4TH.docx

DONALD L.  HOWELL, II
Deputy Attorney General
IDAHO PUBLIC UTILITIES COMMISSION
PO Box 83720
Boise, ID  83720-0074
Tele:  [phone]
FAX: [phone]
Street Address for Express Mail:
472 W Washington
Boise, ID  83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF U S WEST COMMUNICATIONS, INC. FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR REGULATED TITLE 61 SERVICES.
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CASE NO. USW-S-96-5
FOURTH STIPULATION AND SETTLEMENT
COMES NOW U S WEST Communications and the Commission Staff by and through their respective attorneys and submits the following Fourth Stipulation and Settlement for the Commission’s consideration pursuant to Procedural Rules 272, 274-76.  IDAPA 31.01.01.272, 274-276.  The Staff and U S WEST (“the parties”) have entered into a settlement to resolve the issue of toll restriction on rehearing.  The parties urges the Commission to adopt and approve this Fourth Stipulation and Settlement and issue a final Order on rehearing in this case.
BACKGROUND
In Order No. 27659 issued July 27, 1998, the Commission partially granted the Company’s Petition for Reconsideration in this rate case.  More specifically, the Commission decided to reconsider its decision to re-regulate “toll restriction” pursuant to Idaho Code § 62-605(5).  In Order Nos. 27100 and 27152 the Commission held that toll restriction service should be “clawed back” or re-regulated as a Title 61 service.  Order No. 27659 established a rehearing schedule and included an evidentiary hearing set for September 8, 1998.  
In its rehearing prefiled direct testimony, the Staff asserted that toll restriction should be subject to the Commission’s rate setting authority found in Title 61.  The Staff argued that the claw-back requirements set out in Idaho Code § 62-605(5) had been satisfied, thereby enabling the Commission to regulate toll restriction under Title 61.  For its part, the Company’s prefiled direct testimony argued that the claw-back requirements had not been met.  In particular, the Company argued that toll restriction was not offered before July 1, 1998, and that the Staff had not adequately demonstrated that the public interest requires its re-regulation under Title 61.
At this juncture, the Staff and the Company entered into discussions regarding the possible settlement of the toll restriction dispute.  Under the rehearing schedule, the Staff is to file its rebuttal testimony on September 2.  Instead, Staff will file testimony supporting this stipulation.  The results of the settlement discussions are set out below.
STIPULATION AND SETTLEMENT
For purposes of this settlement, the parties recognize that “claw-back” of a Title 62 service involves novel legal and factual issues.  U S WEST seeks to retain the pricing flexibility afforded by Title 62, while the Staff seeks to insure that the charges, terms and conditions for toll restriction service are just and reasonable.  Recognizing these diverse positions, the parties have endeavored to satisfy the desires of each party.  The parties maintain that adoption of the settlement conditions below will ensure that toll restriction service is offered under terms and conditions that are in the public interest and at rates that are just and reasonable .
1.  Non-recurring Charges.  The parties agree and recommend for the Commission’s adoption that customers subscribing to toll restriction be charged an initial non-recurring rate of $13.50 except as noted below.  The proposed non-recurring charge would only be assessed at the time the customer requested toll-restriction service; there would be no charge to discontinue toll-restriction service.  The one exception to the assessment of the $13.50 non-recurring charge would be when residential customers request toll restriction at the time they obtain local exchange service from the Company.  In other words, residential customers requesting toll restriction at the time they initiate local service would not be charged the $13.50 non-recurring fee on their first residential line.  New residential customers subscribing to more than one access line may be assessed one non-recurring charge for the second or more lines equipped with toll restriction.  Approximately 92% of all toll restriction customers are residential customers.
2.  Recurring Charges.  The parties also agree and recommend that the Commission adopt  a recurring charge for toll restriction service for residential customers of $0.25 per month.  The parties also stipulate that the single-line business customer subscribing to toll restriction service should pay a monthly recurring charge of $1.00.  The charges for toll restriction for multi-line business customers would remain subject to Title 62.  The parties believe that a reasonable monthly  charge that appears on the monthly telephone bill will notify or remind customers of their toll restriction service. The parties further agree that the Company would maintain the authority to set its own prices for toll restriction for those business customers that subscribe to more than one access line.  Eligible low-income or Idaho Telecommunications Service Assistance Program participants would receive toll restriction service without recurring or non-recurring charges.   
3.  Rate Changes and Length of Agreement.  The parties further agree that this settlement agreement will operate for a period of 36 months following the Commission’s approval of the agreement.  During this three-year period, the toll restriction rates for residential and single-line customers may only be changed upon Application by the Company and approval by the Commission under Title 61 standards.  This agreement shall also be terminated in those specific exchanges where effective competition exists for basic local exchange service within a local telephone exchange (i.e., not a local calling region).
4.  Precedential Effect.  At the conclusion of the three-year agreement, the Commission and its Staff may pursue “claw-back” of toll restriction service.  The parties agree that adoption of this settlement will have no precedential effect regarding the classification of toll restriction.  This agreement and any Order substantially adopting or approving this settlement may not be used or cited as precedences in future or other proceedings.
5.  Dismissal of Appeal.  If the Commission adopts and approves this settlement agreement, U S WEST agrees to voluntarily dismiss the suspended appeal of this matter before the Idaho Supreme Court in Docket No. 24349.  Each party to the appeal shall bear its own costs on appeal.
6.  Proposed Process.  The parties suggest that the previously scheduled evidentiary hearing for September 8, 1998, be used by the Commission to review this Fourth Stipulation and Settlement Agreement.  In the event that the Commission does not approve of this settlement agreement, then they propose that the Commission reissue an amended rehearing schedule and require the Staff to prefile its rebuttal tesitmony.
CONCLUSION
 The parties strongly believe that this Stipulation and Settlement Agreement represents a reasonable resolution of the toll restriction issue.  Both parties recognize the complexity of the issue presented in this case, the amount and effort of resources expended by the parties thus far, and the length of time that has elapsed since the underlying rate case was first initiated.  This settlement agreement presents an opportunity to finally resolve the last remaining issue in this case.  As reflected herein, the settlement of this issue carries no precedential value beyond this particular case.  In the event that the Commission does not adopt this stipulation, then both the Staff and the Company reserve their rights to fully litigate the toll restriction issue. The parties urge the Commission to adopt this stipulation and issue its final Order on rehearing.
RESPECTFULLY submitted this                  day of September 1998.
For: Commission Staff

Donald L.  Howell, II
Deputy Attorney General
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For: U S WEST Communications, Inc.

Mary S. Hobson
Stoel Rives, LLP
vld/N:USW-S-96-5.dh9