USWS965v20.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 RESPONSE TO
REGULATED TITLE 61 SERVICES.)THE FIFTH 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 Fifth Request for Production to the Idaho Public Utilities Commission Staff dated MARCH 4, 1997.
REQUEST NO. 258:Baldwin, p. 6, lines 10-13
A.Please list each and every service which you suggest is in a "ramp up" period.  (Both services offered and services which are not yet offered)
B.For each such service list all types of plant facilities which you believe are included in U S WEST 1995 test year investments that are required by the listed services.
C.For each such service list all types of plant facilities which you believe are NOT included in U S WEST 1995 test year investments that are required by the listed services.
RESPONSE NO. 258:Baldwin, p. 6, lines 10-13
A.The referenced portion of Ms. Baldwin's testimony concerns new services.  Among U S WEST's services that are in a "ramp up" period are services such as Custom Calling and CLASS services.  As is shown in on Baldwin Surrebuttal, Exhibit No. 159, Schedule 5, page 3, revenues for CLASS and Custom Calling Services have been growing substantially in both absolute and percentage terms, suggesting that penetration rates for these products are far from stable, and thus the Company is still "ramping up."  As the data in Schedule 9, page 7 of Exhibit No. 114 of Baldwin direct testimony show, new products do not "ramp up" overnight.  An example of a product that is not yet offered that U S WEST could decide to offer is an integrated caller identification/call waiting product, which NYNEX recently introduced in Massachusetts.  It is possible that U S WEST will introduce such a product in southern Idaho.  By definition, Ms. Baldwin cannot identify all services which are not yet offered yet which the Company might offer.  
B.Necessary plant investment for the new services (existing and not yet introduced) that is in the 1995 test year encompasses primary investment (e.g., the local loop, and the central office switching equipment) and secondary investment (e.g., land and buildings.)
C.Investment that may be necessary and that may not necessarily be in the test year includes central office switch software upgrades.
REQUEST NO. 259:Baldwin
Provide all documents and other evidence upon which you rely for the conclusion assigning plant costs based upon existing usage results in an "unfair burden" to Title 61 customers of "cross-subsidy" of new ventures.
RESPONSE NO. 259:Baldwin
The reference to Title 61 customers being "unfairly burdened" on line 11 of page 6 of Ms. Baldwin's direct testimony simply reflects the logical consequence of allocating large fixed costs based upon existing usage during a time when the diversity of new services is expanding and the demand for new services is growing faster than that for basic local exchange service.  The fundamental flaw of relying on existing usage for existing services has been recognized by the FCC.  See, for example, the FCC's reference to forecasted usage, where the FCC states, with reference to video dialtone service (a new service), "In addition, because the allocation for nonregulated usage of common network plant is determined by a three-year forecast of investment usage, LECs shall revise their forecast usage allocator to reflect accurately the provision of any nonregulated video dialtone service offered on common network plant.  Moreover, carriers that currently do not provide nonregulated services that use common network plant, but 'reasonably anticipate' offering such services during the plant's three-year forecast usage period, shall include revised apportionment procedures for the nonregulated usage of network plant in the Section VI, Cost Apportionment Tables." RAO Letter 25, released April 3, 1995, FCC Rcd Volume 10, No. 12, page 6010 (footnote omitted).
See also Schedule 5, page 3 of Exhibit No. 159 to Baldwin surrebuttal which demonstrates that custom calling and CLASS revenues expressed as a percentage of U S WEST's intrastate southern Idaho revenues is growing, which is evidence of the misallocation that will occur if such growth is not recognized.  Staff has requested but the Company has not yet produced 1996 results, though the Company has indicated that such results will be available between April and June 1997.  These data would assist the Commission in evaluating the degree to which allocating costs based upon current usage cross-subsidizes the Company's new offerings.
See also Schedule 2 of Exhibit No. 113 which demonstrates differing growth rates.
REQUEST NO. 260:Baldwin, p. 6, line 15
Please provide all empirical evidence pertaining specifically to U S WEST Communications' southern Idaho operations that Ms. Baldwin has that would support her allegation that "plant in service may have excess capacity that is necessary to meet the demand for a disproportionate amount of growth in Title 62 services."
RESPONSE NO. 260:Baldwin, p. 6, line 15
See: Baldwin surrebuttal testimony at pages 36; Schedule 2 of Exhibit No. 113 of Baldwin direct; Schedule 3 of Exhibit No. 113 of Baldwin direct; Schedule 8 of Exhibit No. 114 of Baldwin direct; Schedule 6 of Exhibit No. 159 of Baldwin surrebuttal.
REQUEST NO. 261:Baldwin, p. 6, line 15
Please provide all empirical evidence pertaining specifically to U S WEST Communications' southern Idaho operations that Ms. Baldwin has that would support her allegation that "decisions made prior to or during the test year to upgrade plant may have been motivated by the Company's interest in offering new (Title 62) services in the future."
RESPONSE NO. 261:Baldwin, p. 6, line 15
See Schedule 7 of Exhibit No. 114 of Baldwin direct; Schedule 9 of Exhibit No. 114 of Baldwin direct; Schedule 2 of Exhibit No. 158 of Baldwin surrebuttal; Schedule 5 of Exhibit No. 159 of Baldwin surrebuttal.  See also testimony of Mr. Easton regarding the need for advanced technology (e.g., direct at 17-18).
REQUEST NO. 262:Baldwin, p. 8, lines 5-20 and p. 9, lines 1-9
A.Please provide all empirical facts upon which you rely for the claim that different products have differing needs for future capacity.
B.Please explain why you allege these facts are "undisputed."
C.Does Staff contend that it is an "undisputed" fact that demand for basic residential service is "highly predictable" while large business customer's demand is "far more variable and less predictable?"  If so, please supply all evidence that supports this conclusion.
RESPONSE NO. 262:Baldwin, p. 8, lines 5-20 and p. 9, lines 1-9
A.See surrebuttal testimony of Ms. Baldwin, at 8-10; see also Schedule 2 of Exhibit No. 113 of Baldwin direct, and U S WEST Response to STF02-154.
B.Ms. Baldwin is not aware of information that would suggest that the products that are classified as Title 62 (e.g., multi line business, private line, and Centrex) are characterized by stable or predictable demand.  Similarly, Ms. Baldwin is not aware of data that suggests that primary residential line demand is unpredictable.
C.This is Staff's position.  See the response to part A.
REQUEST NO. 263:Baldwin, p. 8, line 17
A.Ms. Baldwin uses a 5,000 line Centrex customer in her example on page 8, line 17.  Please provide the following:
1.How many Centrex customers in Idaho have 5,000 lines?
2.How many Centrex lines have been disconnected during the test year?
B.Does Staff have any evidence of incidents occurring in southern Idaho in or since the test year such as that described on page 8, lines 17-18 or on page 9, line 11 through page 10, line 9 which have resulted in several thousand loop pairs suddenly becoming idle?
