USWS965v15.docx

SUSAN HAMLIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
472 WEST WASHINGTON STREET
PO BOX 83720
BOISE,  IDAHO  83720-0074
[phone]
Attorney for the Commission Staff
BEFORE  THE  IDAHO  PUBLIC  UTILITIES  COMMISSION

IN THE MATTER OF THE APPLICATION)
OF U S WEST COMMUNICATIONS, INC.)CASE  NO.  USW-S-96-5
FOR AUTHORITY TO INCREASE ITS)
RATES AND CHARGES FOR)STAFF'S PARTIAL RESPONSE   
REGULATED TITLE 61 SERVICES.)TO THE SECOND PRODUCTION
)REQUEST OF U S WEST
________________________________)COMMUNICATIONS, INC.
The Staff of the Idaho Public Utilities Commission, by and through its attorney of record, Susan Hamlin, Deputy Attorney General, hereby responds to U S WEST Communications, Inc.’s Second Request for Production to the Idaho Public Utilities Commission Staff dated      December 11, 1996.  Staff has provided the responses to Request Nos. 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 149, 150, 151, 152, and 153, and will provide the remaining answers to                U S WEST's Second Production Request on December 26, 1996.
Request No. 34:Carol Cooper p. 3
With respect to each  violation referenced in the Carol Cooper testimony, p. 3,  ll. 12-15, please state the name, address, and account number for each alleged violation, and state with specificity each an every fact upon which you base your allegation that Rule 103.01 was violated in each instance.
Response No. 34:Testimony was based on comments made by complainants during conversations with investigators and documented in complaint narratives.  Information describing customer complaints for the years 1990 through September of 1996 was included in the workpapers for Staff witness Hart in Staff's response to U S WEST's First Production Request No. 4.  The underlying narrative of the investigatory record is not subject to disclosure.  Commission Rules of Procedure, Rule 26; Idaho Code § 9-337(5); Idaho Code § 9-335; Idaho Code § 9-340(22).  All identified inquiries and complaints were considered, investigated and handled informally by Staff.  Commission Rules of Procedures, Rule 21.  Staff has agreed to provide all parties to this case who have executed a confidentiality agreement access to narrative records for these investigations and has made those records available at the office of the IPUC during regular business hours.  See Staff's response to U S WEST's First Production Request   No. 9.
Request No. 35:Carol Cooper pp. 4-5
With respect to the testimony, pp. 4-5, regarding alleged violations of Rule 105.02, please identify each and every instance in which "Staff investigations" allegedly "substantiated" that deposits were incorrectly calculated by U S WEST.
Response No. 35:For August 1995, there is at least one complaint that describes problems with calculation of deposits.  In response to that complaint, U S WEST admitted that the deposit amount was based on twice the average of the most recent four bills.  There may be others that have not been discovered because of the volume of records involved.  Staff has made these records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 36:Carol Cooper p. 4
Please provide the total number of complaints/inquiries the Staff has documented regarding calculations of toll deposits by all other toll providers or toll billing agents authorized to do business in Idaho for the years 1994 to present.
Response No. 36:No comparison was made with other toll providers or billing agents.
Request No. 37:Carol Cooper p. 5
With respect to the testimony of Carol Cooper, p. 5, ll. 14-25, please provide the name, address, and account number of the customer for which the Staff allegedly documented four violations of Rule 105.02.
Response No. 37:Testimony was based on comments made by complainants during conversations with investigators and documented in complaint narratives.  Staff has made these narratives available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 38:Carol Cooper p. 6
With respect to the testimony of Cooper, at p. 6, please provide each and every fact upon which you base your statement that U S WEST has failed to correctly allocate payments to customers, in violation of Rule 312.03.
Response No. 38:Testimony was based on information gathered during investigations and documented in the complaint narratives.  Staff has made these narratives available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 39:Carol Cooper
Please quantify the total number of instances by month for January  1994 to present in which Staff has discovered an alleged violation of Rule 312.03 or 401.02.  Please provide the same information for all other telephone corporations or billing agents of telephone corporations which are authorized to provide service in Idaho.
Response No. 39:There were 13 investigations that outlined problems from January 1, 1996 through September 30, 1996.  Due to voluminous material to examine, there may be more than 13 instances.  Data was not accumulated on a monthly basis.  Results for 1994 or 1995 were not quantified.  No comparison was done to other telephone corporations.
Request No. 40:Carol Cooper
Please quantify the total number of instances by month for January 1991 to the present in which Staff has discovered a situation in which U S WEST has failed to permanently remove disputed charges from a customer's bill.  Provide the same information for all telephone corporations or billing agents of telephone corporations which are authorized to serve Idaho.
Response No. 40:No comparison was made to other telephone corporations or billing agents.  See Staff's response to U S WEST's Second Production Request Nos. 39 and 41.
Request No. 41:Carol Cooper p. 6
With respect to the testimony of Ms. Cooper, p. 6, ll. 24-25 and at p. 7 and 8, please identify each and every instance upon which you base your statement that                U S WEST violated Rule 401.02 by allowing disputed charges to appear on bills, or by removing and then reinstating charges a few months later.
