20230620Technical Hearing Transcript Volume I.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CTC TELECOM,)INC.'S,OBJECTION TO ITS 2023 )CASE NO.CTL-T-23-01
ANNUAL ASSESSMENT FEES )
BEFORE
COMMISSIONER ERIC ANDERSON (Presiding)
COMMISSIONER EDWARD LODGE
PLACE:Commission Hearing Room
11331 West Chinden Blvd.
Building 8,Suite 201-A
Boise,Idaho
DATE:June 8,2023
VOLUME I -Pages 1 -58
CSB REPORTINGORIGINALCertgiedShorthandReporters
PostOfficeBox9774
Boise,Idaho 83707 Reporter:csbreporting@,yahoo.com Constance Bucy,Ph:208-890-5198 CSR
1 A PPE A R A NCES
2
3 For the Staff:Michael Duvall
Deputy Attorney General
4 IPUC
11331 W.Chinden Blvd.,
5 Bldg.No.8,Suite 201-A
PO Box 83720
6 Boise,ID 83720-0074
7
For CTC Telecom,Inc.:Cynthia A.Melillo,PLLC
8 8385 W.Emerald StreetBoise,ID 83704
9
10
11
12
13
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15
16
17
18
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20
21
22
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24
25
CSB REPORTING 2 APPEARANCES
208.890.5198
1 I NDEX
2
3 WITNESS EXAMINATION BY PAGE
4 Cynthia Melillo Statement 9
5 Bachchi Oumar-Samahon Ms.Melillo (Direct)20
(CTC)Mr.Duvall (Cross)26
6 Ms.Melillo (Redirect)28
7
Johan Kalala-Kasanda Mr.Duvall (Direct)29
8 (Staff)Prefiled Affidavit 32
Mr.Duvall (Direct-Cont'd)40
9 Ms.Melillo (Cross)42
Mr.Duvall (ReDirect)49
10 Nancy Ashcraft Mr.Duvall(Direct)52
11 (Staff)Prefiled Affidavit 54
12
13
14
15
16
17
18
19
20
21
22
23
24
25
CSB REPORTING 3 INDEX
208.890.5198
1 EXH I B I TS
2
3 NUMBER DESCRIPTION PAGE
4
FOR CTC TELECOM,INC.:
5
1.Gross Intrastate Operating Identified 14
6 Revenues Definition and Admitted 57Examples,Attachment 1
7
8
FOR THE STAFF:
9
A.CTC Telecom,PUC Commission Premarked
10 Audit,Gross Annual Intrastate Admitted 31
Revenue as of 12/31/2022
11
B.Operating Revenues Premarked
12 Admitted 31
13 C.Email from Bachchi Oumar Premarked
to Nancy Ashcraft,5/15/23,Admitted 31
14 with attached CTC Telecom
2022 Revenues
15
16
17
18
19
20
21
22
23
24
25
CSB REPORTING 4 EXHIBITS
208.890.5198
1 BOISE,IDAHO,THURSDAY,JUNE 8,2023,1:30 P.M.
2
3
4 COMMISSIONER ANDERSON:Well,good
5 afternoon.This is the time and place set for an
6 evidentiary hearing in Case No.CTL-T-23-01,further
7 identified as in the matter of CTC Telecom,Inc.'s,
8 objection to its 2023 annual assessment fees.
9 This hearing is taking place to consider
10 the objection filed with the Commission on May 15th,
11 2023,pursuant to Idaho Code 61-1007.The Commission
12 upon receipt of an assessment fee objection and after 10
13 days'notice in writing to the objector shall proceed to
14 hold a hearing upon such objections within 20 days after
15 the date of such notice.
16 My name is Eric Anderson and I'll be the
17 Chair of today's committee.I'm joined by Commissioner
18 Lodge to my right and we comprise the Commission and we
19 will ultimately render a final decision in the matter.
20 We do use a court reporter at today's
21 hearing.Today we have Connie Bucy creating an official
22 transcript of the record.The Commission will review
23 facts and evidence in the record and make its final
24 decision in this case,and when we testify today,please
25 just speak slowly and loud enough for Connie to hear or
CSB REPORTING 5 COLLOQUY
208.890.5198
1 she will remind you to slow down and speak up.
2 We'll begin this afternoon by taking the
3 appearances of the parties.Let's begin with the
4 Applicant Cambridge Telephone Company [sic].
5 MS.MELILLO:My name is Cynthia Melillo.
6 I represent CTC.
7 COMMISSIONER ANDERSON:Welcome.
8 MS.MELILLO:Thank you.
9 COMMISSIONER ANDERSON:And Commission
10 Staff.
11 MR.DUVALL:Michael Duvall representing
12 Commission Staff.
13 COMMISSIONER ANDERSON:Thank you,
14 Michael.Are there any parties that we've missed for
15 purposes of identification on the record?
16 MR.OUMAR:Bachchi Oumar,CFO for CTC
17 Telecom.
18 COMMISSIONER ANDERSON:Thank you very
19 much.Are there any preliminary matters that need to
20 come before the Commission before we begin,motions or
21 requests?Hearing none,when I call your name,please,
22 you will be sworn in and you would as in any other court
23 proceeding be under oath.I will ask you to identify
24 yourself for the record,which will include your name,
25 spelling of your last name,and your address.Unless my
CSB REPORTING 6 COLLOQUY
208.890.5198
1 colleagues find that I have missed something important,
2 we will call our first witness.
3 Does the Company have a witness they would
4 like to call at this time?
5 MS.MELILLO:Mr.Chairman,if
6 permissible,I mean,it's been a while since I've been
7 before the Commission for a hearing,so I apologize about
8 the formalities --
9 COMMISSIONER ANDERSON:You're fine.Just
10 take your time.You're good.
11 MS.MELILLO:Could I do an opening
12 statement before witnesses or no?
13 COMMISSIONER ANDERSON:I have no problem
14 with that opening statement.
15 MS.MELILLO:We just received the Staff
16 affidavit just less than two days ago,so I'm not able to
17 get witnesses to address a lot of the numbers and stuff
18 in that,but I would to address some of the legal --
19 COMMISSIONER ANDERSON:How long do you
20 anticipate this opening statement to take?
21 MS.MELILLO:Well,I end up speaking fast
22 when I'm nervous,so maybe five minutes or so.
23 COMMISSIONER ANDERSON:That's fine.Will
24 you provide that statement to the court reporter at the
25 end of this?
CSB REPORTING 7 COLLOQUY
208.890.5198
1 MS.MELILLO:Yes.
2 COMMISSIONER ANDERSON:Thank you.
3 MS.MELILLO:CTC Telecom's objection is
4 based upon a mistake in over-reporting its intrastate
5 operating revenue for fiscal year 2022.As the
6 Commission is aware,the statutory authority for the
7 special regulatory fee is Idaho Code Title 61,Chapter
8 10,which states that each public utility shall file with
9 the Commission a return verified by an officer showing
10 such utility's gross operating revenues from its
11 intrastate utility business in Idaho.
12 The Company's gross intrastate operating
13 revenue statement was provided on a one-page form
14 verified by an officer of the Company,and the one-page
15 form was filed along with the Company's annual report of
16 small telephone companies to the Idaho Public Utilities
17 Commission,although I don't believe it's part of that
18 report.
19 COMMISSIONER ANDERSON:Cynthia,before we
20 continue on,this is not part of any of the prior record
21 at all;is that correct?
