Farmers did not indicate whether it would accept toll-free calling into its exchanges from the U S WEST exchanges.
B. Farmers’ Petition
On April 20, 1999, Farmers filed a Petition for Clarification or Modification requesting two-way EAS between the U S WEST Treasure Valley EAS region and the Farmers exchanges. On April 28, 1999, U S WEST filed a response indicating it did not oppose Farmers’ request. U S WEST calculated that granting the Petition would result in an estimated rate increase of approximately seven cents ($0.07) for all U S WEST customers in its three EAS regions. Staff opposed the Petition contending that the existing Commission record was not adequate to support the requested action – EAS and a rate increase for U S WEST customers. Oral argument was held on May 18, 1999, at which Staff, U S WEST and Farmers appeared. At the oral argument, additional petitions from U S WEST customers for EAS into the Farmers’ exchanges were received.
On May 27, 1999, the Commission issued Order No. 28053. The Order directed U S WEST and Staff to submit a stipulation documenting the pertinent calling data and all costs to U S WEST. The Commission further ordered U S WEST to include the calling data for its customers calling into the Farmers exchanges and to make such data a part of the record. The Commission noted that it was “inclined to grant the ultimate relief [requested by Farmers but]. . . will reserve its final judgment on whether to grant” EAS until it has reviewed the stipulation. Order No. 28053 p. 5.
Finally, pursuant to Commission Rule 323(b), the Commission found that Order No. 27774 was a final order as to all issues finally decided in that Order and it was not necessary to reconsider or modify that Order to grant the relief Farmers requested. Therefore, the Commission declined to modify any issues finally determined in that Order.

U S WEST AND STAFF STIPULATION
1. Calling data and standards. U S WEST and Staff filed their Stipulation on June 3, 1999. In the Stipulation, Staff and U S WEST agreed that there exists a sufficient community of interest between the subject exchanges. The parties stipulated that the following considerations demonstrate the EAS community-of-interest standards had been satisfied: the calling distributions and volumes between the Farmers exchanges and the U S WEST Treasure Valley region; the physical proximity between the Farmers exchanges and several of the U S WEST exchanges; the public testimony; and the public interest expressed by Farmers’ Petition and the petitions of the U S WEST customers. U S WEST and Staff agreed that EAS from the U S WEST Treasure Valley region into the Farmers exchanges of Fruitland and Nu Acres is appropriate and in the public interest.
2. Costs and rates. U S WEST and Staff agreed to slightly modify the methodology adopted by the Commission in Order No. 27633 for the limited purpose of determining U S WEST’s costs for providing the two-way EAS into the Farmers exchanges. Staff and U S WEST stipulated that the modification was necessary to accommodate the fact that Farmers implemented equal access more than two years ago and this reduces the amount of dial-around calling. Therefore, U S WEST and Staff agreed that U S WEST’s costs for providing mandatory EAS for the current U S WEST Treasure Valley EAS regional exchanges to the Farmers exchanges of Fruitland and Nu Acres wire centers are $0.0818 per toll minute of use. Further, toll minutes of use for U S WEST originating minutes are to be adjusted to reflect dial around at an agreed rate of thirty-eight percent (38%), i.e., toll minutes of use x 1.38 x $0.0818. Toll minutes of use for Farmers’ originating minutes are to be adjusted to reflect dial around at an agreed rate of twenty percent (20%), i.e., toll minutes of use x 1.20 x $0.0818.
U S WEST and Staff also agreed that in determining the number of toll minutes of use, they will use U S WEST originating toll minutes and Farmers’ originating traffic. The parties further agreed to use Farmers’ originating traffic data as demonstrated by calling data February 1999. Finally, based on that information, U S WEST and Staff agreed that the estimated rate increase for all U S WEST customers necessary to provide two-way EAS between U S WEST Treasure Valley EAS region approved in Order No. 27774 and Farmers’ exchanges of Fruitland and Nu Acres is seven cents ($0.07) per month. If approved, the parties agreed that U S WEST will recover its costs through a uniform increase to business and residential local exchange rates for customers within U S WEST’s EAS regions to be imposed at the end of the year.
Finally, the parties agreed that the Stipulation does not affect previous Commission decisions allowing U S WEST to recover its reasonable and prudent capital investments for network facilities or improvements specifically needed to provide EAS from the remaining Revenue Sharing Funds. See Order No. 27100 at 8, 53.

STAFF SUPPLEMENTAL TESTIMONY
On June 4, 1999, Staff filed supplemental testimony evaluating the community of interest factors for calls between Farmers’ exchanges and the U S WEST Treasure Valley EAS Region. Staff witness Wayne Hart testified that he reviewed calling data between the U S WEST and Farmers exchanges supplied by U S WEST. He testified that the calling data represent calls that were handled by U S WEST. Supplemental Testimony p. 1. He noted that Farmers has had intraLATA dialing parity implemented for two years and, therefore, anyone who has chosen an alternate carrier for their intraLATA calling was not included in this data -- significantly discounting the actual calling data from Farmers to the U S WEST exchanges. Id.
Specifically, Mr. Hart testified that his review of the data demonstrated:
. . . a significant interest in calling from the Farmers’ exchanges into the Boise and surrounding exchanges. Farmers’ customers average seven calls per month to Boise and, on a combined basis, average six calls per month into the Caldwell, Nampa, and Weiser exchanges. Again, these are only U S WEST calls and if the calls carried by other IXCs were included, the numbers would be much higher. This puts the calling in line or in excess of calling data for other EAS routes previously approved by the Commission.