Response No. 41:Testimony was based on comments made by complainants during conversations with investigators and documented in complaint narratives.  Staff has made these records available for review.  See Staff's response to U S WEST's Second Production Request  No. 34.
Request No. 42:Carol Cooper p. 7
Please provide all data and information upon which you rely for the claim that it is unreasonable to require customers to tell U S WEST how they want payments allocated when they are in a dispute with another company.
Response No. 42:No allegation was made in Carol Cooper’s testimony at page 7 “that it is unreasonable to require customers to tell U S WEST how they want payments allocated when they are in a dispute with another company.”  Rather, testimony points out that a customer should not have to repeatedly call the Company to provide directions on how to apply payments.
Request No. 43:Carol Cooper p. 8
A.Please provide all information upon which you rely for the contention that U S WEST has violated Rule 601.03 in connection with its policy not to print apartment and suite number information.
B.Please provide the absolute number of customer complaints/contacts by month for the years 1991 to present which relate to this alleged rule violation.
C.Please provide all data or other information demonstrating that other publishers of telephone directories in the state provide this service without charge.
Response No. 43:
A.See Exhibit No. 116, Schedule C, pages 1 and 2 of Carol J. Cooper’s Direct Testimony.  See also U S WEST’s response to Staff Production Request No. 215.
B.Staff objects to this request on the grounds that it seeks information that is voluminous and burdensome to obtain, further the term  “absolute number” is vague and ambigious.  However, Staff did research the records for the year 1995 and found that there was one complaint.
C.Staff witness Cooper does not have policies for other publishers in her possession.  Further, Staff witness Cooper did not rely on such data for her testimony.
Request No. 44:Carol Cooper p. 10
With respect to the testimony of Ms. Cooper  at p. 10, regarding U S WEST's new bill format, please identify each and every rule allegedly violated by U S WEST's new bill format.
Response No. 44:U S WEST’s new bill format does not violate PUC rules.
Request No. 45:Carol Cooper
Provide the total number of customer complaints/inquiries Staff has received from customers relating to the new bill format.
Response No. 45:Staff has not identified bill format complaints by a specific reason code.  Customers have made comments about the format while discussing other issues.
Request No. 46:Carol Cooper p. 12
With respect to the testimony of Ms. Cooper at p. 12, ll. 19-24, please identify the number of violations and the number of customers allegedly affected with respect to your statements regarding customers with restricted service who eventually lost their service from U S WEST.
Response No. 46:Staff has not identified by a specific reason code complaints from customers with restricted service who eventually were disconnected.  A review of complaint narratives revealed 38 toll restricted customers who were threatened with disconnection from January 1, 1996 through September 30, 1996.
Request No. 47:Carol Cooper p. 12
With respect to the testimony of Ms. Cooper, p. 12, ll. 19-24, please identify each and every fact upon which you base your statement that there is a pattern demonstrating that "customers who are toll restricted are eventually threatened with disconnection or lose their phone completely because they get further in debt and cannot pay the bill."
Response No. 47:Staff relied on its review of investigatory records.  Staff has made these records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 48:Carol Cooper p. 13
With respect to the testimony of Ms. Cooper, p. 13, ll. 4-7, please provide each and every fact upon which you base your statement that "the added expense of custom calling services and voice messaging service" is a contributing factor for customers who are unable to maintain their monthly payments.
Response No. 48:Staff relied on its review of investigatory records.  Staff has made these records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 49:Carol Cooper pp 13-14
With respect to the testimony of Ms. Cooper, pp. 13-14, please identify the number of customers identified by your research who had prior credit problems who became unable to maintain their monthly payments due to custom calling services and/or voice messaging services.
Response No. 49:Staff has not identified complaints from customers with custom calling services and voice messaging services by a specific reason code.  By reviewing investigatory records for the period from January 1, 1996 through September 30, 1996, Staff identified 99 investigations involving pending or actual disconnection of service for customers with amounts owing for non-regulated services.
Request No. 50:Carol Cooper p. 15
With respect to the testimony of Ms. Cooper at p. 15, ll. 6-12, please identify each and every fact upon which you base your statement that "in the long run, uncollectibles place an upward pressure on rates."
Response No. 50:Uncollectibles decrease the Company’s revenues.  Staff has evidence there has been an increase in uncollectibles, expressed both as actual dollars as well as a percentage of uncollectibles to gross sales.  See line 12 in U S WEST's revenue sharing report for 1995, Case No. USW-S-96-3.
Request No. 51:Carol Cooper p. 16
Please provide the total number of complaints/comments received by Staff from non-listed customers who have been contacted by U S WEST telephone solicitors.
Response No. 51:From January 1, 1996 through September 30, 1996, there were 6 complaints from non-listed customers regarding U S WEST telephone solicitors.
Request No. 52:With respect to the testimony of Ms. Cooper at p. 16, ll. 1-6, please specify the number of customers who were toll restricted or toll denied customers that actually "paid off their toll sooner than agreed to because they wanted their long distance service back."
Response No. 52:Staff objects to this request on the grounds that it seeks information that is voluminous and burdensome to obtain.  However, Staff has made the records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.  