C.Provide any documents which support your responses to parts "A" and "B."
RESPONSE NO. 263:Staff
A.  1.  Based upon Ms. Baldwin's review of U S WEST's 1995 Annual Report Addendum, it appears that there may not be presently any Centrex customers of this size in southern Idaho.  The data in this addendum provide wire center specific data and apparently provide Centrex lines expressed in based upon a trunk equivalency (e.g., divided by 3.3).  The data do not provide customer-specific data, however.  Staff does not have the requested information regarding the disconnection of Centrex lines during the test year, however, whether the churn occurs during the test year or in a different year is irrelevant to the impact of such churn on network sizing.  See for example, the Company's response to STF02-154 which shows the volatility of Centrex demand (but only in part, because the data do not include data on additions and discontinuations of Centrex, but rather show net changes in total demand.  (Staff requested data for the years 1989 through 1995, however, the Company indicated in its response that it did not track Centrex lines separately before 1993.).  (Staff requested data for the years 1989 through 1995, however, the Company indicated in its response that it did not track Centrex lines separately before 1993.)
B.  No.  A possible example may be the conversion of facilities at the INEEL.  Staff has no further information.
C.  See response to parts A and B.
REQUEST NO. 264:Baldwin, p. 12
Please provide all empirical evidence pertaining specifically to U S WEST Communications' Idaho operations that demonstrates  investment deployed for the implementation of broadband data services and ADSL during the test year.  (See, Baldwin rebuttal testimony page 12, line 14 for references to "future" allegations.)
RESPONSE NO. 264:Baldwin, p. 12
Because ADSL is designed to operate over copper distribution facilities using digital switching technology, in a sense much, if not all, investment in such facilities and technology during the test year represents potential investment in ADSL services.  As Ms. Baldwin states on
page 13, basing the allocation of plant on existing usage means that "without a new rate case, there will be no shifting of...joint and common costs from Title 61 to Title 62" when ADSL (or any other new service) is introduced.
REQUEST NO. 265:Baldwin
Provide all evidence within the possession of Staff or its consultant that supports the conclusion that any portion of U S WEST's spare capacity has resulted from disconnection of Title 62 services and replacement of said services with either other less capacity-intensive Title 62 services or services offered by a competitor provided on its own facilities.
RESPONSE NO. 265:Baldwin
Staff requested such data from the Company, but the Company did not provide relevant data.  See Staff Request 5-313-3.
REQUEST NO. 266:Baldwin, p. 14, lines 3-4
A.Please provide the total amount of southern Idaho intrastate investment that falls into the "other digital" category to be allocated between Title 61 and Title 62.
B.Please identify the allocation factors that apply to this "other digital" investment.
C.Please state the total amount of "other digital" investment you propose to allocate to Title 61.
D.Does your response to part "C" above constitute the entire allocation to Title 61 services of digital technology with the exception of the fully depreciated facilities placed under Tech Plus and Tech II?  If not, describe precisely which other digital facilities are included in Title 61 costs and the investment amounts (net of depreciation) which those facilities represent.
RESPONSE NO. 266:Baldwin, p. 14, lines 3-4
A.The  digital investment that would be allocated between Title 61 and Title 62 includes all of the investment shown on Schedule 1b, Exhibit No. 159, on lines 14, 16, and 17, and also that portion of the investment on line 15 (Digital Subscriber Pair Gain investment) made before January 1, 1989 and not assigned to Title 62 for Toll, feature group, custom calling, and CLASS services.  The total amount of this investment is $41,771,706.  (See Schedule 4 in
Exhibit No. 113 of Baldwin Direct for the source of plant additions in the digital subscriber pair gain account for the years prior to January 1, 1989.)
B.The Company's composite allocation factor for total TPIS of 61% was used.
C.The amount that would be allocated to Title 61 is $25,464,032 (i.e., the $30,220,957 minus the Tech II direct assignment to Title 61 of $4,756,925).
D.The amount provided in response to part "C" constitutes the entire portion of the Company's digital COE TPIS that would be allocated to Title 61.  However, it does not include any of the investment in digital switches or subscriber loop equipment placed under the Tech Plus and Tech II Programs, which represent a total of $40,849,113 that would be directly assigned to Title 61 (along with the associated accumulated depreciation.)
REQUEST NO. 267:Baldwin, p. 14, lines 7-9
A.What does the witness intend by the use of the term "excess revenues?"  Is it Staff's position that the Title 61 Revenue Sharing funds used to construct Tech II represented the difference between just and reasonable rates and revenues collected from customers which created "excess revenues?"
B.Is it Staff's position that Title 62 or shareholder funds used to construct U S WEST's matching portion of Tech II constituted some form of over earnings?
RESPONSE NO. 267:Baldwin, p. 14, lines 7-9
A.Excess revenues in the referenced testimony means those revenues which were computed under the Idaho Revenue Sharing Plan as appropriately being returned to Title 61 customers.  It is Ms. Baldwin's understanding that at any time during the revenue sharing years the Company could have petitioned the Commission to evaluate its costs and revenues, and that revenue sharing served as a mechanism by which the Company was required to return certain revenues to ratepayers in lieu of a detailed examination of costs.  It is not Staff's position that Title 61 Revenue Sharing funds represented "excess revenues.".  
B.No.  It is Ms. Baldwin's understanding that the Title 62 portion of the Revenue Sharing Plan funds were available for U S WEST to use as it deemed appropriate.  Ms. Baldwin is simply observing that the Company could have elected to use such funds to expense                U S WEST's investments in urban areas.
REQUEST NO. 268:Baldwin, p. 14, lines 12-13
A.Please explain why U S WEST's "choice" to capitalize the portion of Tech II funded with shareholder funds creates what Ms. Baldwin terms a "lopsided" partnership.
B.Does Staff suggest that U S WEST should have expensed its part of the agreement as implied in the statements on page 14, lines 9-14?
C.If so, please provide all empirical evidence on which you rely for that conclusion.
RESPONSE NO. 268:Baldwin, p. 14, lines 12-13
A.The Company's fully-expensed, Title 61-funded Tech II investment had no impact on the rate base.  By capitalizing the counterpart to these expenditures, the plant additions — unless directly assigned to Title 62 consistent with Staff's recommendation — would enter the rate base and thus, under the Company's proposal, the costs would be borne in part by Title 61 customers.  U S WEST's capitalization of the shareholder portion of Tech II investment, combined with its proposal to allocate that investment between Title 61 and Title 62, forces Title 61 customers to shoulder part of that investment, and yet Ms. Baldwin is unaware of any Commission directive to the Company to use Title 61 funds for such investment.