22 MS.MELILLO:Correct.We didn't have an
23 opportunity to respond to the affidavit is my only
24 concern,so there's certain things I would like to
25 respond to.
CSB REPORTING 8 COLLOQUY208.890.5198
1 COMMISSIONER ANDERSON:Without objection,
2 counsel,perhaps this should be sworn in and be sworn
3 testimony.You don't have any problem with that?No
4 objection to that?
5 MR.DUVALL:I don't have any objection to
6 that.
7 COMMISSIONER ANDERSON:To swearing in or
8 not swearing in?
9 MR.DUVALL:To swearing in.
10 COMMISSIONER ANDERSON:Cynthia,why don't
11 we take the stand and we'll swear you in.
12
13 CYNTHIA MELILLO,
14 produced as a witness at the instance of CTC Telecom,
15 Inc.,having been first duly sworn to tell the truth,
16 testified as follows:
17
18 COMMISSIONER ANDERSON:You may begin.
19 THE WITNESS:Do you want me to start from
20 the top?
21 COMMISSIONER ANDERSON:Please.
22 THE WITNESS:Okay,CTC Telecom's
23 objection is based upon a mistake in over-reporting its
24 intrastate operating revenue for fiscal year 2022.As
25 this Commission is aware,the statutory authority for the
CSB REPORTING 9 MELILLO208.890.5198 CTC Telecom
1 special regulatory fee is Idaho Code Title 61,Chapter
2 10,which states that each public utility shall file with
3 the Commission a return verified by an officer showing
4 such utility's gross operating revenues from its
5 intrastate utility business in Idaho.
6 The Company's gross intrastate operating
7 revenues was provided on a one-page form verified by an
8 officer of the Company.The one-page form or
9 certification was filed along with the Company's annual
10 report of small telephone companies to the Idaho Public
11 Utilities Commission.
12 The annual report sets forth all gross
13 operating revenues of the Company no matter where
14 received or from what sources.There's also a column for
15 all gross operating revenues of the Company received
16 within Idaho.This column excludes revenues received
17 from operations in other states.For instance,some
18 small telephone companies in Idaho do business in Oregon
19 or Washington or Nevada.
20 The numbers included in the Idaho column
21 in Idaho is not where the companies separate what
22 constitutes revenues from interstate and nonregulated
23 activities from revenues from the Company's intrastate
24 utility business.It's simply the column where the
25 Company reports gross revenues received in Idaho.The
CSB REPORTING 10 MELILLO208.890.5198 CTC Telecom
1 certification provided by the Company is the only place
2 where the distinction between revenues from its
3 intrastate utility business versus interstate and
4 nonregulated business is made to the Commission.
5 In its initial filing of the
6 certification,the Company reported all gross income as
7 intrastate revenue,failing to remove from the
8 certification those revenues generated from interstate
9 and nonregulated activities.In the Company's objection,
10 the Company removed the revenues generated from
11 interstate and nonregulated activities to arrive at the
12 proper calculation of revenues generated from intrastate
13 utility business in Idaho.
14 While the numbers reported in the annual
15 report are used in determining which revenue categories
16 will ultimately be included in intrastate revenues,the
17 annual report does not provide for separating those
18 revenues.
19 The Company believes that Commission Staff
20 in its affidavit confuses the revenues reported in the
21 annual report with the revenues considered as part of the
22 Company's intrastate utility business.The Commission
23 Staff affidavit states that Staff calculated Company's
24 gross intrastate operating revenue as 5,910,757,which is
25 the entirety of the Company's reported gross revenues.
CSB REPORTING 11 MELILLO
208.890.5198 CTC Telecom
1 Staff goes on to recommend a separation
2 study to separate interstate versus intrastate gross
3 operating revenue,but if Staff recommends assessment
4 based on total gross revenues,then there would be no
5 reason for a separation study,but if Staff believes
6 there are revenues of the Company that are considered
7 interstate and thus,not subject to assessment,then
8 Staff's calculation cannot be correct.
9 Staff's primary argument is based on a
10 mistaken interpretation of Commission Order 28760.In
11 that Order,the Commission defined gross income for
12 purposes of Public Utilities Law in the same manner as
13 gross income is defined under the Idaho Code governing
14 taxation.In essence,gross income is all income from
15 whatever sources derived.
16 Staff then goes on to use the definition
17 of gross income as equivalent to gross intrastate
18 operating income,and that the gross revenue reported by
19 the Company should be the basis of the assessment.In
20 paragraph 17 of Staff's affidavit,you can see that Staff
21 confuses the annual report of gross operating revenues
22 with gross intrastate operating revenues.Staff
23 repeatedly refers to the reports,the annual reports,as
24 showing Company's gross intrastate operating revenues.
25 The Company was not reporting gross intrastate operating
CSB REPORTING 12 MELILLO208.890.5198 CTC Telecom
1 revenues,it was reporting gross revenues.
2 Order 28760 did not equate gross
3 income/gross revenue with gross intrastate operating
4 income.In fact,in that case,the Commission did not
5 ultimately assess the company involved on the full amount
6 of the company's gross income.The Company does not take
7 issue with the definition of gross income/gross revenue
8 as stated in the Order,but for purposes of the special
9 regulatory fee,that's not the end of the analysis.
10 Staff fails to show --to allow the analysis of what
11 portion of gross income was derived from the Company's
12 intrastate utility business versus interstate and
13 nonregulated income.Not all income generated in Idaho
14 is generated from intrastate business.
15 Staff asserts in paragraphs 14,15,and 16
16 that Company erroneously reported intrastate revenues in
17 the various revenue categories established by Staff.
18 Again,the annual report where revenues are reported are
19 not segregated into intrastate versus interstate.They
20 are reported under various codes,but the codes in and of
21 themselves do not designate intrastate versus interstate.
22 However,certain of those categories
23 clearly state they are interstate revenues and thus,can
24 easily be placed in a category of interstate revenue and
25 thus,should not be included in the basis for the
CSB REPORTING 13 MELILLO
208.890.5198 CTC Telecom
1 assessment,yet Staff included all revenues in all
2 categories.
3 Based upon an attachment located on the
4 Commission website titled,"Attachment 1,Gross
5 Intrastate Operating Revenues Definition and Examples,"
6 the following are excluded from gross intrastate
7 operating revenues:Servicing or installing customer
8 premises equipment for a customer;revenues from cellular
9 services;network access services revenues that come from
10 interstate operations and nonregulated income.
11 I do have a copy of that if you would like
12 that,although I was not given exhibit numbers,so I
13 don't have it labeled as an exhibit.
14 COMMISSIONER ANDERSON:Whatever you wish
15 to submit for the record.
16 (Ms.Melillo distributing documents.)
17 (CTC Telecom,Inc.,Exhibit No.1 was
18 marked for identification.)
19 THE WITNESS:The purpose of the
20 attachment is to show that there clearly are some
21 revenues which are not considered instrastate revenues,
22 and neither Title 61 nor Title 62 regulate internet
23 activities.Thus,those activities which reflect revenue
24 from broadband internet activity should not be included
25 in gross intrastate operating revenue.
CSB REPORTING 14 MELILLO208.890.5198 CTC Telecom
1 As to VoIP services,based on FCC
2 guidelines and standard accounting principles in this
3 industry,64.9 percent of VoIP revenue is considered
4 interstate,as some portions run over the internet and
5 some portions can be considered to have a basis in
6 intrastate activities.