Request No. 53:Carol Cooper pp. 17-19
With respect to the testimony of Ms. Cooper, pp. 17-19, please identify each and every fact upon which you base your statements that U S WEST has discouraged customers from implementing a PIC freeze.
Response No. 53:Staff relied on its review of investigatory records and U S WEST’s responses to Staff’s Production Requests Nos. 19 and 157.  Staff has made these records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 54:Carol Cooper pp. 19-22
With respect to the testimony of Ms. Cooper, at pp. 19-22, please identify the specificity and the number of customers allegedly affected by billing and collection problems.
Response No. 54:From January 1, 1995 through September 30, 1996, there were 892 U S WEST customers who contacted the PUC regarding disconnection or billing problems.
Request No. 55:Carol Cooper pp. 19-22
With respect to the testimony of Ms. Cooper pp. 19-22, please identify each and every fact upon which you base your statements that there have been "a number of problems, including lost and misapplied payments, misplaced proof of payment, delayed return of deposits, and failure to advice [sic] customers of how to allocate payments so that local exchange service could be preserved."  Provide the total number of such investigations the Staff has conducted into such allegations for the years 1994 to present and the total number of such investigations in which U S WEST was found to have been at fault.
Response No. 55:Staff relied on its review of investigatory records.  Staff objects to the request to provide the total number of Staff's investigations and the total number in which    U S WEST was at fault on the grounds that it seeks information that is voluminous and burdensome to obtain.  However, Staff has made the records available for review.  See Staff's response to U S WEST's Second Production Request No. 34.
Request No. 56:Carol Cooper p. 19
With respect to the testimony of Ms. Cooper p. 19, ll. 20-23, please identify each and every fact upon which you base your statement that "there is ample evidence to conclude that the Company is experiencing serious difficulties with its billing and collection operations."
Response No. 56:See Staff's response to U S WEST's Second Production        Request No. 55.
Request No. 75:  Schneider p. 11
Provide a copy of the Telephony magazine article to which you refer in testimony on page 11.
Response No. 75:The article is in your response to IPUC Staff Audit Request       No. 78C.
Request No. 76:Carlock p. 3
Please provide all information upon which you rely for the statement that                U S WEST Communication has "unique" access to names, addresses and telephone numbers of all residents and businesses as compared with other users who have purchased the information from the directory publication subsidiary.
Response No. 76:On page 3, I state, “The incumbent local exchange carrier (LEC) will maintain unique access to names, addresses and telephone numbers of all residents and businesses.”  U S WEST Communications is the incumbent LEC, therefore it has primary access to names, addresses and telephone numbers of all residents and businesses taking local service.
Request No. 77:Carlock p. 8  
Upon what "USWD market research" do you rely for the claim that the U S WEST Direct directory "continues to be the primary directory referenced by customers and advertised in by advertisers."   Please specify by number all data responses which contributed to this understanding.
Response No. 77:I relied primarily on the U S WEST answer to Staff Production Request No. 265 including SIMBA Information, Inc. and SIMBA/Communications Trends articles and USWD Idaho market share data.
Request No. 78:Carlock p. 11
Please explain how allocation of 100% of the directory revenues to Title 61 (as recommended on page 11, line 3) is fair to other potential providers of Title 61 local exchange service, but is unfair to alternative providers of Title 62 service (See, page 11,
line 5).
Response No. 78:As explained on page 11, lines 6 - 15 of my direct testimony, I believe the price set by this Commission for local resale could reflect the directory revenue benefit and passed on to the local service customer.  This uniform benefit would be fair to all local service customers and would not disadvantage other potential Title 61 providers since the benefit is reflected in the resale price to all providers.  This would not necessarily be the case with Title 62 services because charges for all Title 62 services are not established by this Commission and the benefit may not be passed on to the end-user customer.
Request No. 79:Carlock p. 23
Please provide all information upon which you rely for the claim that  "competitive risks are less for U S WEST than for many telephone companies."
Response No. 79:The following documents were reviewed to support this statement:  Rating Agency and Market publications from Standard & Poors; Duff & Phelps; Salomon Brothers; Fitch; Furman Selz; Moody's Public Utility Manual, 1995 and 1996; Moody's Public Utility News Reports, 1996; C.A. Turner Utility Report, March and November 1996; Value Line Investment Survey for Windows, October 30, 1996 - data discs.  News releases and data off the Internet from PointCast and QuoteCom Services.
Request No. 80:Stockton
Please provide your source of information that indicates the existence of a State Executive Board in Idaho as referenced on page 6, line 5 & 6.
Response No. 80:The referenced statement does not indicate the existence of a State Executive Board in Idaho.  Those lines state:  “...Advisors (current members of the State Executive Boards ) are also eligible for concession...”  The information is from U S WEST Communications, Inc., Regional Policy and Procedures “RPP 1207 - Telephone Concession Plan” manual that was received in response to Staff Audit Request 41.  The source of information for the Advisors is found in Section 5 of the manual.  
Request No. 81:Stockton p. 8
Please list and describe each and every action taken by the Staff or the Commission to enforce Order No. 18188 as it pertains to the requirement of an informational tariff filing or other statement regarding the provision of telephone concession to employees.
Response No. 81:Staff is unaware of any specific actions to enforce Order             No. 18188 as it pertains to the requirement of an informational tariff filing or other statement regarding the provision of telephone concession to employees.
