990428_cc.doc

CHERI C. COPSEY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]

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 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

STAFF OPPOSITION TO FARMERS’ PETITION FOR CLARIFICATION OR MODIFICATION OF ORDER NO. 27774

On April 20, 1999, Farmers Mutual Telephone Company filed a Petition for Clarification or Modification of Commission Order No. 27774 pursuant to Idaho Code § 61-624 and Commission Rule 326. Farmers is a telephone cooperative and, with a few exceptions, its operations are not regulated by the Commission. Farmers requests the Commission modify Order No. 27774 to order U S West Communications, Inc. to implement two-way extended area service (EAS) between the U S West Treasure Valley EAS Region and all Farmers’ exchanges. Order No. 27774 was a final order issued November 4, 1998, granting EAS between the U S WEST exchanges of Weiser, Payette and New Plymouth and the U S WEST Treasure Valley calling region.
Staff opposes granting the Petition for several reasons. All Commission decisions must be based on the official record. IDAPA 31.01.01.281. The record in this docket, USW-S-96-6/USW-T-96-6, was closed and the final order issued, over five (5) months ago. Other than broad assertions, Farmers does not supplement the record. No testimony or evidence is offered.
This Commission ruled that decisions regarding EAS require certain evidence be considered before EAS is approved. Order No. 26311 (GNRT9313). The Commission record does not contain any of the evidence required by that Order. It contains no calling data to or from the Farmers’ exchanges; no information regarding the existence of a “community-of-interest” between the Farmers’ exchanges and the U S WEST Treasure Valley calling region; nor any evidence regarding the costs to U S WEST customers associated with providing EAS. Therefore, the Commission should dismiss this Petition. Any consideration of whether two-way EAS should be ordered must be based upon evidence contained in a record.
BACKGROUND
Commission EAS Criteria
In June 1993, the Commission initiated a comprehensive investigation into the need for revising the geographic boundaries of local telephone exchanges or calling areas within Idaho – providing EAS. GNR-T-93-13. As a result of that investigation, on February 15, 1996, the Commission decided that in evaluating EAS requests, the Commission should balance the “community-of-interest” between or among the petitioning exchanges against the costs and rate impacts to each of providing EAS. Order No. 26311. The Commission did not adopt a mathematical formula. However, the evaluation begins with an analysis of whether a “community-of-interest” exists. At a minimum, the factors considered are:
Call volume — the total number of calls from the home exchange to the requested exchange divided by the number of lines in the home exchange;

Call distribution — the number or percentage of customers making calls;

Geographic proximity (distance between exchanges);

The presence of geographic or other physical barriers (mountains, rivers, valleys) between exchanges;
County seat relationship (are both exchanges in the same county);

The relationship to school district (do both exchanges share the same school district);

The proximity to medical facilities and services; and

The willingness of customers to pay increased rates.
Order No. 26311. The Commission did not rank these individual criterion or weight their importance.
Once the community-of-interest has been determined, it is balanced against the costs and rate impacts of providing EAS. As ITA witness Ray Hendershot recommended in the generic EAS case, conversion of toll routes to local routes for the small independent LECs should not be undertaken without considering the revenue consequences.
USW-T-96-6/USW-S-96-6
On November 4, 1994, the Commission received Petitions containing more than 180 signatures from U S WEST customers living in Weiser and Payette for toll-free calling between Weiser and Payette. Toll-free calling between exchanges is usually provided via a service arrangement known as EAS. Approximately 75% of Idahos exchanges have EAS calling to other exchanges. Additional Petitions were filed in late 1997 requesting EAS among the Midvale, Cambridge, Fruitland, Ontario (Oregon) and U S WEST Treasure Valley calling region exchanges.
On October 27, 1997, the Commission decided it would consider the extension of EAS to Ontario, Cambridge and Midvale exchanges separately after concluding its consideration of the U S WEST exchanges. Moreover, because the establishment of an EAS to Ontario would cross a state boundary, the Commission found it could not unilaterally grant the Petitions even after public hearing because it would require the concurrence of the Oregon Public Utilities Commission and ultimately the approval of the Federal Communications Commission. The Commission earlier denied a Petition for EAS to Ontario. See Case No. MTB-T-90-7, Order No. 23827.
On August 26, 1998, the Commission consolidated this case with 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. Farmers did not intervene. The technical hearing was held September 24, 1998, and testimony taken from Staff witness, Wayne Hart, ITA witness, Ray Hendershot, and John Souba, U S WEST witness. There was no evidence presented or testimony given regarding the community-of-interest between the U S WEST exchanges in the U S WEST Treasure Valley calling region and the Farmers’ exchanges. No calling data was made part of the record. Moreover, no witness presented evidence regarding the costs to U S WEST customers for providing two-way EAS between the Farmers’ exchanges and the U S WEST Treasure Valley calling region.
On October 7, 1998, a public hearing was held in Payette to take public testimony regarding the Petitions. Jay Garrett, Farmers’ general manager, testified on behalf of Farmers at the public hearing and expressed concern over the proposed EAS configurations. Tr. pp. 251-256. He testified that if the Commission granted the request it would encourage Farmers shareholders to want a similar EAS plan. Tr. pp. 251-255. However, in response to Commission questions, he also indicated that Farmers customers currently only pay $9.75 per month and they receive capital credits back each year. Tr. p. 255. He indicated that he estimated that it would cost Farmers’ ratepayers about $23.71 to implement a similar plan and that he was aware that in other areas customers were currently paying over $24.00 per month. Tr. pp. 255-256.
ITA witness, Ray Hendershot, testified that granting the Petitions was not justified because Payette is the county seat and each of the communities have medical facilities, doctors, dentists, stores and schools, the community of interest with the Treasure Valley did not exist. Tr. pp. 131; 133; 135; 138-139. However, based on the record, public testimony, the technical evidence of the parties, and the law, the Commission granted the Petitions and authorized U S WEST to implement EAS between the Weiser, Payette and New Plymouth exchanges and the U S WEST Treasure Valley calling region.
STAFF RECOMMENDATION:
The record does not contain the information required to evaluate the request for two-way EAS and, therefore, does not meet the Commission standards as outlined in Order No. 26311. The record is closed. Moreover, the evidence that is in the record is irrelevant to consideration of two-way EAS between the Farmers’ exchanges and the U S WEST Treasure Valley calling region. Therefore, the Commission Staff opposes the Farmers’ Petition.
The Staff urges the Commission to deny Farmers’ Petition.
DATED at Boise, Idaho, this day of April 1999.

_______________________________
Cheri C. Copsey
Deputy Attorney General

Technical Staff: Wayne Hart

M:uswt966_cc.doc
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 their rates for local service.
Farmers is a member of the Idaho Telephone Association.

STAFF OPPOSITION TO FARMERS’
PETITION FOR CLARIFICATION OR
MODIFICATION OF ORDER NO. 27774 5