7 I would like to address a few additional
8 comments made in Staff's affidavit that put the Company
9 in a bad light.Staff asserts that Company's
10 calculations should not be considered in determining the
11 assessment because of inaccuracies or differences in
12 amounts reported in different reports over time.
13 The Company's initial annual report was
14 submitted on April 14th and was based on Company's books
15 and records prior to completion of the Company's annual
16 audit.When Company submitted a revised annual report on
17 May 15th in connection with the objection,the audit was
18 completed and,therefore,the numbers are based on the
19 most current audited books and records.
20 Again,in paragraph 17,you can see that
21 Staff confuses the annual report of gross operating
22 revenues with gross intrastate operating revenues.Staff
23 refers to Company's gross intrastate operating revenues
24 filed on the various dates.The Company,again,was not
25 reporting gross intrastate operating revenues.It was
CSB REPORTING 15 MELILLO
208.890.5198 CTC Telecom
1 reporting gross revenues.
2 The only time Company reported or revised
3 the gross intrastate operating revenues was first in the
4 mistaken certification and then in the objection,and the
5 number that Company claims is 108,652.91,which is the
6 gross revenues less revenues generated from interstate
7 and nonregulated activity.
8 Staff further contends that the codes
9 under which certain revenues were reported or Staff was
10 concerned with the codes.The Company initially reported
11 certain revenues under Code 5250 because that is the code
12 referenced on the annual report form.There was no place
13 to break out those revenues.They were later reported
14 under a different,more descriptive code,but moving them
15 from one code to another is not the basis for the
16 Company's filing error as the Staff contends.
17 The basis for the objection is that the
18 revenues reported under those codes,as well as other
19 revenue reported on the annual report,are not intrastate
20 revenues.
21 Finally,Staff states the Company did not
22 fully respond to audit requests.The Company would like
23 to state on the record that Company provided full
24 financials and responded to all questions presented.The
25 Company was never informed that Staff needed different or
CSB REPORTING 16 MELILLO208.890.5198 CTC Telecom
1 additional information and Company resents the
2 implication that Company was not cooperative.
3 In conclusion,the calculations submitted
4 by the Company as intrastate utility revenue in the
5 revised filing are consistent with the revenues reported
6 for revenues generated from its intrastate utility
7 business in Idaho in prior years,and an assessment
8 calculated on such amount would be consistent with
9 assessments for prior years.
10 To now consider Company's gross income as
11 the Company's gross intrastate operating revenues is to
12 ignore the distinction between interstate and intrastate
13 revenue and make the plain language of Idaho Code 61-1003
14 meaningless.If the assessment was to be based on gross
15 income,the statute would say gross income rather than
16 operating revenues from its intrastate utility business.
17 Moreover,including revenues from clearly
18 established interstate activities and nonregulated
19 activities such as internet would have implications
20 beyond this Company's assessment.The Company does not
21 believe any other company is charged an assessment on
22 such revenues and charging only Company would create
23 issues regarding the uniformity of application of the
24 statute to Company versus all other companies,and to go
25 back and assess all other companies on such revenues
CSB REPORTING 17 MELILLO
208.890.5198 CTC Telecom
1 would arguably be beyond the Commission's statutory
2 authority to base the assessment on revenues from
3 intrastate utility business.Assessments based on
4 internet revenues,for example,would likely be an issue
5 to be decided by courts and not this Commission.
6 The Company respectfully requests that the
7 Commission find that Company's calculation of its
8 revenues generated from its intrastate utility business
9 in Idaho is accurate and consistent with Idaho Code and
10 standard accounting practices for the telecommunications
11 industry and assess the special regulatory fee on such
12 calculation.
13 COMMISSIONER ANDERSON:Thank you.Are
14 there any questions from Staff?
15 MR.DUVALL:I don't have any
16 cross-examination.I would like to give a brief opening
17 statement based off of what's already in the record,so I
18 don't think I'll need to take the stand.It will be
19 probably less than one minute.
20 COMMISSIONER ANDERSON:Fine.Thank you
21 for your testimony.Thank you.
22 (The witness left the stand.)
23 COMMISSIONER ANDERSON:Mr.Duvall,you're
24 on deck.
25 MR.DUVALL:Thank you,Commissioners.
CSB REPORTING 18 MELILLO
208.890.5198 CTC Telecom
1 Staff believes that it has interpreted gross intrastate
2 revenue correctly.Idaho Code based off of paragraph 5
3 of Johan Kalala-Kasanda's affidavit,we believe that
4 Idaho Code 61-1003 clearly specifies that gross operating
5 revenues,it outlines intrastate gross operating
6 revenues,so it expressly says that this revenue will be
7 intrastate,not interstate,and then in paragraph 13,
8 Idaho Code 63-3011 adopts the Internal Revenue Code
9 61 (a),and it is that adoption of the Internal Revenue
10 Code that Staff believes defines what gross revenue is.
11 Even though that statement talks about
12 gross income,we believe that the distinction between
13 gross income and gross revenue is not relevant,because
14 61-1003 already specified that this was for intrastate
15 gross revenue and then cited the section quoted on
16 paragraph 13 as elucidating what gross revenue --
17 operating revenues means.
18 That is all that Staff has for its opening
19 statement.
20 COMMISSIONER ANDERSON:Thank you,and you
21 had no other witnesses to call?
22 MS.MELILLO:Yes.
23 COMMISSIONER ANDERSON:I'll be out of
24 order with you,but that's fine.Please call your next
25 witness.
CSB REPORTING 19 COLLOQUY208.890.5198
1 MS.MELILLO:I would like to call Bachchi
2 Oumar.
3 COMMISSIONER ANDERSON:In the future when
4 we ask if there's any opening statements or affidavits
5 that would like to be provided,we probably should do
6 that in the Order rather than wait until we actually are
7 calling witnesses in the future.
8
9 BACHCHI SAMAHON-OUMAR,
10 produced as a witness at the instance of CTC Telecom,
11 Inc.,having been first duly sworn to tell the truth,was
12 examined and testified as follows:
13
14 DIRECT EXAMINATION
15
16 BY MS.MELILLO:
17 Q Please state your name for the record.
18 A Bachchi Samahon-Oumar.
19 Q Would you like him to spell that?He said
20 that earlier.What is your position with CTC Telecom?
21 A I'm the chief financial officer.
22 Q How long have you been in that position?
23 A About two years and three months.
24 Q Given your position with CTC,is it safe
25 to say that you are knowledgeable with respect to the
CSB REPORTING 20 SAMAHON-OUMAR (Di)
208.890.5198 CTC Telecom
1 Company's operating revenues?
2 A Yes.
3 Q Did you prepare the Company's annual
4 operating statement showing 2022 year-end operating
5 revenues to be filed with the Commission?
6 A Yes.
7 Q Have you filed this report with the
8 Commission for any prior years?
9 A Yes,I did for the year 2021 as well.
10 Q What is your understanding as to what you
11 are to include in the annual report to the Commission?
12 A The annual financial report that we
13 present to the Commission included all the revenues
14 derived from doing business in the State of Idaho.
15 Q Does it provide for separating intrastate
16 versus interstate?
17 A In the financial reporting segment of
18 that,there is no such place to identify intrastate
19 versus interstate.
20 Q What is your understanding as to what is
21 to be included in the column that states Idaho only?