Request No. 82:Stockton p. 13
Please describe the process of your analysis and the basis of your decision to exclude any sub-account as not relating to Title 61 services.  Was this done entirely on the basis of the sub-account title?  If not, identify all other methods used to make this determination.  Please provide a list of all sub-account titles which you determined related entirely to    Title 62.  Please provide a similar list for all that you determined to be Title 61.
Response No. 82:Staff objects to the term “process of analysis” as being vague and ambiguous.  For clarity in responding to request No. 82, I have broken the request down into three parts.
A. Please describe the process of your analysis and the basis of your decision to exclude any sub-account as not relating to Title 61 services.  Was this done entirely on the basis of the sub-account title?  If not, identify all other methods used to make this determination.
The process of my analysis and  the basis of my decision to exclude any sub-account as not relating to Title 61 services is explained in my direct testimony.  I entered each and every account and sub-account heading into a lotus spreadsheet.  I then inserted the year-end dollar amounts into the spreadsheet in the appropriate accounts.  These dollar amounts, as previously stated in my direct testimony, are from the U S WEST southern Idaho Jurisdictional books.  The decision to classify an account as not being related to Title 61 services was not done entirely on the basis of the account title.  I also relied on the assistance of Staff Accountant Syd Lansing, when deciding which accounts to exclude as a part of the Chart of Accounts adjustment.  In addition to the account title, and the expertise of Syd Lansing, I also relied upon the FCC’s Part 32, Uniform System of Accounts, specifically Section 32.5999 through Section 32.7250.  Copies of these spreadsheets were provided on November 26, 1996.  A disk containing these spreadsheet files was also provided on November 27, 1996.
B.  Please provide a list of all sub-account titles which you determined related entirely to Title 62.
A list of sub-account titles which are identified as being “Not Title 61" expenses has previously be provided in Stockton’s work papers.
C.  Please provide a similar list for all that you determined to be Title 61.
A complete list of all accounts has previously been provided in Stockton’s work papers.  The accounts that have been identified as being “Not Title 61" expenses are included in the complete listing of all accounts.  The accounts and sub-accounts of expenses on the complete list that are not included in the “Not Title 61" category are either Title 61 expenses or Title 61 and 62 expenses.
Request No. 83:Stockton p. 14
What numerical portion of your "adjustment to expenses" of $9,827,635 was included in Title 61 expenses in U S WEST's rate request in this docket?  Please provide work papers showing how you reached this conclusion.
Response No. 83:Staff did not calculate whether any portion of $9,827,635 was included as part of the Company’s Title 61 expenses.  U S WEST’s Title 61 rate request did not contain sufficient detail in the work papers for Staff to use it as the starting point to calculate Staff’s proposed revenue requirement.  These expenses should be directly assigned at the Idaho Intrastate level.  Staff’s case is based on the 1995 Idaho Intrastate JD booked amounts.
Request No. 84:Stockton pp. 21-22.
A.Is this adjustment made exclusively on the basis that the entries (in your opinion) related to expenses that should be allocated solely to Title 62 services, or does the adjustment also cover expenses that you believe should be allocated to a different jurisdiction?  If your adjustment covers both kinds of issues, please provide a breakdown of all components of the $857,352 adjustment as to whether they are made on the basis of  1) not being related to a Title 61 service or, 2) not being related directly related to the  southern Idaho jurisdiction.
B.What portion of the $857,352 adjustment was included by U S WEST in its rate request in this docket?   Please provide work papers showing your calculations for this response.
Response No. 84:
A.Staff provided my workpapers on November 26, 1996,  that identify the adjustment components.
B.Staff did not calculate whether any portion of $857,352 was included as part of the Company’s Title 61 expenses.  U S WEST’s Title 61 rate request did not contain sufficient detail in the work papers for Staff to use it as the starting point to calculate Staff’s proposed revenue requirement.  These expenses should be directly assigned at the Idaho Intrastate level.  Staff’s case is based on the 1995 Idaho Intrastate JD booked amounts.
Request No. 85:Stockton pp. 24-25
What portion of the $784,630 adjustment that you recommend for advertising was included by U S WEST in its rate request in this docket?  Please provide work papers showing your calculations for this response.
Response No. 85:Staff did not calculate whether any portion of $784,630 was included as part of the Company’s Title 61 expenses.  U S WEST’s Title 61 rate request did not contain sufficient detail in the work papers for Staff to use it as the starting point to calculate Staff’s proposed revenue requirement.  These expenses should be directly assigned at the Idaho Intrastate level.  Staff’s case is based on the 1995 Idaho Intrastate JD booked amounts.
Request No. 127:Baldwin
Provide all correspondence, memos, notes of telephone conversations, E-Mail messages and files, and all other data of any kind pertaining to each and every contact and exchange between any member of the IPUC Staff (including persons who have subsequently left the Staff) and ETI, or any employee thereof including but not limited to Lee Selwyn and Susan Baldwin.