B.Ms. Baldwin identified the theoretical option for the Company of having expensed the investments it undertook during the Company's revenue sharing years, using the Title 62 portion of the excess revenues.  Ms. Baldwin is not commenting on whether U S WEST "should" have done so, but is simply describing how the Commission's Tech Plus and Tech II directives regarding the use of Title 61 revenue sharing funds combined with the Company's other unilateral investment decisions should guide the Commission in this proceeding in the fair assignment and allocation of common TPIS.
C.N/A
REQUEST NO. 269:Baldwin p. 18
Please describe all incentive for competitors to invest created by Staff's allocation proposal.  For example, how will Staff's proposal encourage competitors to invest in:
A.local loop facilities?
B.local switching facilities?
C.facilities to bypass U S WEST switched access services?
D.specialized facilities to provide non-basic services - e.g., CLASS platforms, ISDN switches, etc?
E.private/dedicated line-based services?
RESPONSE NO. 269:Baldwin p. 18
By accurately assigning and allocating costs to the appropriate products, Staff's proposal will eliminate the unfair cross-subsidization advantage that U S WEST would otherwise possess.  In so doing, over the long run Staff's proposal will facilitate the economically efficient entry of both resale-based and facilities-based competition in all areas.  
Staff's allocation proposal will not reduce competitors' incentives to invest in the facilities identified in this request.  Facilities identified in categories (C) through (E) involve services subject to Title 62; indeed with respect to these services, Staff's allocation proposal would reverse the disincentives inherent in the U S WEST approach.
By overallocating investment in categories (C) through (E) to Title 61, U S WEST's allocation scheme would make it far more difficult for new entrants to compete, such firms would necessarily be forced to recover the costs of such facilities on a stand-alone basis.
To the extent that competition may be present in southern Idaho for services in categories (A) and (B), competitors would be able to use those facilities jointly for all of the services enumerated here, as U S WEST is able to do, and would therefore not be disadvantaged by the requirement that U S WEST recover a portion of its investment in local exchange distribution and switching facilities from non-basic services.  Indeed, competition in the basic service market would not be feasible unless such additional revenue generating opportunities were available to competitors.
REQUEST NO. 270:Baldwin, p. 18
A.Does Staff's position that its allocation proposal provides more incentive for competitors to invest depend upon an assumption that Staff's allocation proposal, if adopted, will force U S WEST to increase prices of Title 62 services?
B.If your response to part "A" is negative, please explain how competitive investment will be encouraged with no change or a decrease to Title 62 prices.
RESPONSE NO. 270:Baldwin, p. 18
A.Staff's position is based upon the fact that a fair allocation of costs to the services that cause them will prevent the unfair subsidization of competitive services by services for which competition has yet to develop in southern Idaho.  See Susan Baldwin surrebuttal, at 17.  Furthermore, not all Title 62 services face actual competition at this time, and as such U S WEST is able to price such services well in excess of cost.  Accordingly, there is no reason why Staff's cost allocation should require the Company to increase prices for such services, although the Company would have the market power necessary to effect such increases.  Title 62 services that do confront effective competition, to the extent that they are currently priced below their appropriate cost, will require rate increases.  Such increases will provide a more level playing field for U S WEST's competitors, and will prevent the Company from shifting costs of its competitive services to captive ratepayers.
B.Competitive investment will be encouraged because U S WEST will be prevented from reducing its prices for Title 62 services unfairly below those of new competitive entrants.
REQUEST NO. 271:Baldwin, p. 22, lines 4-11
Is it Staff's position that U S WEST (or any LEC operating in southern Idaho) has any reasonable opportunity to increase significantly (i.e., by more than 20% over prices in the test year) the price of switched access over the next 24 months?  Please explain your answer.
RESPONSE NO. 271:Baldwin, p. 22, lines 4-11
There is no present competition for switched access in southern Idaho.  Accordingly, since the Idaho legislature has (perhaps incorrectly) classified switched access under Title 62, the Company has the market power to effect such increases.  
REQUEST NO. 272:Baldwin, p. 22
With Ms. Baldwin's assumption that the local loop should be allocated to Title 62 because of additional contribution coming from new services such as CLASS services,
A.If U S WEST adds additional services that in the future utilize that loop does Staff advocate that an additional allocation cost to Title 62 will be necessary?
B.If the answer to part "A" above is negative, then please explain why the revenues associated with CLASS and custom calling feature are relevant at this point in 5% proposed allocation of the local loop.
RESPONSE NO. 272:Baldwin, p. 22
A.Yes.
B.Not applicable.
REQUEST NO. 273:Baldwin, pages 25-26
A.Would Staff support a U S WEST "tariff change" as suggested by Ms. Baldwin, that would "bundle" all CLASS and custom calling features into dial tone (Title 61 business and residence services) and raise regulated rates by an amount equivalent to "foregone revenue" (line 11) minus avoided marketing costs?
B.If your response to part "A" is negative please explain why this is discussed as a U S WEST option in Ms. Baldwin's testimony and explain why Staff does not support it.
C.If your response is affirmative, please explain why this proposal is not vulnerable to the criticisms 1)  it forces Title 61 customers to "subsidize" Title 62 services and 2)  it is an anti-competitive attempt to "capture" or "re-monopolize" competitive revenue streams prior to the development of effective competition.
RESPONSE NO. 273:Baldwin, pages 25-26
A.Staff would consider supporting a tariff change whereby rates for Title 61 local exchange service would be increased to recover the costs of custom calling and CLASS services associated with the relevant Title 61 lines.  Staff would have to evaluate the effect of any appropriate shift of TPIS (Schedule 2 of Exhibit No. 114 specifies the amount of TPIS currently proposed by the Company to be allocated to Central office features, some portion of which might be allocated to other products as a result of this proposal).
B.N/A
C.CLASS services are already subsidized by basic services because the costs of advanced switching and signaling systems have been charged to and recovered from basic services.  There is no attempt to "remonopolize" something that isn't competitive to begin with.  
If the Company believes that Title 61 services should pay for the platform require to offer these services, then Title 61 customers should receive these services as part of their basic service package.  
REQUEST NO. 274:Baldwin, p. 28
Regarding the "alternative" that U S WEST pay an access charge for use of a Title 61 line to provide Title 62 custom calling and CLASS please provide the following:
A.A full description of how such an access charge would be calculated including a description of any costing methodology used proposed for use in its creation.
B.A description of how it would be assessed e.g., per activation, minutes of use, etc.
C.A description of how and when it would be paid and to whom.
D.An explanation of how Title 61 customers would benefit from such an arrangement including but not limited to whether the benefit would flow to all Title 61 customers or only to those whose additional service choices include CLASS or custom calling services.
RESPONSE NO. 274:Baldwin, p. 28
A.The access charge would be calculated so as to produce an appropriate level of contribution for the use of the basic service infrastructure to furnish Title 62 services.
B and C.  The precise amount should be set by dividing the target contribution amount (e.g., 5% of loop costs) by the number of class feature units that are being provided.  The charge should be assessed on a per unit, per-customer basis.