Supplemental Testimony p. 2.

Mr. Hart further testified that granting “EAS for these exchanges will also address the problem of overlapping school district lines and county boundaries that exist in parts of the Fruitland and Nu Acres exchanges.” Id. In addition, he testified that “EAS will also make medical facilities and services in Caldwell, Nampa, and Boise more accessible to Farmers’ customers.” Id. Finally, he considered other geographic boundaries and found that the Farmers exchanges are unusual in that they are located between exchanges that enjoy EAS into the Treasure Valley. At the same time, he found no significant barriers such as rivers, mountains or valleys separating these exchanges. Therefore, he found that this represents an economic disadvantage to customers who have a need to call in to or out of these exchanges.
For those reasons, Mr. Hart testified that Staff supports and recommends granting two-way EAS between Farmers and the U S WEST exchanges in the Treasure Valley EAS region. Supplemental Testimony p. 3.

COMMISSION FINDINGS
The Commission finds that it has jurisdiction to hear this Petition and decide its merits under Idaho Code §§ 61-301, 61-307, 61-502 and 61-622. U S WEST is a regulated telephone corporation subject to the Commission jurisdiction. The Commission finds that the relief requested by Farmers, if approved, would require U S WEST to increase rates and change services to its customers. The Commission clearly has jurisdiction to determine whether the rates charged by any telephone corporation for regulated services are just and reasonable and to fix those rates. Idaho Code §§ 61-301, 61-307 and 61-502.
Based on our review of the Supplemental Testimony of Wayne Hart and the information contained in the Stipulation, the Commission finds that the evidence meets the Commission’s criteria for ordering EAS. We find the proposed rate increase of $0.07 per month is just and reasonable and will defray U S WEST’s costs to provide two-way EAS between U S WEST’s Treasure Valley EAS region and the Farmers exchanges. It is reasonable to spread this uniform rate increase to both business and residential customers located within the three U S WEST local calling regions. Given U S WEST’s schedule for implementing the Farmers EAS and its desire to avoid changes to its computer billing system at the end of this year, we find it is reasonable to implement EAS this year but postpone the accompanying billing change until next year. The Commission concludes that ordering EAS between U S WEST’s Treasure Valley EAS region and Farmers’ exchanges is in the public interest.
The modest rate increase is mitigated by two options for customers. First, the Idaho Telephone Service Assistance Program (ITSAP) is available for eligible low-income residential customers. ITSAP provides eligible residential customers with a credit for local monthly service of $10.50. In other words, flat-rate local service for an ITSAP customer would be $10.39 per month ($3.40 for measured service). This represents a significant savings for eligible customers. Second, U S WEST offers both residential and business customers measured service. For customers who are able to limit their local calling, measured service also offers substantial savings. Under the rates approved today, the monthly rates for measured service for residential and business customers would be $10.53 and $17.53 (including three hours of local calling per month), respectively.
We encourage those customers who may be eligible for the ITSAP credit or desire to subscribe to measured local service to take advantage of these lower cost services. To facilitate customers moving from flat-rate to measured-local service, we shall direct the Company to waive the charge from switching from flat-rate to measured service for 60 days after the Company notifies customers of the rate changes. In addition, we shall also direct the Company to advise all of its customers of the impending rate changes and the availability of both ITSAP and measured service options.
Finally, as it found in Order No. 28053, the Commission reiterates that it is not necessary to reconsider or modify Order No. 27774 in order to grant the relief requested. Therefore, the Commission declines to modify any issues finally determined in Order No. 27774.

O R D E R
IT IS HEREBY ORDERED that the Petition of Farmers Mutual Association is granted in part as described above.
IT IS FURTHER ORDERED that U S WEST take the necessary actions to implement EAS as authorized by this Order. The parties shall advise the Commission of the EAS cut-over dates within fourteen (14) days of the service date of this Order.
IT IS FURTHER ORDERED that U S WEST notify its customers of the scheduled implementation of EAS, the impending rate changes, and the available mitigation measures of ITSAP and measured service. U S WEST shall also waive any non-recurring charge for a period of sixty (60) days to allow residential customers to switch to local measured service.
IT IS FURTHER ORDERED that U S WEST file local service tariffs in conformance with the rates set out in this Order to be effective on or after March 1, 2000.
IT IS FURTHER ORDERED that U S WEST’s EAS costs for capital plant and facilities be recovered from available revenue sharing funds.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in these Case No. USW-S-96-6/USW-T-96-6 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order or in interlocutory Orders previously issued in these Case No. USW-S-96-6/USW-T-96-6. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of June 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

O:uswt966_cc3
“Toll-free” EAS is something of a misnomer because the costs associated with converting a former long-distance toll route to a toll-free EAS route are usually recovered from the affected customers by increasing the rate for local service.
In Case No. MTB-T-90-7, this Commission earlier denied a Petition for EAS to Ontario. See Order No. 23827.

In other words, U S WEST customers located outside one of the three U S WEST EAS regions will not experience an increase in rates.

ORDER NO. 28069 1

Office of the Secretary
Service Date
June 25, 1999