22 A Well,when you look at it,we already
23 provide the revenues generated in,for the whole Company
24 in,Idaho.Obviously,the Idaho column shows up and
25 certainly in prior years,the people who filed this
CSB REPORTING 21 SAMAHON-OUMAR (Di)208.890.5198 CTC Telecom
1 report had indicated that it's the same as the general
2 financial data that was reported on that report,so there
3 was no information provided in the annual financial
4 report in the Idaho column.It always said same as the
5 Company,so that was not enough guidance provided,nor
6 have I seen any,to indicate what kind of data should be
7 presented in that column.
8 Q So if they were,say,CenturyLink or
9 someone providing an annual report,that one column would
10 be all of their gross revenues and then perhaps the other
11 column would be just gross revenues generated in Idaho?
12 A Yes.
13 Q So you do not understand or do you
14 understand that that Idaho column is for intrastate
15 reporting,reporting of intrastate revenue?
16 A I kind of get that,yes.
17 Q It does not --you did not use that column
18 for reporting intrastate?
19 A I did not.
20 Q If gross intrastate operating revenues are
21 not reported on that annual report form,where and how do
22 you report them?
23 A The only place where we reported the
24 intrastate revenue generated on an annual basis was in
25 that one-page certification form that was presented to
CSB REPORTING 22 SAMAHON-OUMAR (Di)
208.890.5198 CTC Telecom
1 the PUC on the 1st of April.Now,that's the only
2 mechanism we had to report that information.
3 Q Did you prepare that certification for
4 this year?
5 A I did.
6 Q How do you determine what amount goes on
7 the one-page Idaho gross intrastate operating revenue
8 certification?
9 A Well,I had to,in prior year I had to,go
10 in and look at the worksheets that was done in prior
11 years to determine what type of accounts should be
12 included in the calculation of intrastate revenues.Now,
13 the problem that I faced with this year is I made an
14 error in terms of not bifurcating the total revenues like
15 I did in the previous year,so that's the root cause of
16 this problem that we have today.
17 Q So you don't believe there was any issue
18 with the gross revenues that you reported in the annual
19 report,just the number on the certification?
20 A Yes.
21 Q Did you compare your certification with
22 prior years before submitting it to the Commission?
23 A That's one of the other things I failed to
24 do,because we were in the midst of an audit and trying
25 to get the audit statement and so forth,so I missed --
CSB REPORTING 23 SAMAHON-OUMAR (Di)
208.890.5198 CTC Telecom
1 that was the second item that I missed.
2 Q At what point did you think your filing
3 might be incorrect?
4 A Well,subsequent to providing the
5 intrastate revenues to the PUC,sometime in the late
6 April/early May time frame received 2023 assessment for
7 CTC Telecom,and my staff noted that compared to prior
8 years that the assessment was way higher.Upon review of
9 the assessment notice that was sent to us,I realized the
10 error at that time.
11 No.1,I contacted my boss and did
12 indicate to him that an error was made and I wanted to
13 provide a revised gross intrastate revenue statement.I
14 called Nancy Ashcraft of the PUC,which she was very
15 helpful,and I said to her that we didn't as a Company
16 have a problem paying the assessment as long as we can
17 get some refund back once we provided a revised
18 intrastate revenue to the PUC.
19 Nancy opined that they didn't have
20 anything in the policies of the PUC to grant us a refund
21 to a Company like us.Then I filed revised gross
22 intrastate revenues for 2022.
23 Q A revised certification or a revised
24 annual report of gross,total gross,revenues?
25 A Well,it was not in the same format as the
CSB REPORTING 24 SAMAHON-OUMAR (Di)208.890.5198 CTC Telecom
1 certification.The certification was a one-page
2 document.What I did was I created a worksheet to show
3 what was presented before and now and I included that,
4 clipped that information into an email and sent it over
5 to Nancy.
6 Q So you didn't sign another
7 certification?
8 A I did not sign anything except for my
9 signature line in the email that I sent to Nancy.
10 Q So on that revised worksheet,the number
11 that you came up with as far as intrastate operating
12 revenue,that compared generally with prior years?
13 A Yes,it aligned pretty well with all the
14 prior years that we have reported.
15 Q Would you sign a certification with that
16 number on it?
17 A Absolutely.
18 MS.MELILLO:Okay,I have no further
19 questions.
20 COMMISSIONER ANDERSON:Thank you.Staff?
21 MR.DUVALL:Thank you.We just have a
22 few questions for Mr.Bachchi.Is that how you pronounce
23 it?
24 THE WITNESS:Bachchi.
25 MR.DUVALL:Bachchi.All right,we have
CSB REPORTING 25 SAMAHON-OUMAR (Di)208.890.5198 CTC Telecom
1 a few questions for Mr.Bachchi.
2
3 CROSS-EXAMINATION
4
5 BY MR.DUVALL:
6 Q Between January 1st,2023,and May 31st,
7 2023,is it true that you filed to the Commission
8 different amounts for your 2022 gross intrastate
9 operating revenues?
10 A Not different,but I initially filed on
11 April 14th,I did file that,yes,and I subsequently
12 filed amended intrastate revenues in that context,yes.
13 Q So you filed one and then you amended
14 it?
15 A Yes.
16 Q Okay,thank you.Is it correct --okay,I
17 think we've answered that,so pardon me if I already
18 asked this question --
19 A Of course.
20 Q --but is it correct that you changed or
21 amended the miscellaneous revenues account from 5250
22 corporate operations revenue to 5280 nonregulated
23 revenue?
24 A Yes.I did change it partly because the
25 accounts that were indicated in the annual report didn't
CSB REPORTING 26 SAMAHON-OUMAR (X)
208.890.5198 CTC Telecom
1 have similar codes that were in our financials,so I had
2 to reclassify those appropriately,so that's the reason
3 for the numbers changing.
4 Q Okay,thank you.What do these
5 miscellaneous revenues amounting to $5,308,156
6 represent?
7 A They all represent items relating to
8 interstate activities of the Company.Internet,to me,
9 based on the FCC regulations is considered interstate
10 revenues,so based on that,for wireless internet or just
11 regular internet,all was pretty clear,revenue items
12 were taken out on that basis.
13 Q So is it correct that originally you filed
14 them in such a way that they appeared to be intrastate,
15 but now your position is they're interstate?
16 A Yes.
17 MR.DUVALL:Okay,no further questions.
18 Thank you.
19 THE WITNESS:Thank you.
20 COMMISSIONER ANDERSON:Thank you.Any
21 redirect?
22 MS.MELILLO:Yes.
23
24
25
CSB REPORTING 27 SAMAHON-OUMAR (X)208.890.5198 CTC Telecom
1 REDIRECT EXAMINATION
2
3 BY MS.MELILLO:
4 Q Just for clarification,your report,and I
5 couldn't tell if counsel was saying interstate or
6 intrastate some of the time,your report that you filed
7 in April and then again in May,was that for your
8 intrastate or total gross revenues?
9 A Total gross revenues and then I had broken
10 it down to indicate what intrastate should be.
11 Q So in that initial report where you
12 categorized things in 5250 versus 5280,you didn't have
13 that segregated one way or the other as intrastate or
14 interstate?
15 A No.
16 Q So your second report was not moving
17 something from one category to another to try to change
18 its classification?
19 A No.
20 MS.MELILLO:Nothing further.
21 COMMISSIONER ANDERSON:Thank you,and
22 thank you for your testimony.
23 (The witness left the stand.)
24 COMMISSIONER ANDERSON:Does the Company
25 have other witnesses?