D.All Title 61 customers would benefit because the costs of the basic service infrastructure would be more fairly allocated than if the Company's proposal were adopted.
REQUEST NO. 275:Baldwin p. 33, line 10
Please provide all empirical evidence that the Staff and/or Ms. Baldwin rely upon to support the claim that large capacity cable investments have been made by U S WEST in Idaho "with the hope that some or all of its customers will order Centrex."
RESPONSE NO. 275:Baldwin p. 33, line 10
Upon reviewing the referenced testimony, Ms. Baldwin would change the word "[w]hen" which appears on line 10 to "[i]f."
REQUEST NO. 276:Baldwin,  p. 34-35
Please provide all data which supports the claim that "over a ten-year period, the growth in Title 61 lines will be 52%, whereas the growth in Title 62 lines will be 236%."
RESPONSE NO. 276:Baldwin,  p. 34-35
See Schedule 2 of Exhibit No. 113 to Baldwin direct.  
REQUEST NO. 277:Baldwin p. 35, lines 6-7
Please provide Ms. Baldwin's definition of "churn in the economic sense" as used on page 35 of her rebuttal testimony.
RESPONSE NO. 277:Baldwin p. 35, lines 6-7
"Churn in the economic sense" refers to a situation in which service discontinuations are balanced by new service connections, but where the latter involve facilities other than those released by the former.  A residential subscriber moving out of a residence and disconnecting telephone service, who is replaced by a new occupant who orders telephone service at the same
location, does not constitute churn because the same physical facilities were continuously in service despite the change in the customer responsible for payment of charges.
REQUEST NO. 278:Baldwin p. 35
A.Please describe what adjustments should be made to identify the "costly churn" mentioned in the testimony.
B.How long in terms of months, years must plant remain out of "revenue-producing service" before it would be considered "churn in the economic sense?"
C.Why did Staff consider re-installation of service within a 30-day period relevant to this question?
RESPONSE NO. 278:Baldwin p. 35
Ms. Baldwin's discussion does not suggest the presence of a bright line between "non-churn" and "churn" in the economic sense.  Ms. Baldwin's point is that facilities used in the provision of Title 61 service remain revenue-producing despite changes in customer to a far greater extent than will facilities used in the provision of Title 62 services.
REQUEST NO. 279:Baldwin, page 36
A.Please provide all reports and back-up data related to the ETI study for Washington mentioned on page 36.
B.Please indicate how this study was used by the Washington Staff in any contested proceedings, and how it has been used (if at all) in other states.
C.Provide copies of all orders of state regulatory commissions which rely upon or refer to said study.
RESPONSE NO. 279:Baldwin, page 36
A.  A.  The referenced ETI study has been provided to the Company and is available at the Commission's offices for other parties.
B.  ETI was requested to undertake the analysis in the context of a rate case, which was subsequently settled.
C.  N/A
REQUEST NO. 280:Baldwin p. 38, lines 1-11, and p. 37, lines 12-20
A.Given Ms. Baldwin's hypothesis that Title 62 services such as Centrex have driven creation of excess capacity over and above that necessary for the provision of Title 61 services, please explain how a comparison between utilization factors and the types of products being served would either support or call into question your recommended cost allocation methodology.
B.Is it Ms. Baldwin's expectation that areas designated as having "high" or "saturated" fill percentages would have a greater number of Title 62 access lines than those with lower fill percentages?
C.If your response to part "B" is affirmative, please explain how demand for Title 62 services in certain areas motivates U S WEST to build excess capacity in others.
RESPONSE NO. 280:Baldwin p. 38, lines 1-11, and p. 37, lines 12-20
Ms. Baldwin believes that there is greater variability in the utilization of facilities intended for the provision of Title 62 services than for the more stable Title 61 services.  There is every likelihood that individual conditions exist whereby facilities are not available in, for example, a CO that has a large Centrex population.  However, that situation could change overnight if the large Centrex user discontinued that service in favor of a PBX.
REQUEST NO. 281:Baldwin p. 38, lines 14-20
Please explain the statement, "by allocating plant for existing demand based upon an average fill factor, Staff has over-allocated plant to Title 61."
RESPONSE NO. 281:Baldwin p. 38, lines 14-20
Staff's analysis utilizes the fill factor provided by the Company for all access lines in southern Idaho.  To be accurate, however, that fill factor should be de-averaged, and a separate fill factor calculated for Title 61 services than that for Title 62 services.  
REQUEST NO. 282:Baldwin, p. 43, line 14
A.Please provide all empirical evidence that supports the claim  "The major reason for deploying digital switches in urban areas is to be able to offer custom calling and CLASS services, and to be able to attract and to retain Centrex customers."
B.Please provide all empirical evidence which specifically pertains to U S WEST's southern Idaho operations which supports the claim referenced in part "A."
RESPONSE NO. 282:Baldwin, p. 43, line 14
A.  CLASS services and digital Centrex can only be offered from digital switches.  Analog switches are adequate to provide Title 61 services.  
B.  See Schedule 5 of Exhibit No. 159, and Schedule 2 of Exhibit No. 158.  Also, the majority of Centrex and other Title 62 lines are served by wire centers other than those that were upgraded under the Title 61 revenue sharing portion of the Tech II program.
REQUEST NO. 283:Baldwin p. 43, line 17
Please provide all empirical evidence that shows the following statement to be true for U S WEST's deployment of digital switches "it is unlikely that any operational savings associated with the deployment of digital switches would offset the substantial capital investment that was involved in their (digital switches) acquisition."
RESPONSE NO. 283:Baldwin p. 43, line 17
Digital switch costs are typically considered to be highly proprietary.  Digital switch cost estimates range between $100 and $200 per line, depending upon the size of the switch and the size of the vendor discount.  U S WEST reports proposes total maintenance expenses of $23.588-million (see schedule 1 of Exhibit No. 113 of Baldwin direct), approximately 4.3% of total proposed TPIS.  As  an approximation, one can apply this percentage to a switch cost of $150 per line yielding an estimate of $6.45 per year in maintenance costs for switching costs.  The savings in maintenance cost would be some amount less than that (e.g., if there a savings of 50%, the savings would be approximately $3.00 per year).  Furthermore, there would be other costs associated with the digital switch upgrade (e.g., the costs of prematurely retiring the analog switch and thus paying additional depreciation expenses).  It is hard to imagine a situation where the savings could offset the substantial cost of the investment.  
REQUEST NO. 284:Baldwin p. 43, line 19
Please provide all empirical evidence that shows the following statement to be true for U S WEST's deployment of digital switches "it is likely that the expectation of new sources of revenues from Title 62 services provided the business case justification for the deployment of urban switches."
RESPONSE NO. 284:Baldwin p. 43, line 19
See Staff Response to U S WEST Data Request No. 283.
