20060313_1491.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:MARCH 9, 2006
RE:2005 ANNUAL REPORT AND RECOMMENDATIONS FOR THE IDAHO
TELEPHONE SERVICE ASSISTANCE PROGRAM.
On February 28 2006, the Idaho Telephone Service Assistance Program (ITSAF)
Administrator, Alyson Anderson, filed the Annual report for the fiscal year ending
December 31 2005. Ms. Anderson reported gross revenues from surcharges of$1 609 568 of
which $797 052 (50%) was assessed on wireline local exchange services and $812 516 (50%)
was assessed on wireless services. Disbursement credits for eligible subscribers increased by
almost 5% to $1 334 650, and disbursements to phone companies for administration costs
increased by almost 4% to $118 177. At year s end, 33 038 recipients were receiving ITSAP
support, an increase of nearly 6% from 2004. The ITSAP Administrator s fees and expenses
were $7 888 for the year. The Fund's cash balance at the end of the year was $251 938 and
$740 000 worth of Treasury Notes were purchased with maturity dates of March 6, 2006 and
April 30, 2006.
The number of local access lines reported to the Administrator for 2005 decreased
slightly (2.6%) from approximately 679 600 to approximately 662 200. The average number of
residential lines reported was approximately 465 600 and the average number of business lines
was approximately 196 600. The average reported number of wireless access lines increased by
almost 21 % to approximately 775 000 from 642 000. The average total number of lines
increased overall by about 115 200 (9%) to approximately 1,437 200 from 1 322 000.
DECISION MEMORANDUM - 1 -MARCH 9, 2006
2006 BUDGET AND TRENDS
Ms. Anderson estimates the 2006 funds from access lines will remain stable, with
contribution from wireless lines increasing and local access lines decreasing. She reports the
number oflTSAP recipients is estimated to increase by approximately 6%, the telephone
company administrative costs to increase by approximately 5%, and the ITSAP Administrator
fees and expenses will increase by approximately 10%. The projected funding requirement for
2006 is estimated to be $1 635 800.
ADMINISTRATOR'S RECOMMENDATIONS
After reviewing the projected funding needs for 2006, Ms. Anderson believes that
maintaining the current surcharge of $.07 would result in an unnecessarily high reserve balance.
She, therefore, recommends a surcharge rate reduction to $.06 per month per local and wireless
access line. At this rate, the projected fund balance is estimated to be $559 189, an amount Ms.
Anderson believes will be adequate to reimburse companies, as well as provide a reasonable
four-month reserve balance.
STAFF RECOMMENDATION
Staff agrees with Ms. Anderson s assessment that a change to the ITSAP surcharge rate is
warranted and recommends the rate reduction to $0.06 per line per month.
COMMISSION DECISION
Does the Commission wish to reduce the Idaho Telephone Service Assistance Program
surcharge rate to $0.06 per line per month?
lLU
~~~
Grace Seaman
i:udmemos/ITSAP 2005
DECISION MEMORANDUM - 2 -MARCH 9, 2006