CSB REPORTING 28 SAMAHON-OUMAR (Redi)208.890.5198 CTC Telecom
1 MS.MELILLO:No,sir.
2 COMMISSIONER ANDERSON:No?Staff,you
3 can call witnesses.
4 MR.DUVALL:Yes,Staff calls Johan
5 Kalala-Kasanda to the stand.
6 COMMISSIONER ANDERSON:And he has
7 provided written testimony,also;is that correct?
8 MR.DUVALL:Correct.
9
10 JOHAN KALALA-KASANDA,
11 produced as a witness at the instance of the Staff,
12 having been first duly sworn to tell the truth,was
13 examined and testified as follows:
14
15 DIRECT EXAMINATION
16
17 BY MR.DUVALL:
18 Q Would you please state your name and spell
19 your first and last name for the record?
20 A My name is Johan E.Kalala-Kasanda,
21 J-o-h-a-n,and the last name is K-a-l-a-1-a -
22 K-a-s-a-n-d-a.
23 Q Thank you.Are you the same Johan E.
24 Kalala-Kasanda that filed an affidavit in this case with
25 Attachments A through C?
CSB REPORTING 29 KALALA-KASANDA (Di)208.890.5198 Staff
1 A I am.
2 Q Would it be okay if I called you
3 Mr.Johan?
4 A Yes,it will be.
5 Q Thank you.Do you have any corrections or
6 modifications to your filed affidavit or amendments?
7 A No,I do not.
8 Q If you were asked the same questions today
9 relative to your affidavit and/or amendments,would your
10 answers be the same?
11 A Yes,they would be.
12 MR.DUVALL:Mr.Chair,I would move to
13 spread the filed affidavit and Attachments A through C
14 into the record as if read.
15 COMMISSIONER ANDERSON:Without objection,
16 so done.
17 MR.DUVALL:Then would the Commission
18 like a physical copy of those?
19 COMMISSIONER ANDERSON:They're not in the
20 file currently?
21 MR.DUVALL:They are filed.
22 COMMISSIONER ANDERSON:Then we have
23 copies here,then.
24 MR.DUVALL:Okay,thank you.
25 /
CSB REPORTING 30 KALALA-KASANDA (Di)
208.890.5198 Staff
1 (Attachments A -C were admitted into
2 evidence.)
3 (The following prefiled affidavit of
4 Mr.Johan Kalala-Kasanda is spread upon the record.)
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
CSB REPORTING 31 KALALA-KASANDA (Di)
208.890.5198 Staff
1 I,Johan E.Kalala-Kasanda,being first duly
2 sworn under oath,depose and state as follows:
3 1.My name is Johan E.Kalala-Kasanda.I am over
4 21 years of age,of sound mind,and I have personal
5 knowledge of the facts stated herein.
6 2.The information contained herein is true and
7 correct to the best of my knowledge and belief.
8 3.I am a Utilities Analyst 2 -
9 Telecommunications,at the Idaho Public Utilities
10 Commission ("Commission").I have been employed at the
11 Commission since November 2017.I am responsible for
12 telecommunication companies'applications to the
13 Commission.
14 4.On May 15,2023,CTC Telecom Inc.("CTC
15 Telecom"or "Company")filed an objection,pursuant to
16 Idaho Code §61-1007,to the Company's 2023 annual
17 Assessment Fee.The Company included attachments and
18 exhibits,documenting the Commission's fee assessment
19 invoice as well as the Company's revised Gross Intrastate
20 Operating Revenues ("GIOR")for the calendar year 2022.
21 5.The Commission's operating budget is derived
22 from the assessment of regulatory fees upon utilities who
23 are subject to the Commission's jurisdiction.Idaho Code
24 §61-1003 provides that on or before April 1st of each
25 year,each utility company shall report its gross
CSB REPORTING 32 KALALA-KASANDA 1
208.890.5198 Staff
1 operating revenues from its intrastate business in Idaho
2 for the preceding calendar year.
3 6.Based upon the total amount of GIOR reported by
4 all the public utilities,the Commission then determines
5 the proportionate assessment applicable to each public
6 utility to recover the Legislature's authorized
7 appropriation.
8 7.Once each public utility's assessment is
9 determined,the Commission notifies the public utility of
10 its regulatory fee no later than May 1st of each year.
11 "Such fee shall be paid to the Commission in equal
12 semi-annual installments."Idaho Code §61-1005.Any
13 public
14 /
15 /
16 /
17
18
19
20
21
22
23
24
25
I
CSB REPORTING 33 KALALA-KASANDA la
208.890.5198 Staff
1 utility may object to the fee "on or before the time
2 specified for payment for the first installment of the
3 assessment made against it."Idaho Code §61-1007.
4 8.In its Objection email to the Commission,the
5 Company stated:
6 The 2022 revenues relating to Idaho Only
(intra-state)was significantly overstated
7 thus increasing our assessment for 2023.
This was the result of me erroneously
8 including inter-state revenues.We
realized the mistake after we received
9 your assessments for 2022.I would like toapologizefortheerrorandhopeyoucan
10 accept the revised 2023 Operator's
Statement.The change in the assessment is
11 significant to us $215.35 versus$11,638.53.
12
13 See Attachment C.
14 9.Based upon the definition of GIORs,Staff
15 calculated that the Company's GIOR for 2022 should be
16 $5,910,757.66.See Attachment A.
17 10.Staff recommends that the Company be audited
18 again for the next filing,with a special focus on the
19 procedures implemented and the effectiveness of these
20 changes.
21 11.Staff recommends that the Company be ordered to
22 conduct a separation study of its interstatei and
23 intrastate2 gross operating revenues.
24 12.Staff recommends that the adoption of
25 guidelines for the reporting of gross intrastate
CSB REPORTING 34 KALALA-KASANDA 2
208.890.5198 Staff
1 operating revenues be established so as to standardize
2 the reporting procedures for all public utility
3 companies.
4 13.For the purpose of regulatory assessment,the
5 definition of the GIOR was provided in Commission Order
6 No.28760 of Case No.EIR-R-01-01.On page 10 of this
7 Order the Commission stated:
8 Idaho Code §63-3011 defines the term
gross income as having the same meaning as
9 defined in Section 61(a)of the Internal
Revenue Code.The Tax Code defines gross
10 income as all income from whatever sources
derived,including (but not limited to)
11 the following items:compensation forservices,including fees,commissions,
12 fringe benefits,and similar items;gross
income derived from business;gains
13 derived from dealings in property;
interests;rents;royalties;dividends;
14 annuities,income from life insurance and
endowment contracts;pensions;income from
15 discharge of indebtedness;distributive
shares of partnership gross income;income
16 in respect of a decedent;and income from
an interest in an estate or trust.26
17 U.S.C.§61(a).In discussing the concept
of gross income,our Supreme
18 /
19 /
20 /
21
22
23 1Interstate gross operating revenues means operating revenues
generated from business activities conducted "between states."
24 2Intrastate gross operating revenues means operating revenues
generated from business activities conducted "within a state,such as
25 Idaho."
Court has interpreted gross income as
CSB REPORTING 35 KALALA-KASANDA 2a
208.890.5198 Staff
1 including income from any source.