REQUEST NO. 285:Baldwin p. 45, lines 18-19
Please explain why it is necessary in Staff's opinion to directly assign "all other digital subscriber loop equipment added since January 1, 1989" to Tile 62.
RESPONSE NO. 285:Baldwin p. 45, lines 18-19
Digital subscriber loop equipment is used when fiber (rather than copper) is deployed in the feeder portion of the outside plant.  One of the major factors determining whether it is economically efficient to deploy fiber instead of copper in the local loop is the distance involved.  The Tech II program addressed loop modernization in rural areas — areas that are characterized by longer distances.  Staff proposes to directly assign any digital subscriber loop equipment that the Company deployed using Title 61 Tech II funds (and to directly assign the associated accumulated depreciation) to Title 61.  The Company's deployment of digital subscriber loop equipment where copper was providing adequate Title 61 service or in new outside plant construction in urban areas where the feeder is of relatively shorter distances is unlikely to have passed a cost benefit analysis where such analysis focussed on costs and benefits for Title 61 products.  The only costs of deploying fiber in the loop area that should be assigned or allocated to Title 61 customers are those that have been explicitly directed by the Commission (e.g., Tech II rural improvements) or those that the Company has demonstrated to be economically justified.  Otherwise, Title 61 customers will be inappropriately cross-subsidizing the Company's deployment of fiber in the loop for the Company's strategic reasons.
REQUEST NO. 286:Baldwin p. 51
Please provide on paper all reports including inputs and outputs as well as the actual spreadsheet, e.g., EXCEL that Staff used to duplicate the relevant steps of the CARS cost allocation process as described on page 51 of Baldwin's rebuttal testimony at line 13 and in Exhibit No. 159, Schedule 10, Page 1.  This request includes all workpapers associated with this process.
RESPONSE NO. 286:Baldwin p. 51
Preparing paper versions of all relevant reports, including inputs and outputs, would be time consuming and costly, and the resulting paper versions would be voluminous.  Staff has printed its modified CARS Input Report 7.1, and CARS Output Report F3-1.2, and is providing all other relevant reports on disk, in Excel format.
REQUEST NO. 287:Baldwin
A.Please explain the economic term "complementary products."
B.Does Staff consider a camera and film as "complementary products?"  If not, please provide an example.
C.Does Staff consider the local loop and custom calling or CLASS features as complementary products?  If not, why?
RESPONSE NO. 287:Baldwin
A.  "Complementary products" are products exhibiting negative cross price elasticities.
B.  Cameras and film represent a special type of complementary product pair known as "tied goods."  They are complementary goods because they exhibit the property of negative cross price elasticity, but are tied goods because their individual demands cannot exist at all in isolation from one another.  Thus, while the demand for film will tend to increase when the price of cameras decreases, and conversely the demand for cameras will tend to increase as the price of film decreases, there would be no demand for either one without the other — a camera is useless without film and film is useless without a camera.  Hence, there would be no demand for cameras at all if the price of film made it unaffordable; there would be no demand for film if the price of cameras made them unaffordable.
C.  The local loop and CLASS or custom calling features are probably not complementary products, although the demand for optional services like CLASS and custom calling is clearly tied to, and cannot exist without, the basic dial tone line.  Unlike the case for true complementary goods, the demand for basic dial tone service will not be consequentially influenced by the price of the optional services, so there is no non-zero cross-elasticity in that direction.  The demand for custom calling and CLASS services is likely to be negatively affected by the price of basic dial tone service, but not for the same reason as in the case of cameras and film or hot dogs and buns.  In those cases, the demand for B rises as consumption of A increases, so a drop in the price of A will cause consumption of A to rise, which will cause consumption of B to rise as well.  However, the demand for residential dial tone lines is nearly price inelastic, so a change in the dial tone line rate will not materially affect consumption of that core service.  But as the price of dial tone is increased, the "bottom line" of the customer's bill would also rise.  Since optional features like custom calling and CLASS services are discretionary services, the demand for these service features might be diminished if the price of the basic dial tone line increases.  Hence, while there would be a negative cross-elastic effect, the nature of the relationship is not typical of that which would apply for true "complementary goods."  For complementary goods, the demand for B increases as the price of A declines because that decrease in the price of A also causes the demand for A to increase.  If the price of cameras falls, people buy more cameras, and because there are now more cameras around, their owners will buy more film.  In the case of optional telephone services, a change in the price of the relatively price-inelastic dial tone line does not materially affect the demand for dial tone lines, but does affect the demand for discretionary services to the extent that customers seek to offset the rate increase by reducing overall telephone service consumption.
REQUEST NO. 288:Baldwin, Schedules
Please explain why the allocations of secondary investments should be kept in the same proportion to COE and OSP as defined in CAAS in Ms. Baldwin's schedules to her rebuttal testimony.
RESPONSE NO. 288:Baldwin, Schedules
Secondary investments in plant are used to support and provide functionality to primary investments.  As plant is shifted from Title 61 to Title 62 (relative to the Company's proposal) so too should the related secondary investment.  Ms. Baldwin has not conducted a separate evaluation of the reasonableness of the Company's allocation of secondary investments, and for that reason, has retained the same ratio that is reflected in the Company's proposed allocation of TPIS.
REQUEST NO. 289:Baldwin's Exhibit No. 158, Schedule 1, page 1, item 9.
A.Please explain the minor spreadsheet error that generated inaccurate allocations of secondary investments to Title 61.
B.Please provide the spreadsheets, e.g., EXCEL spreadsheets on diskettes showing the errors and explaining the items you changed.
C.For the supporting schedules to Ms. Baldwin's rebuttal testimony, please provide the spreadsheets, e.g., EXCEL spreadsheet, on diskettes that were used to calculate the assignment of the secondary investment assignments.
RESPONSE NO. 289:Baldwin's Exhibit No. 158, Schedule 1, page 1, item 9.
A.The error had to do with a revision in COE investment allocation and assignment that was not incorporated into the allocation factors for secondary investments.
B.Electronic copies of the spreadsheets relevant to Ms. Baldwin's direct testimony have already been provided to U S WEST.  The revised workpaper in question is being provided pursuant to Data Request 289C (below).
C.See Workpapers of Susan Baldwin, particularly Workpaper 4, an electronic copy of which is being provided in response to U S WEST Data Request No. 292.
REQUEST NO. 290:Baldwin, Exhibit No. 159, Schedules 1a and 1b
What is the basis for the assumption that 50% of the Revenue Sharing funded investment in Tech II is CWFI and 50% is digital fiber pair gain facilities?
RESPONSE NO. 290:Baldwin, Exhibit No. 159, Schedules 1a and 1b
The 50% figure is an approximation.  If the Commission directs the Company to adopt Staff's proposed methodology, the final computations can be revised based upon the Company's categorization of the Tech II investment between the CWF1 and the COE categories.