Response No. 127:Staff objects to this request on the grounds that it is overly broad and seeks information that is protected by attorney/client privilege and is work product.  Further, Staff objects to this request on the grounds that it asks for information that is not relevant and not likely to lead to discovery of admissible evidence in this proceeding.  Staff members who have relevant information and who will be testifying for this docket have been identified in Staff's response to U S WEST's First Production Request No. 2.  In response to U S WEST's First Production Request No. 4 Staff provided copies of its workpapers in support of its testimony.  Staff also reviewed all production requests, audit requests, and annual reports of U S WEST in preparation for its testimony in this proceeding.
Request No. 128:Baldwin
Provide a copy of the agreement under which ETI was retained and all amendments, extensions and appendices which accompany, modify or update such agreement.
Response No. 128:Staff objects to this request on the grounds that it seeks information that is protected by attorney/client privilege and is work product.  Further, Staff objects to this request on the grounds that it asks for information that is not relevant and not likely to lead to discovery of admissible evidence in this proceeding.
Request No. 129:S. Baldwin p. 3
Provide the origin of the 5% allocation of local loop to custom calling features and explain why this particular percentage is chosen.
Response No. 129:The 5% allocation of the local loop was based on an analysis of    U S WEST's revenues.  U S WEST derives approximately that amount of its total revenues in southern Idaho from custom calling features.  Accordingly, 5% was chosen as a fair and conservative percentage of the local loop to assign to custom calling.  See Exhibit No. 114, Schedule 10.
Request No. 130:S. Baldwin p. 4
Explain the term "economically efficient" as it is used on page 4, line 6.
Response No. 130:"Economically efficient" production methods produce a given amount and/or type of output for the least possible cost.  As Ms. Baldwin's testimony makes clear, U S WEST has undertaken a number of investments in southern Idaho that do not represent the least-cost alternative in terms of the provision of Title 61 services.  For more on this topic, see:  Paul A. Samuelson, Foundations of Economic Analysis, Enlarged Edition, Harvard Economic Studies, v. 80, Cambridge, MA, Harvard University Press, 1983, Chapter IV; and Hal R. Varian, Intermediate Microeconomics:  A Modern Approach, Third Edition, New York, W. W. Norton & Company, Inc., 1993, Chapters 18 and 19.
Request No. 131:S. Baldwin p. 5
Please define the term "corrected plant in service" as  used at line 8.
Response No. 131:“Corrected plant in service” refers to Staff's allocation of plant in service between Title 61 and Title 62, which corrects for errors in U S WEST's proposal.
Request No. 132:S. Baldwin p. 8
Explain the statement at line 14, that Title 61 services are required "economically" to be "jurisdictionally separated from any services the Company might be offering simultaneously under Title 62".  Explain all economic theories or other economic principles which demand such separation.
Response No. 132:This statement is based on Commission directives that require    U S WEST to separate and allocate to Title 61 only those revenues and expenses derived from, and directly required for, the provision of Title 61 services.  As Ms. Baldwin observed in her testimony (pages 11-12), in a 1994 decision, the Commission set forth three criteria to be followed in an allocation method:
1.Title 62 services must not be subsidized by Title 61 services.
2."Title 62 services must be assigned a reasonable portion of the common and joint network costs as well as general overhead costs.  In particular, all services using the local loop should be included in the allocation of the loop costs."
3."Direct cost assignment must be used when facilities or other operating expenses are clearly necessary for only Title 61 or Title 62 services, when the level of costs is escalated beyond what is necessary for Title 61 services alone, the additional cost should be directly allocated to Title 62" (Order No. 25826, at 11, Case No. USW-S-94-3).
Request No. 133:S. Baldwin p. 14
Does Staff have evidence that any of the investment made by U S WEST in the alternative toll fiber route discussed at page 14 was allocated by U S WEST to Title 61 services in this case?  If so, please provide the numerical amount of any such allocation and all documents which support Staff's conclusion.
Response No. 133:Staff does not allege "that any of the investment made by          U S WEST in the alternative toll fiber route discussed at page 14 was allocated by U S WEST to Title 61 services in this case."
Request No. 134:S. Baldwin p. 19
Please describe each step taken by Ms. Baldwin and the amount of time spent on each step in attempting to "verify the validity of the logic" of each the special studies referred to in the CAAS system.  Provide the same information for each other member of the IPUC Staff and each ETI employee who was engaged in this process.
Response No. 134:Staff objects to this request on the grounds that it asks for information that is not relevant and is not likely to lead to discovery of admissible evidence in this proceeding.  Further, Staff objects on the basis that it seeks information that is protected by attorney/client privilege and is work product.  
Staff witnesses with relevant information pertaining to the CAAS system are Susan Baldwin and Sydney Lansing.  Susan Baldwin of ETI analyzed the CAAS and CARS data files provided by U S WEST, as well as the associated Cost Segregation and Accounting Manuals.  Additionally, Ms. Baldwin requested the Special Studies mentioned in the Cost Segregation Manual; however they were not readily provided by U S WEST (see Response to Staff Data Request 03-169).  Finally, in addition to other efforts, Ms. Baldwin traveled to Denver to discuss the CAAS system with Dallas Elder and other members of U S WEST's Finance Organization.