Henderson v.Smith,128 Idaho 444,915
2 P.2d 6 (1996)(construing the Idaho ChildSupportGuideline,I.R.C.P.6(c)(6)).
3 Order No.28760 (internal quotations and changes
4 omitted).Therefore,Staff followed the methodology
5 determined in Order No.28760 to determine intrastate
6 revenues as all revenues that are generated as a result
7 of the Company's activities that occur only in the State
8 of Idaho.The origination and ultimate destination must
9 be within the state.
10 14.Staff performed several substantive tests of
11 the reported revenue.The testing of relevant assertions
12 included:completeness,accuracy,valuation and
13 allocation,existence,cutoff,occurrence,and
14 classification and understandability.As explained below,
15 Staff found that the Company erroneously reported its
16 intrastate revenues.
17 15.The reported revenues are classified into
18 revenue accounts and these revenue accounts are broken
19 into categories that Staff established for intrastate
20 operating revenues.These categories generally mirror
21 revenue accounts established by the Code of Federal
22 Regulation ("CFR"),47 CFR Part 32 Subpart D.The Code
23 provides the Uniform System of Accounts for
24 Telecommunications Companies.
25 16.The revenue accounts include the actual cash
CSB REPORTING 36 KALALA-KASANDA 3
208.890.5198 Staff
1 revenues (or equivalents)that have or will occur as a
2 result of the company's ongoing major or central
3 operations during the period.They include the revenues
4 which arise from furnishing regulated telecommunications
5 services to others,from directory advertising,rentals
6 of telecommunications assets and from providing other
7 services which are directly associated with the provision
8 of regulated telecommunications services.
9 17.Staff does not believe operating revenues were
10 accurately reported or properly updated by the Company.
11 This is because,since January 2023,the Company has
12 reported different amounts of GIOR.In the annual report
13 filed to the Commission on April 14,2023,the Company's
14 GIOR was reported to be $5,814,258.On March 3,2023,the
15 GIOR reported was $5,872,113.On May 15,2023,the
16 Company filed a revised GIOR of $108,652.91,claiming
17 calculation errors.See Attachment A and Attachment C.
18 18.During the audit,Staff uncovered numerous
19 inaccuracies in the calculations of account balances,
20 misclassifications,and inappropriate presentation of
21 account balances.The Company did not fully respond to
22 the first round of audit requests issued by the Staff.
23 /
24 /
25
CSB REPORTING 37 KALALA-KASANDA 3a
208.890.5198 Staff
1 19.Staff was particularly concerned with different
2 classifications that the Company reported in the accounts
3 5250 Corporate Operations Revenue of $5,254,1513 and 5280
4 Nonregulated Operating Revenue of the amount of
5 $5,308,156.4 In the annual report filed with the
6 Commission on April 14,2023,this was allocated to
7 sub-account 5250.However,in the attachment to the
8 objection the Company moved these revenues to account
9 5280 Nonregulated Operating Revenue and made this a basis
10 for its filing error.Staff does not agree with this
11 presentation.
12 20.For the reasons outlined above,Staff believes
13 that it is inappropriate for the Commission to accept any
14 of the four versions of the GIOR submitted by the
15 Company.Staff recommends that the Commission accept the
16 amount of $5,910,757.70 as the GIOR for the Company for
17 the year 2022.
18 21.Staff recommends an audit of the internal
19 oversight/controls and intrastate revenues be completed
20 for the operating year 2023 by Commission Staff,with a
21 special focus on the procedures implemented and the
22 effectiveness of these changes.The audit will determine
23 compliance with the definition of Intrastate Revenues as
24 provided by the Commission.
25 22.Staff also recommends that the Company be
CSB REPORTING 38 KALALA-KASANDA 4
208.890.5198 Staff
1 ordered to conduct a separation study of its interstate
2 and intrastate gross operating revenues.Additionally,
3 Staff recommends that the adoption of guidelines for the
4 reporting of gross intrastate operating revenues be
5 established so as to standardize the reporting procedures
6 for all public utility companies.
7 /
8 /
9 /
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24 3 As shown on Attachment B
4 As shown in Attachment C and Attachment A -total of lines 48 to
25 102
CSB REPORTING 39 KALALA-KASANDA 4a
208.890.5198 Staff
1 (The following proceedings were had in
2 open hearing.)
3
4 DIRECT EXAMINATION
5
6 BY MR.DUVALL:(Continued)
7 Q Mr.Johan,on paragraph 5 of your
8 affidavit,you state,"Idaho Code Section 61-1003
9 provides that on or before April 1st of each year,each
10 utility company shall report its gross operating revenues
11 from its intrastate business in Idaho for the preceding
12 year";is that correct?
13 A Yes.
14 Q Does Idaho Code 61-1003 specifically state
15 that it's dealing with gross operating revenues?
16 A Yes.
17 Q Does Idaho Code 61-1003 state specifically
18 that it's dealing with intrastate,intrastate ending with
19 an "a"?
20 A Yes.
21 Q Or intrastate with an "a"in the middle,
22 not ending with an "a."Now that we know that we are
23 dealing with intrastate revenue,let's move to paragraph
24 13 of your affidavit.What has the Commission previously
25 defined as gross operating --sorry,as gross operating
CSB REPORTING 40 KALALA-KASANDA (Di)
208.890.5198 Staff
1 revenue in previous cases?
2 A In Commission Order No.28760,the
3 Commission provided an elaborate definition of what
4 constituted gross intrastate operating revenue as
5 revenues generated from businesses within the State of
6 Idaho,specifically origination and termination within
7 the State of Idaho.
8 Q Okay,so is it your understanding that as
9 long as the source,the destination,is within the State
10 of Idaho that it's intrastate revenue?
11 A Indeed.
12 Q Now,the quoted section in your affidavit
13 uses the word "income"from Order 28760.Did the
14 Commission in Case No.28760 treat gross income as gross
15 revenue for the purposes of assessment fees?
16 A That's correct,yes.From my
17 understanding of that Order,they were just semantics.
18 Q Okay,does the distinction between
19 regulated and deregulated operations matter for the
20 purposes of determining gross intrastate revenue relative
21 to assessment fees?
22 A No,it does not.
23 MR.DUVALL:Thank you.The witness is
24 now available for cross-examination.
25 MS.MELILLO:Thank you.
CSB REPORTING 41 KALALA-KASANDA (Di)208.890.5198 Staff
1 CROSS-EXAMINATION
2
3 BY MS.MELILLO:
4 Q May I also call you Mr.Johan?
5 A Yes,you may.
6 Q Mr.Johan,in the Order where gross
7 income/gross revenue,and I don't care about the semantic
8 differentiation between gross income and gross revenue,
9 does it use that definition as an equivalent to gross
10 intrastate income or revenue or is it just gross
11 income?
12 A Well,my understanding of the Order is
13 that the Internal Revenue Code definition of what is
14 considered gross income is adopted to provide the
15 Commission definition of what is considered gross
16 revenues for a company,so that's my understanding of the
17 way the Commission issued the Order.
18 Q So it's gross income,but it's not gross
19 intrastate income?
20 A Well,it is gross income per IRS,the
21 Internal Revenue Code,but the Commission as an adoption
22 of that definition,it is gross intrastate revenue.
23 MS.MELILLO:Can I give him --I don't have
24 copies,but can I give him a copy of the Order to --
25 THE WITNESS:I do have it here.
CSB REPORTING 42 KALALA-KASANDA (X)
208.890.5198 Staff
1 Q BY MS.MELILLO:Okay,can you show me
2 where in that Order it states that gross income is the
3 equivalent of gross intrastate income such that you take
4 the Company's entire gross income without looking at
5 generation and call it gross intrastate income?