REQUEST NO. 291:Baldwin, Exhibit No. 159, Schedule 1b
A.Please provide your calculations for the numbers contained in the column, "Assigned to Toll, Custom Calling, and CLASS."
B.What is the basis for the 61% allocator used for most investment categories on this Schedule?
C.At line (3) does the assignment of $27,504,150 represent the entire amount of intrastate Idaho investment in digital switching equipment that was not part of the Tech Plus program?  If not, please explain.
D.Please provide the calculations for line (15) allocating "Digital Subscriber Pair Gain" showing amounts assigned to other Title 62 services, amounts assigned under the Tech II program and allocators used.
RESPONSE NO. 291:Baldwin, Exhibit No. 159, Schedule 1b
A.The column referred to assigns 20% of unseparated investment in categories associated with the local loop to toll, feature group, and custom calling and CLASS products.  See Notes of Susan Baldwin's Exhibit No. 159, Schedule 1b.  This is in keeping with the 15% assignment for toll and feature group, and Staff's proposed 5% assignment for custom calling and CLASS services.  See also Susan Baldwin Workpaper 1, which is based on ALFI information for unseparated investment in COE.
CategoryUnseparated Investment20% of Unseparated Investment
Analog Sub. Loop Carrier$     663,899$     132,780
Digital Sub. Loop Carrier$71,287,262$14,257,452
B.The 61% allocator is based upon the CARS 61% composite allocation to Title 61.  See Notes of Schedule 1b, Exhibit No. 159.
C.Yes.
D.Idaho South Digital Loop Carrier Investment:
Available after intrastate separation, assignment of 15% for toll and feature group, and 5% for custom calling and CLASS:  $40,799,013.  (See:  Schedule 1b of Exhibit No. 159 of Susan Baldwin's surrebuttal testimony, and Susan Baldwin's Workpaper 1.)
Post Jan. 1, 1989 investment in digital pair gain (available after intrastate separation and assignments for toll, feature group, custom calling, and CLASS):  $21,853,230.  (Based on Digital Circuit Equipment Investment (Acct. 2232) for 1989-1995 of $36,422,050, from Schedule 4 of Exhibit No. 113 of Susan Baldwin's direct testimony.)
Tech II investment:  $9,513,850
50% of Tech II investment:  $4,756,925
Direct Assignment:Post-1989 investment    Title 61       Title 62      $21,853,230    $  4,756,925$  17,096,305
Allocation:Pre-1989 investment
(based on U S      $18,945,782$11,549,349 $   7,396,433
WEST's 61% composite
allocation factor
for Title 61)
Assignment for Toll, FG, Custom Calling,
and CLASS Services:    $14,257,452
Total assignment and allocation: $16,306,274    $38,750,190
REQUEST NO. 292:Baldwin
For all of Ms. Baldwin's Schedules to her rebuttal testimony:
A.Provide all supporting documents that were used to obtain the inputs shown on the schedules.
B.Provide all spreadsheets, e.g., EXCEL spreadsheets, on diskettes used to calculate and develop the Schedules.
RESPONSE NO. 292:Baldwin
A.Workpapers for Susan Baldwin's surrebuttal exhibits have already been provided to U S WEST.
B.Please refer to the enclosed disc.
REQUEST NO. 293:Baldwin
Regarding Ms. Baldwin's Exhibit No. 158, Schedule 1, page 1, item 5:
Why are Operator Systems category now directly assigned entirely to Title 62?
RESPONSE NO. 293:Baldwin
Operator Systems is directly assigned to Title 62 based upon the rebuttal testimony of Dallas Elder, at 33-34.
REQUEST NO. 294:Baldwin
Regarding the data from the state of Washington based on 1989 data in paragraph 1 of Exhibit No. 159, Schedule 7, page 1:
A.Please provide all empirical data that demonstrates that this data is applicable in Idaho for the current test year.
B.Please provide all empirical data that demonstrates that 1989 data would be  applicable in the test period of 1995.
C.Please provide all empirical data that demonstrates that data collected by EIT in the mid-70's is applicable in the 90's.
RESPONSE NO. 294:Baldwin
A-C.Staff requested historical fill data for southern Idaho but the Company was unable to provide these data.  Thus Staff used data for Washington State as a proxy.  Title 61 products have not changed since the mid-70s.  The purpose of using data from the mid-70s is to use a fill factor that is representative of Title 61 demand characteristics rather than of a network configured for Title 61 and Title 62 products as well as for the Company's overall strategic business interests.
REQUEST NO. 295:Baldwin
A.Ms. Baldwin throughout her rebuttal testimony refers to Centrex lines.  Did Staff or its consultants examine the CAAS data that was provided to determine what the relationship of the Centrex lines associated with official lines used by U S WEST compared to customer lines?
B.Please provide Staff's understanding of the number of Centrex lines associated with official use compared to the number associated with customers for southern Idaho.
RESPONSE NO. 295:Baldwin
A.  No.
B.  Staff would not expect the demand variability properties of Centrex service to be applicable for Centrex-like services furnished as "official lines" to U S WEST itself.  First, many U S WEST central offices from which such official services are furnished are co-located within the same building wherein the official service lines terminate.  Hence, for such co-located official lines, there would be no "loop" per se.  Second, unlike customer Centrex lines that confront competition from PBXs, electronic key systems and other CPE-based products and services, it is not likely that U S WEST would discontinue an official Centrex-like service and replace it with, for example, a PBX.  Hence, to the extremely limited extent that official Centrex-like services furnished to U S WEST offices actually require "loops" of non-zero length, the variability of demand for such loops would likely mirror the demand for the underlying (Title 61 or Title 62) services that U S WEST furnishes to its customers rather than for the superficially similar Centrex services that U S WEST offers in the competitive business telephone systems market.
REQUEST NO. 296:Baldwin Exhibit No. 159, Schedule 7
A.Please provide all historical data regarding U S WEST southern Idaho fill capacity which supports your (apparent) conclusion that fill factors in Idaho have decreased from 70% since the "mid-1970's" to the 61% used in your calculations.
B.Please provide all evidence and documentation upon which you rely that there are 100,876 spare lines "necessary to accommodate Title 62 demand, and thus a total of 135,221 liens required to meet Title 62 demand."
RESPONSE NO. 296:Baldwin Exhibit No. 159, Schedule 7
A.  See page 36, lines 8 through 15 and U S WEST's response to STF02-049, which has been reproduced as Schedule 8 in Exhibit No. 114 to Ms. Baldwin's direct testimony.  In STF03-160, Staff requested fill factor data for the years 1988 to the present, but the Company was unable to provide these historical data.  Ms. Baldwin relied on an analysis of the outside plant utilization of Pacific Northwest Bell (U S WEST's predecessor) in Washington State in order to conduct the analysis of fill factors in Idaho.  