IPUC Staff member Sydney Lansing analyzed the CAAS and CARS data files provided by U S WEST, compared the CAAS procedure to U S WEST's regular books, and attempted to trace the process via which the CAAS and CARS systems derive their jurisdictional, product, and Title 61/Title 62 separations.  Mr. Lansing traveled to Denver to discuss the CAAS system with Dallas Elder and other members of U S WEST's Finance Organization.
Request No. 135:S. Baldwin p. 28
Provide each and every fact upon which you rely for your statement:  "The Company has invested in excess capacity far beyond what would be needed to meet a reasonable business projection of growth in demand for new lines."  Produce each document which embodies, reflects or relates to the facts which support this claim.
Response No. 135:This statement was based upon U S WEST's response to Staff Audit Request 18, Attachment A, in which the Company provides data that indicates that only 10% of the installed fiber plant in southern Idaho is currently "lit" (in use).  It is further based upon a comparison of U S WEST's objective and actual fill factors in southern Idaho, which also indicate the presence of a significant amount of spare capacity (Proprietary response to Staff Data Request 02-049, Attachment A).
Request  No. 136:S. Baldwin p. 28 / Exhibit 114, Schedule 1
Using the categories depicted on Exhibit 114, Schedule 1, identify in the dollar amount of alleged "over-investment" contained in each category under U S WEST's proposed allocation.
Response No. 136:ETI's research has indicated that there is a substantial level of over-investment in plant allocated to Title 61 in U S WEST's proposed allocation.  Performing a complete and accurate analysis of the dollar amount of this over-investment would require data regarding the specific types and amounts of plant and equipment allocated to Title 61 for each product category, a greater level of detail than U S WEST's CARS-based allocation between Title 61 and Title 62 provides.  An ETI analysis of over-investment would require that U S WEST provide any and all information required to develop measures of plant used to provide Title 61, Title 62, or a combination of the two services, and idle plant or spare capacity.
Request No. 137:S. Baldwin p. 27
Provide all facts upon which you rely for the conclusion that any substantial part of U S WEST's distribution plant was constructed and is being held for future Centrex Services.
Response No. 137:The text referenced on page 27 is a hypothetical statement.  See e.g., Selwyn, Lee L., Patricia D. Kravtin, and Paul S. Keller, “An Analysis of Outside Plant Provisioning and Utilization Practices of U S WEST Communications in the State of Washington,” prepared for the Washington Utilities and Transportation Commission, March  1990, Attachment 8.
Request No. 138:S. Baldwin p. 36
A.Provide all facts upon which you rely for the claim "the need for extensive spare capacity is driven primarily by discretionary and competitive services."
BProduce all documents which embody or reflect the facts identified in this response.
Response No. 138:
A.This statement is based upon calculations of the growth in demand for Title 61 versus Title 62 services.  Demand for, and revenues from, Title 62 services are growing at a substantially faster rate than Title 61 services.  The majority of U S WEST's spare capacity is therefore likely to be employed in the provision of Title 62 services.
B.See Exhibit No. 113, Schedule 2; Staff's response to U S WEST's Second Production Request No. 137.
Request No. 139:S. Baldwin p. 35
Describe how you would determine the "stand-alone" cost of regulated and non-regulated services.  What costs (i.e., embedded, TSLRIC) are to be determined under the procedure described at page 35, lines  2-10?
Response No. 139: In general, stand-alone costs would need to be developed by configuring a network and facilities mix that would be required solely to provide Title 62 services.  Since Title 62 services are, by definition, "competitive," these would be the costs that any non-ILEC competitor would incur in providing the same set of services without the ability or opportunity to utilize plant that is also used to provide monopoly Title 61 services on a joint basis.  An engineering cost analysis undertaken on this basis should develop TSLRIC type costs.  If costs are to be expressed on an embedded basis, the TSLRIC stand-alone costs could be transformed into embedded costs by application of conversion factors.
Request No. 140:S. Baldwin p. 35, ll. 19-21
What is the origin of the "requirement" that prices for "competitive, non-regulated services" be based on the "stand-alone" costs of the services?  Are the relevant costs for meeting this "requirement" embedded, historical costs or some form of marginal or incremental costs?
Response No. 140:See Staff's response to U S WEST's Second Production Request No. 139.  This requirement follows from the principle that all economies of scope derived from the simultaneous provision of regulated and non-regulated services be allocated to customers of the regulated, monopoly service.  As Ms. Baldwin states in her testimony    (p. 35, ll. 19-21), the benefits of such economies should flow to monopoly customers for two reasons:  first, because monopoly customers have funded the majority (indeed, before 1989, all) of the ILEC's investment in infrastructure, and second, because eliminating those economies from non-regulated services helps to ensure that the ILEC possesses no unfair advantage over new entrants.  Stand-alone costs for competitive Title 62 services should be developed on a forward-looking TSLRIC basis, since these are the costs that a new competitor would encounter when entering the market, and would reduce the potential for adverse impact on competition from many of the various incumbency advantages uniquely available to the ILEC.
Request No. 141:S. Baldwin p. 36, ll. 15-17
What incumbent "competitive entry" is referenced at line 15?  Do you refer to        U S WEST's entry into the interLATA toll market?  Would the proposed allocation in fact, create an incumbent LEC disadvantage?  Explain why or why not.