6 A Well,I think that the Commission Order
7 was very elaborate in providing this explanation.The
8 Commission dedicated an entire section to this and I'm
9 going to read this to you.It says on page 10 at the top
10 of the Order,"The term gross operating intrastate
11 revenues is not defined in the Public Utilities Law."
12 That's to me indicating how the Commission came about
13 adopting the Internal Revenue Code definition into its
14 Order,so from the Commission Order,the definition of
15 gross intrastate operating revenue is gross revenues,not
16 gross income as defined in the Internal Revenue Code.
17 Q Again,yes,it says that in discussing the
18 concept of gross income,our Supreme Court has
19 interpreted gross income as including income from any
20 source,but it doesn't say anywhere in this Order that
21 gross income or gross revenue is the equivalent of gross
22 intrastate revenue or income;in other words,yes,gross
23 income or gross revenue is everything we've made,but for
24 purposes of the statute which says what we're assessing
25 is gross revenues that are intrastate in nature,does
CSB REPORTING 43 KALALA-KASANDA (X)
208.890.5198 Staff
1 there not have to be a second analysis to take out of
2 your gross income the interstate portion of that?
3 A From the definition of what is considered
4 gross intrastate operating revenues provided in the
5 Order,for the sole purpose of assessing regulatory fees,
6 that is where only instrastate are considered,because
7 the Commission only considers the business activities and
8 revenues generated for those business activities within
9 the State of Idaho.
10 Q In your affidavit --again,what paragraph
11 was that --paragraph 13 you state that to determine
12 intrastate revenues as all revenues that are generated as
13 a result of the Company's activities that occur only in
14 the State of Idaho.The origination and ultimate
15 destination must be within the state.Is internet
16 activity generated within both the origination and the
17 destination within the state?
18 A Yes.
19 Q Really?
20 A I can elaborate.
21 Q Pardon?
22 A Can I elaborate?
23 Q Sure.
24 A Internet services is provided from
25 physical equipment that is physically located at the
CSB REPORTING 44 KALALA-KASANDA (X)
208.890.5198 Staff
1 physical location.There's a geographic area where the
2 physical equipment will be located.That will be the
3 origination of that revenue.When the services are being
4 provided,the services then can be either within the
5 State of Idaho or someone can start reaching out for the
6 internet worldwide web;however,the income generated is
7 going from that physical location.In the Code of
8 Federal Regulations of System of Accounts,it states
9 clearly that when accounts --revenues are allocated into
10 the account,it is incumbent upon the financial officer
11 to distinguish between within those revenues which one is
12 intrastate and which one is interstate,so the internet
13 revenues are and can be both intrastate and interstate.
14 Q But in this case you've rejected any
15 internet income as being interstate?
16 A Well,that is because from the financial
17 statement that I reviewed,the group --general ledger
18 that was provided,that particular account was only
19 described as internet,so I know that internet services
20 cannot be provided without physical equipment being
21 located in a geographic physical area.From that
22 perspective,I considered that those incomes,those
23 revenues,are intrastate.If the Company provided a
24 breakdown,I would have considered that,which I did in
25 other accounts.
CSB REPORTING 45 KALALA-KASANDA (X)
208.890.5198 Staff
1 Q Are there any activities that a regulated
2 telephone company engages in that you would consider
3 interstate?
4 A Well,in this particular case,whether
5 they're regulated or nonregulated,that definition comes
6 into account.All we are considering here,I'm going by
7 the definition of the Commission,is whether the activity
8 is intrastate or interstate.
9 Q Also,in Statute 61-1003,it says utility
10 business,so arguably,that would be the regulated
11 utility business of that company since it's under Title
12 61,so there are non-regulated activities;for instance,
13 revenue generated under cable TV,for instance,would be
14 one,so just a general question,are there any
15 nonregulated,and I'm not speaking just CTC here,just in
16 general,are there any nonregulated activities that would
17 not be part of this assessment?
18 A Well,a company,a telephone company,here
19 in Idaho engages in numerous types of businesses.It is
20 incumbent upon the company to know that the revenues
21 generated,usually it will start from being interstate or
22 instrastate and then it starts moving down to being
23 regulated and nonregulated.
24 Q Is that not what Mr.Oumar provided you in
25 the comparison between the two?
CSB REPORTING 46 KALALA-KASANDA (X)
208.890.5198 Staff
1 A No.In some --when I read the entire
2 financial statement,there were some accounts that were
3 specifically identified as interstate and I did not
4 include them,and others were not mentioned and I
5 considered them to be intrastate.
6 Q Even the ones that he specifically
7 excluded as interstate,you decided they were
8 intrastate?
9 A Well,when I examined them and I made a
10 reference,my verifications on the System of Accounts as
11 issued by the Code of Federal Regulations,this is where
12 I found out that they are intrastate,but they could also
13 be,part of it could also be,interstate,but they were
14 not broken down.That is why I recommended a separation,
15 study separation,of what is considered intrastate and
16 what is considered interstate revenues,because it wasn't
17 there.
18 Q Of everything that they presented,you
19 found nothing that was interstate or nonregulated?
20 A Well,as far as the nonregulated part that
21 I excluded,because I operated exclusively from the
22 definition of what is considered gross intrastate
23 operating revenues that the Commission has issued,so I
24 did not consider regulated or nonregulated.I just
25 looked at is it intrastate or is it interstate,and then
CSB REPORTING 47 KALALA-KASANDA (X)
208.890.5198 Staff
1 I used the Code of Federal Regulations that provided
2 clear instructions as to how to break it down and how to
3 assign them to a particular account.
4 Q So there is some revenue streams that
5 could be nonregulated that would not be included in
6 here?
7 A I'll say again,the categories of being
8 regulated or nonregulated were not taken into
9 consideration.The consideration was exclusively and
10 solely for intrastate and interstate as given by the
11 Commission definition in the Commission Order
12 No.28760.
13 Q Even though the guidance on the Commission
14 website for the definition and examples of intrastate
15 gross operating revenue excludes nonregulated
16 activities?
17 A Well,I looked for the purpose of the
18 assessment.When it comes down to what is included and
19 not included,the Company when they produced their
20 financial statement,its account needs to be broken down
21 into what is intrastate and what is interstate,and there
22 is also an account of nonregulated as well,so all that
23 needs to be provided in the financial statement.I did
24 my best using the System of Accounts to review which one
25 is intrastate and which one is interstate and separated
CSB REPORTING 48 KALALA-KASANDA (X)
208.890.5198 Staff
1 the two.
2 Q The purpose of the assessment is to pay
3 for the Commission's activities in regulating these
4 companies,so I would argue that also should be looked at
5 whether intrastate or interstate is nonregulated
6 activities,because the Commission does not regulate
7 those,but moving on from that,is it your position,
8 then,I just want to be clear,internet is an intrastate
9 activity?
10 A Yes.
11 MS.MELILLO:No further questions.
12 THE WITNESS:As I said,part of it is,
13 part of it is not.
14 COMMISSIONER ANDERSON:Thank you.Any
15 redirect?
16 MR.DUVALL:Yes,we do have some
17 redirect.
18
19 REDIRECT EXAMINATION
20
21 BY MR.DUVALL:
22 Q Mr.Johan,counsel for the Company has
23 stated that Idaho Code Section 61-1003 references that --
24 she's arguing that it should only cover regulated income
25 if I understand it.You referenced Section 61-1003 in
CSB REPORTING 49 KALALA-KASANDA (Redi)
208.890.5198 Staff
1 paragraph 5 your affidavit;correct?