B.  The source of the figure of 100,876 spare lines for Title 62 is the result of subtracting 160,465 from 261,341.  The source of the data for the Title 62 lines are the data in Schedule 2, Exhibit No. 113 to Ms. Baldwin's direct testimony, which in turn relies on the Company's response to STF02-051.  This source indicates that there are 34,345 Title 62 business lines.  The total of 135,221 is the sum of the spare capacity (100,876) plus the capacity serving lines in service (34,345).  As is stated at page 37, lines 7 through 9, the analysis likely understates the number of future Title 62 lines because it relies on a data source that excludes Centrex lines and other Title 62 lines.
REQUEST NO. 297:Baldwin Exhibit No. 159, Schedule 7
A.Please clarify:  when Ms. Baldwin's states in paragraph 3 that Title 61 demand will be 462,146, "projecting out five years," does it mean Staff predicts that there will be 462,146 Title 61 lines in service in the year 2000?
B.Likewise, is it Staff's prediction that in the year 2000 there will be 62,999 Title 62 lines in service?
RESPONSE NO. 297:Baldwin Exhibit No. 159, Schedule 7
A.  The source of the Title 61 lines (pre-growth) is Schedule 2, Exhibit No. 113, i.e., 374,419 lines.  Applying the historical compound annual growth factor for the time period 1990 through 1995 shown on the same schedule, i.e., 4.3% yields 462,146 for the year 2000.  Assuming that there were 374,419 Title 61 lines in 1995, and assuming the same annual growth rate for Title 61 lines as the Company has reported, there will be 462,146 Title 61 lines in service in the year 2000.
B.  As stated in response to Request 296, the analysis described in Schedule 7 of Exhibit No. 159 relies on Title 62 business lines.  As is shown in Schedule 6 of Exhibit No. 114, the total number of lines that are classified as Title 62 is greater than the 34,345 business lines.  The figure of 62,999 lines corresponds with the 34,345 Title 62 business lines reported for 1995, increased by a compound annual growth rate of 12.9% for five years.  See Schedule 2 of Exhibit No. 113.
REQUEST NO. 298:Baldwin Exhibit No. 159, Schedule 7
Other than the information contained on Schedule 7, provide all additional evidence within the possession of Staff or its consultants to support the claim that there is "an implied required fill of 25.4% for Title 62 services."
RESPONSE NO. 298:Baldwin Exhibit No. 159, Schedule 7
The figure of 25.4% is the result of the computations and assumptions described on Schedule 7 of Exhibit No. 159.
REQUEST NO. 299:Baldwin
A.Please detail at an account level Staff's allocations of intrastate expenses included in Staff's revenue requirement between Title 61 and Title 62 (or non Title 61).  For purposes of responding to this request please use FORM A attached hereto.
B.To the extent there is a variation in allocation factors between categories of expenses, please provide an explanation for the differences.
RESPONSE NO. 299:Baldwin
Staff has not prepared an analysis at this level of detail.  It is the Staff's expectation that the Company could, as necessary, provide detailed compliance filings and workpapers based upon the adoption of Staff's methodology.
REQUEST NO. 300:Baldwin, Lansing et al
Please show the calculations and allocations by the Staff in the format attached for 1995 southern Idaho investment as presented by the Staff in this case its testimony and exhibits.  For purposes of responding to this request, please use Form B attached hereto.
RESPONSE NO. 300:Baldwin, Lansing et al
Staff has not prepared its allocation and assignment of TPIS and depreciation reserve at the level of detail requested by the Company.  See Schedule 1c of Exhibit No. 159 of Baldwin surrebuttal for the Staff's proposed TPIS allocation shown separately for major primary and secondary investment categories.  Regarding depreciation, Staff's Exhibit No. 101 does not reflect the incorporation of Dr. Selwyn's specific recommendations regarding, among other things, the use of 1988 depreciation rates.  It is the Staff's expectation that the Company would provide detailed compliance filings and workpapers based upon the adoption of Staff's methodology.  (ETI)
REQUEST NO. 301:Baldwin, Lansing
A.Please identify the adjustments to plant in service made by Mr. Lansing by account as compared to the adjustments and allocations made to plant in service by Susan Baldwin by account.
B.Please provide a reconciliation of the adjustment to plant in service identified in part "A" for both Mr. Lansing and Ms. Baldwin to the total intrastate plant in service.
RESPONSE NO. 301:Baldwin, Lansing
See responses to Requests 299 and 300.  (ETI)

REQUEST NO. 302:Baldwin, Lansing
Please explain the discrepancy in the total intrastate plant in service between Ms. Baldwin (Exhibit No. 159, Schedule 1c, page 1 of 2) and Mr. Lansing (Revised Exhibit
No. 101 page 1).
RESPONSE NO. 302:Baldwin, Lansing
Ms. Baldwin's total intrastate plant in service of $547,598 corresponds with the workpapers of Margaret Wright filed with her direct testimony.  See Schedule 1 of Exhibit No. 113 of Ms. Baldwin's direct testimony.  (ETI)

REQUEST NO. 303:Lansing Exhibit No. 101 Revised 2/26/97, page 4 of 13
A.Please explain how the adjustment to accumulated depreciation is made through the allocation process as stated in Note 1 to the above - cited page.
B.Please explain how the adjustment to deferred income tax is made through the allocation process as stated in Note 1 to the above - cited page.
C.Please explain why the adjustment to remove "fiber recorded by not in use" has no adjustment to accumulated depreciation?
RESPONSE NO. 303:Lansing Exhibit No. 101 Revised 2/26/97, page 4 of 13
A.As shown in Workpaper 4 of Ms. Baldwin, Staff's allocation of accumulated depreciation tracks in part the proposed assignment and allocation of TPIS (for simplicity, this is referred to in the Workpaper as the allocation to Title 61 and Title 62.)  Accumulated depreciation follows the assignment and allocation of the $468,635-million in TPIS that remains after assigning $45,606-million to Title 61 (for Tech Plus and Tech II), and $33.308-million to Title 62 (based upon Lansing's audit of TPIS).  Please not that Staff's allocation for this purpose does not take into account Dr. Selwyn's proposed adjustments to depreciation, as described in his direct and surrebuttal testimony.
B.Deferred income tax is allocated between Title 61 and Title 62 based upon the allocation and assignment of total plant in service.  See Susan Baldwin's Workpaper 4.
C.Plant held for future use should not be depreciated nor should it be allocated any accumulated depreciation.
REQUEST NO. 304:Lansing Exhibit No. 101, page 5 of 12
Please provide all documents and other evidence to support Staff's conclusion that "station apparatus non regulated" (FRC 9128C), terminal equipment non regulated" (FRC 9162C) "Public Tel EQ - inmate Services" (FRC 9488C) and "Analog Alarm Services" (FRC 9057C) are not removed by Part 64 and therefore included for intrastate results of operations.