Response No. 141:"Competitive entry" of the incumbent refers to the provision of any competitive (that is, Title 62) service by the incumbent.  As Ms. Baldwin stated in her testimony (pp. 35-36), allocating the benefits of economies of scope to monopoly customers would reduce the inherent advantage the ILEC will possess upon entering a competitive market, for instance, the interLATA toll market.  In no way, however, would it make the ILEC any worse off than any other entrant that seeks to provide service in that market.  Indeed, the ILEC would retain substantial advantages over other entrants (e.g., its ownership of a near-ubiquitous local network, its experience and know-how in the provision of telecommunications services, and its substantial maintenance and support personnel and infrastructure).  The recommended allocation will only reduce some of the financial advantage the ILEC would otherwise possess.
Request No. 142:S. Baldwin p. 42
Please provide the factual basis for your statement on page 42, ll. 13-15, which indicates that Title 62 services face "little if any competition."  Please focus your response to such Title 62 services as long distance, dedicated private line services, speed calling services, dedicated point-to-point data services, high-speed packet-switched data services and voice messaging services.
Response No. 142:Staff witness Baldwin's testimony on page 42 does not indicate “that Title 62 services face 'little if any competition'”as implied in the request.  Rather, her testimony there addresses custom calling and CLASS services.
Request No. 143:S. Baldwin p. 45
A.Did Staff calculate the 1995 annual Title 62 revenue generated in the 52 rural wire centers that were upgraded to digital switching under the Tech Plus Program?  If so, provide the calculation and all documents and workpapers that support your calculation.
B.If your response is that Staff does not have sufficient information to provide this calculation, please identify all data requests in which the Staff attempted to obtain this information and describe whether the Company cooperated in providing it.  
C.What impact will the recent EAS order creating larger local calling areas have on the amount of Title 62 revenues generated in these rural wire centers?
Response No. 143:
A.No.
B.Staff did not make any specific data requests for Title 62 revenues in the 52 rural wire centers; however, U S WEST was generally highly non-responsive to any data requests regarding its provision of Title 62 services, for instance stating that "Title 62 services are not economically regulated and therefore would not lead to admissible evidence in this proceeding." (See, for instance, responses to Staff Production Request Nos.3 - 185).  See also responses to Staff Production Request           Nos. 2 - 86 and Nos. 2 - 87.
C.Presumably the recent EAS order will reduce the relative quantity of Title 62 revenues, because calls that were considered toll (Title 62) will shift to being local (Title 61).  The costs associated with those calls, as well as some plant and equipment, will also presumably shift from Title 62 to Title 61, although the precise manner in which such shifts occur will be impacted by the toll-to-local reclassification as provided for in 47 CFR §36 (jurisdictional separations).  As a result, it is ambiguous as to whether U S WEST's Title 62 profits will rise or decline as a result of the shift to EAS.
Request No. 144:S. Baldwin p. 45, ll. 15-16
Provide all data upon which you rely for your statement "Title 61 services derive little if any direct benefit from Company-funded CO upgrades."
Response No. 144:The Commission has previously accepted Staff's statement, referenced in Ms. Baldwin's testimony, that "the 20 older electronic analog switches ... provide most if not all features otherwise provided by U S WEST's newer digital switches." (Idaho PUC Order No. 24506, at 10.)  Since the specific upgrades of analog to digital switches in this case do not provide any additional features for Title 61 customers, Staff concludes that Title 61 customers do not directly benefit from them.
Request No. 145: S. Baldwin p. 65
Provide all cost/benefit analysis Staff has performed regarding its recommendation U S WEST be required to develop "improved reporting and accounting systems, such as time management systems for its corporate and customer service operations."
Response No. 145:Staff has performed no such cost/benefit analyses.  Staff's recommendation in this case is not based upon a business case scenario, but rather upon the regulatory requirements that U S WEST accepted when it undertook to shift services to     Title 62.
Request No. 146:S. Baldwin p. 66, ll. 15-18
A.Has Staff performed an analysis of U S WEST's Title 62 operations and rate of return based on:
a)U S WEST's proposed allocation of costs to Title 62?
b)Staff's proposed allocation of costs to Title 62?
B.Provide the results of any such analyses and all supporting documents and workpapers.
Response No. 146:
A.No.
B.N/A
Request No. 147:S. Baldwin (generally)
List all currently offered Title 62 services which theoretically benefit from:
a)  "excess capacity" in distribution facilities; and
b)  "excess capacity" in feeder.
Response No. 147:All Title 62 services that involve the use of feeder and distribution plant theoretically benefit from excess capacity in distribution facilities and from excess capacity in feeder.  These would include, inter alia, centrex, PBX trunks, local private lines, digital access lines, video services, remote metering, alarm monitoring, and ISDN.
Request No. 149:Selwyn
On page 4, ll. 7 & 8, you discuss "Title 61 plant" and "Title 62 plant."  Please provide three examples of each type of telecommunications network plant that you believe belongs within each of the two categories.