2 A Yes,that is correct.
3 Q So is it fair to say that you're quite
4 familiar and have read Idaho Code 61-1003?
5 A Yes.
6 Q Does Idaho Code 61-1003 anywhere use the
7 word deregulated?
8 A No.
9 Q Does it anywhere specify a distinction
10 between regulated and deregulated?
11 A No.
12 Q Okay,thank you.On paragraph 13 where
13 Idaho Code 63-3011 adopts the International Revenue
14 Code --Internal Revenue Code,thank you,you stated on
15 about the second line starting after the Code period,
16 "The Tax Code defines gross income as all income from
17 whatever sources derived";correct?
18 A That's correct.
19 Q Is the word regulated or deregulated in
20 there?
21 A No.
22 Q What about for continuing on for
23 compensation for services,does it make a distinction
24 between regulated and deregulated?
25 A No.
CSB REPORTING 50 KALALA-KASANDA (Redi)
208.890.5198 Staff
1 Q What about for fees or services,does it
2 make a distinction between regulated and deregulated?
3 A No.
4 Q What about for any of the maybe 10 or 20
5 sources of income,does it make a distinction between
6 regulated and deregulated?
7 A No.
8 Q Okay,thank you,so this section here
9 defines gross operating revenue;is that your
10 understanding?
11 A That's my understanding.
12 Q Now,how we get from here to intrastate
13 gross operating revenue is because Idaho Code 61-1003
14 explicitly states intrastate;is that correct?
15 A That's correct.
16 MR.DUVALL:No further questions.
17 COMMISSIONER ANDERSON:Thank you.Any
18 follow-up?
19 MS.MELILLO:No.
20 COMMISSIONER ANDERSON:Thank you.
21 Commissioners have any questions?Thank you,Johan,
22 Mr.Johan,excuse me.
23 (The witness left the stand.)
24 COMMISSIONER ANDERSON:Staff,do you have
25 more witnesses?
CSB REPORTING 51 KALALA-KASANDA (Redi)
208.890.5198 Staff
1 MR.DUVALL:Yes,one more.Staff calls
2 Nancy Ashcraft to the stand.
3
4 NANCY ASHCRAFT,
5 produced as a witness at the instance of the Staff,
6 having been first duly sworn to tell the truth,was
7 examined and testified as follows:
8
9 DIRECT EXAMINATION
10
11 BY MR.DUVALL:
12 Q Would you please state your name and spell
13 your first and last for the record,please?
14 A Nancy Ashcraft,N-a-n-c-y A-s-h-c-r-a-f-t.
15 Q Are you the same Nancy Ashcraft that filed
16 an affidavit in this case?
17 A Yes.
18 Q Do you have any corrections or
19 modifications to your affidavit?
20 A I do not.
21 Q If I were to ask you the same questions
22 today relative to your affidavit,would your answers be
23 the same?
24 A Yes.
25 MR.DUVALL:Mr.Chair,I now move to
CSB REPORTING 52 ASHCRAFT (Di)
208.890.5198 Staff
1 spread the affidavit filed by Nancy Ashcraft to the
2 record as if read.
3 COMMISSIONER ANDERSON:Without objection,
4 so moved.
5 (The following prefiled affidavit of
6 Ms.Nancy Ashcraft is spread upon the record.)
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CSB REPORTING 53 ASHCRAFT (Di)208.890.5198 Staff
1 I,Nancy Ashcraft,being first duly sworn under
2 oath,depose and state as follows:
3 1.My name is Nancy Ashcraft.I am over 21 years
4 of age,of sound mind,and I have personal knowledge of
5 the facts stated herein.
6 2.The information contained herein is true and
7 correct to the best of my knowledge and belief.
8 3.I am a Financial Specialist,Senior at the
9 Idaho Public Utilities Commission ("Commission").I
10 started working in this position in 2016.I am
11 responsible for the billing and collection of annual fees
12 assessed on public utilities as described in Idaho Code
13 §§61-1001 through 61-1008.
14 4.In my position,I am aware that CTC Telecom
15 Inc.("Company")objected to its 2023 assessment fees
16 ("Objection").The Company filed its Objection and two
17 accompanying Exhibits on May 15,2023.
18 5.The Company claimed it made an error in the
19 intra-state data that it sent to the Commission;the
20 Company stated this error resulted in an assessment fee
21 of $11,638.53 instead of $215.35.
22 6.The Commission issued Notice of Objection on
23 May 26,2023,and the Company was served the Notice of
24 Objection Hearing via email on that same date.See IDAPA
25 31.01.01.14.The Company was also sent the Notice of
CSB REPORTING 54 ASHCRAFT 1
208.890.5198 Staff
1 Objection Hearing via certified mail as courtesy.The
2 Objecting Hearing has been set for June 8,2023,in
3 accordance with Idaho Code §61-1007.
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CSB REPORTING 55 ASHCRAFT la
208.890.5198 Staff
1 (The following proceedings were had in
2 open hearing.)
3 MR.DUVALL:The witness is now available
4 for cross-examination.
5 MS.MELILLO:I have no questions for
6 you.
7 COMMISSIONER ANDERSON:No questions.
8 Thank you very much.
9 (The witness left the stand.)
10 COMMISSIONER ANDERSON:Staff?
11 MR.DUVALL:That is it for Staff.That
12 is all of our witnesses.Thank you.
13 COMMISSIONER ANDERSON:All right.That
14 looks like we've expired our witness list,and at this
15 point in time,I guess,unless any parties have any
16 additional information they'd like to provide to the
17 Commission now,it's a good time to do it.If not,the
18 Commissioners find,will find,there is something else
19 that needs to be added to the record prior to the
20 Commission --strike,sorry.The testimony being given
21 today,we will close this hearing out and a final Order
22 will be done and we'll deliberate privately.
23 This hearing will be completed and we will
24 close the record as of now,meaning that this case will
25 be deemed fully submitted.The Commission will
CSB REPORTING 56 COLLOQUY
208.890.5198
1 deliberate privately and a final decision will be done at
2 that time.With that,this hearing is adjourned.
3 (All exhibits previously marked for
4 identification were admitted into evidence.)
5 (The hearing adjourned at 2:28 p.m.)
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CSB REPORTING 57 COLLOQUY208.890.5198
1 A UTHENT I C A T I ON
2
3
4 This is to certify that the foregoing
5 proceedings held in the matter of CTC Telecom,Inc.'s,
6 objection to its 2023 annual assessment fees,commencing
7 at 1:30 p.m.,on Thursday,June 8,2023,at Commission
8 Hearing Room,11331 West Chinden Blvd.,Building 8,
9 Suite 201-A,Boise,Idaho,is a true and correct
10 transcript of said proceedings and the original thereof
11 for the file of the Commission.
12 Accuracy of all prefiled testimony as
13 originally submitted to the Reporter and incorporated
14 herein at the direction of the Commission is the sole
15 responsibility of the submitting parties.
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CONSTANCE S.BUCY
20 Certified Shorthand Reporter #187
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CONSTANCE S BUCY
2 3 NOTARY PUBLIC -STATE OF IDAHO
COMMISSION NUMBER l2995
MY COMMISSION EXPIRES 9-5-202424
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CSB REPORTING 58 AUTHENTICATION(208)890-5198