RESPONSE NO. 304:Lansing Exhibit No. 101, page 5 of 12
FRC 9128C, account 2311, has a balance of $47,570 with dereg removals (see 1990 Detail Report attached) of $110,938 leaving a negative balance in a plant asset account, a completely impossible situation.  FRC 9162C is combined with at least 5 other FRC’s in account 2362 for the separations process as presented in the 1990 Report.  Thus, making a dereg determination  to the  FRC impossible.  FRC 9488C, account 2351, is combined with 3 other FRC’s in the separations process as presented in the 1990 Report.  Also, making a determination of the proper dereg amount to the FRC impossible.  FRC 9057C, account 2232, is combined with 25 other FRC’s in account 2232.  Account 2232 is then combined with 6 other accounts (accounts 2211, 2212, 2215, 2220, 2230, and 2231) in the 1990 Report.  Once again making a proper calculation of the dereg amount associated with FRC 9057C impossible.  (See copy of STF000-006, Attachment A.)
REQUEST NO. 305:Lansing Revised Exhibit No. 101, page 10 of 13
A.Regarding column (4) "Staff Title 61 Factors" please explain the difference between the factor used for accumulated depreciation and amortization (line 32) versus accumulated deferred income tax (line 33).
B.How do the Staff Title 61 factors in column 4 line 32 relate to Exhibit No. 101 page 1 of 13, line 5, column i?
C.Please explain how each of Mr. Lansing's adjustments listed on Revised Exhibit No. 101 page 4 of 13 is used in developing the factors used in column (4).
D.How does Ms. Baldwin use her "spare capacity" adjustment in developing the factors used in column (4)?
E. Please provide all calculations used in development in each factor in column (4) including starting points, etc.
RESPONSE NO. 305:Lansing Revised Exhibit No. 101, page 10 of 13
This issue was settled for this case in the Second Settlement and Stipulation.
REQUEST NO. 306: Baldwin
A.Are the Title 61 factors identified in column (4) applied  uniformly by Ms. Baldwin and other Staff members to all common costs used to develop revenue requirement?
B.If your answer to part "A" is negative, please identify:
1.each instance where they are not applied;
2.the allocation factors which are applied to each exception; and,
3.provide an explanation in each case as to why they are not applied.
RESPONSE NO. 306: Baldwin
This issue was settled for this case in the Second Settlement and Stipulation.
A.The allocation factors listed in Column 4 are applied uniformly to all common costs.  See Workpaper 4 of Susan Baldwin's Surrebuttal.
REQUEST NO. 307:Lansing p. 3, line 25
A.Please identify by name and position all "asset accounting people in Seattle" to whom you refer.
B.Provide all notes, documents or other materials that embody, reflect or relate to the discussions software in the capitalized leases.
RESPONSE NO. 307:Lansing p. 3, line 25
A.Beth Reiman, Robert York, Dean Tyler; positions not known.
B.See attached documents.
REQUEST NO. 308:Lansing p. 16, lines 11-13
Please provide data relied upon to make calculations of 2.0213% for the state apportionment factor?
RESPONSE NO. 308:Lansing p. 16, lines 11-13
U S WEST, Inc. and Subsidiaries - Idaho Corporation Income Tax Return for 1995.
Provided for my review in Denver, February 6, 1997.
REQUEST NO. 309:Terri Carlock, p. 18, lines 7-11
Given Ms. Carlock's surrebuttal testimony at page 18, lines 7-11 indicating that her cost of equity range is based primarily on the DCF method and that the DCF method is market based, please explain and document any conversion or adjustment made to comport with the statement on page 13, lines 14-16, that "A conversion from market to book must be made since regulators make decisions based on book data."
RESPONSE NO. 309:Terri Carlock, p. 18, lines 7-11
No conversion or adjustment was made.  The statement simply reflects the two measures are not directly comparable when the book value of a stock is not equal to the stock price for use in a comparable risk/earnings analysis.
REQUEST NO. 310:Terri Carlock, p. 15, lines 2-5
In reference to page 15, lines 2-5, please provide a detailed example of the methodology adopted by the Commission, and documentation of the Commission's formal adoption of the methodology in question.  Additionally, please provide the specific mathematical procedures employed to derive the 3.513% and 4.015% annual effective growth rates shown in Exhibit No. 128, Schedule 12, page 1 of 2.
RESPONSE NO. 310:Terri Carlock, p. 15, lines 2-5
This issue was settled for this case in the Second Settlement and Stipulation.
The methodology was adopted following Case Nos. BOI-W-93-1 and BOI-W-93-3.  Testimony and exhibits reference the computations.  Although Order Nos. 25062 and 25640 adopt the allowed return on equity encompassing the growth adjustment, neither the methodology or the quarterly compounding are discussed specifically in the order.
As stated in my surrebuttal testimony, page 18, lines 2-6, even if the methodology utilized by Cummings was accepted that my return on equity range would not change.
REQUEST NO. 311:Terri Carlock, p. 18, lines 15-20
A.In reference to page 18, lines 15-20, please explain how "If USWC were a smaller company, the capital structures for financial and ratemaking purposes would be the same.
B.Please provide all studies, accounting reports, analyses, or other data which supports the conclusion that, "It is primarily because of the size of USWC and its allocation process that the regulatory reporting capital structure and the actual financial structure differ."
RESPONSE NO. 311:Terri Carlock, p. 18, lines 15-20
This issue was settled for this case in the Second Settlement and Stipulation.
REQUEST NO. 312:Terri Carlock, p. 21, lines 21-25
A.  In reference to page 21, lines 21-25, please provide reference to Staff testimony and workpapers and calculations to demonstrate that the cost of capital leases including interest is included in the results of operations as an expense to calculate the revenue requirement.
B.  Provide all evidence which supports your conclusion that interest expense is included in the amortization for capitalized leases.
RESPONSE NO. 312:Terri Carlock, p. 21, lines 21-25
This issue was settled for this case in the Second Settlement and Stipulation.
REQUEST NO. 313:Carlock p. 21
Please provide all Idaho Commission orders, if any, which require that a utility treat capitalized leases as operating leases.
RESPONSE NO. 313:Carlock p. 21
This issue was settled for this case in the Second Settlement and Stipulation.
REQUEST NO. 314:Terri Carlock, p. 22, lines 10-16
In reference to page 22, lines 10-16, please explain how the methodology used to calculate the effective cost of debt includes amortization of premiums, discounts, and issuance costs.  In addition, please provide a copy of relevant portions of Order No. 25880 in Case No. IPC-E-94-5.
RESPONSE NO. 314:Terri Carlock, p. 22, lines 10-16
This issue was settled for this case in the Second Settlement and Stipulation.
DATED at Boise, Idaho, this               day of March 1997.
________________________
Susan Hamlin
Deputy Attorney General
gdk:sh:i\wpfiles\umisc\response\\prdreq\usws965.rs7