Response No. 149:“Title 61 plant” is plant that is used to furnish Title 61 services; “Title 62 plant” is plant that is used to furnish Title 62 services.  The distinction that is being made here (in describing plant as belonging to either Title 61 or Title 62) is that, through use of a cost allocation process that is properly designed and implemented, plant can be divided as between Title 61 and Title 62 services.  In some cases, plant can be specifically assigned directly to either Title 61 or Title 62, but a significant portion of plant is shared by both service categories.  As discussed in Ms. Baldwin's testimony at pages 35-37, Title 62 plant consists of all plant that would be required to furnish Title 62 services on a stand-alone basis.  Title 61 plant consists of all remaining shared telephone plant in service that is not assigned to Title 62, plus any items that are used exclusively to furnish Title 61 services and are directly assigned.
Request No. 150:Selwyn
On page 4, ll. 18-20, you recommended no adjustments for "depreciation rates and lives that were last formally authorized for U S WEST in 1988 for Title 61 services."  Please explain how depreciation rates are set for Title 61 services.  Specifically, please provide the 1988 depreciation rates set for residential local exchange service and blocking service for "976" and "900" services.
Response No. 150:The reason for distinguishing the appropriate depreciation rates as specifically applying to Title 61 services is that since Title 62 services are non-regulated,           U S WEST can choose to apply any depreciation rates it desires to Title 62 plant, whereas Title 61 services continue to be regulated by the Idaho PUC.  Dr. Selwyn's affirmative recommendation is that the Commission apply the last formally authorized depreciation lives to the categories of plant first identified on page 33 of the Direct Testimony of William R. Easton and as shown in the first column of Dr. Selwyn's Exhibit 112, Schedule 5, which is duplicated below:
1988 Idaho PUC Approved Depreciation Lives
Accountfor Southern Idaho Plant (projected years)
ESS - Digital20.0
Circuit - Digital13.0
Circuit - Analog13.0
Aerial Cable - Metallic22.0
Underground Cable - Metallic30.0
Buried  Cable - Metallic30.0
Fiber Cable 30.0
Intrastate “976 and “900" services are not available from U S WEST in Idaho, therefore blocking of these services is a moot issue.
Request No. 151:Selwyn
On page 5, ll. 10-13, you describe the service quality benefits of ISDN.  Please describe the consumer equipment, consumer equipment costs, service benefits, and actual applications for ISDN that the average residential consumer in Idaho would incur or enjoy as a result of having ISDN service.
Response No. 151:Page 5, 11. 10-13 does not describe any specific service quality benefits of ISDN as this request would seem to indicate, but simply notes that U S WEST has failed to deploy ISDN in a comprehensive manner even though this service could ostensibly be provided at little additional cost to the Company relative to the large amount of investment that has already been made to provide digital switches.  As a digital technology, however, ISDN greatly expands the versatility and utility of local telephone service and could provide, for example, high speed data connections and advanced voice services (see p. 57, 11. 12-14 of       Dr. Selwyn's testimony).  ISDN service would therefore represent a positive improvement on the overall quality of the service being provided when compared to traditional basic service, and could be offered to southern Idaho consumers with a relatively small amount of additional investment by U S WEST.  The cost of digital switches (already in place) represents a large percentage of the overall cost of providing ISDN service.  The remaining investment would consist of line cards and some associated software.  That ISDN has not been widely implemented to date suggests that the digital switches that were placed in service were installed merely to provide extremely expensive, advanced services to those willing to pay for them, while ordinary customers had no choice but basic analog voice services (which could have been provided equally well by analog switches).  Finally, consumer ISDN equipment, such as ISDN interface cares that would be installed in the consumer's personal computer, have been dropping rapidly, and can now be purchased for about $250 - only slightly higher than a high quality state- of-the-art modem card (which it replaces).
Request No. 152:Selwyn
Please provide the rationale and specific support for your statement on page 8, line 14 wherein you discuss the "subsidies of new U S WEST advanced digital and broadband services by basic local exchange service prices."
Response No. 152:See Ms. Baldwin's testimony at p. 9, lines 4-14, pp. 11-12, and   pp. 17-24.  When costs are incurred for plant that is not required for the ongoing provision of Title 61 services but that are assigned, in whole or in part, to Title 61 and utilized to provide Title 62 services, the effect is to create a subsidy flow of Title 61 revenues to Title 62 services.  This is because the costs that are confronted by U S WEST in providing the Title 62 services are less than those that would exist were the plant acquired solely for those services.  Thus, to the extent that the assignment of such costs to Title 61 services causes rates for the regulated services to increase (as U S WEST is proposing to do in this case), Title 61 ratepayers will be forced to pay more so that the Company's costs for providing Title 62 services can be less.
Request No. 153:Selwyn
Please provide specific support for your statement on page 10, line 19, that local exchange competition is not likely to occur in Idaho "in the near future."  Please define the "near future."
Response No. 153:The reference here is to facilities-based competition at the local exchange level.  See page 10, lines 20-22, lines 17-20 for specific examples that support          Dr. Selwyn's opinion.  The term “near future”, for the purposes of this testimony, can be defined as the next five to ten years, but the exact number of years is not critically important.  U S WEST has provided no support or foundation for its assertions concerning the expectation of significant facilities-based competition in the local service market in the short term.
DATED at Boise, Idaho, this               day of December 1996.
______________________________
Susan Hamlin
Deputy Attorney General
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