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HomeMy WebLinkAbout19910729.docx Minutes of Decision Meeting July 29, 1991 - 1:30 p.m. In attendance were: Commissioners Joe Miller, Ralph Nelson and Marsha H. Smith and staff members Mike Gilmore, Don Howell, Madonna Faunce, Bev Barker, Birdelle Brown, Gary Richardson, Tonya Clark, Terri Carlock, Lori Mann and Myrna Walters. Items from the July 29, 1991 Agenda were discussed and acted on as follows. 1.  Regulated Carrier Division Agenda dated July 29, 1991. Commissioner Nelson said he thought Commissioners should think about limiting their area unless they can prove they will haul in other areas. Tonya Clark spoke to the surveys she is reviewing. Commissioner Miller asked what advantage limiting the area would serve? Commissioner Nelson said if you receive a protest, would have a better idea of the carriers in the area.  At the hearing last week, one thought there were 3, the protestant named 11. Commissioner Miller said that would be a decision we would make in conjunction with decision on entry. **Approved regulated carrier agenda. **Held Item 2 - Gary Richardson's July 19, 1991 Decision Memorandum re:  Draft Public Information Policy. 3.  Lynn Anderson's July 26, 1991 Decision Memorandum re:  GTE OPUS and Measured Service Tariffs, Case No. GTE-T-89-5, Advice No. 91-13. Commissioner Smith said she didn't have any trouble with measured detail. Commissioner Miller agreed.  Asked what the policy decision for prohibiting person to person was? Commissioner Nelson responded. Commissioner Smith asked staff to remind Commissioners of why that was the decision in '83. -2- Lynn Anderson said Dick or Perry thought it was nonsensical.  Wasn't much explanation in the order.  Telephone company will assume it is person to person local call and charge higher rate. Commissioner Miller said if we have a rule, prefer to follow it. Commissioner Nelson said he thought $3 was a tremendous charge. Commissioner Miller said lets add here to the longstanding policy. Measured detail looks fine.  No charge for person to person local. Discussed the situation. Commissioner Nelson suggested not offering person to person. Mike Gilmore explained what would happen if you offered both. Commissioner Miller said just disapprove this and they can make decision how they want to do it. Agreed. 4.  Terri Carlock's July 26, 1991 Decision Memorandum re:  PacifiCorp Issuance and Sale of not more than 5 million shares of common stock - Case No. PAC-S-91-3. Commissioner Miller asked Terri Carlock if there was anything here of concern? Terri Carlock said nothing out of the ordinary. **Okayed by all three Commissioners. 5.  Don Howell's July 19, 1991 Decision Memorandum re:  FCC Docket to Promote Greater Competition for the Provision of Interstate Special Access and Switched Transport Services. Commissioner Smith said it would be helpful to know U. S. West's position. Don Howell responded.  Talked about whether or not U. S. West person would be available to come and talk to Commission.  Don't know what their position is. -3- Commissioner Miller said another thing to look at is resolution considered by Communications Committee on these dockets.  Was pretty well written. Commissioner Smith said the other thing that would be helpful would be to look at other states. Commissioner Miller spoke to New York. Commissioner Smith said she thought it was important for us to file because New York's won't be appropriate for rural. Commissioner Miller said this isn't something that would need nationwide uniformity of comments.  There is no need for every state to be like every other state. Commissioner Smith said maybe a way to do it would be on a lata basis. Commissioner Miller said that might be a good approach for a state like Idaho.  Presumably each state would be in the best position to know what good for them or not. Don Howell is to see what U. S. West thinks. Commissioner Miller said Eileen Benner has the Communications Committee resolution.  Could do something in the reply cycle, if we want to. 7.  Don Howell's July 26, 1991 Decision Memorandum re:  Enforcement and Collection of USF Surcharge. Commissioner Miller said to just follow the standard procedure to the end, if it doesn't work, follow the next step. Don Howell said if that doesn't work, we  could file action rather than the administrator.   Commissioner Smith said if we told the administrator to do it, she could hire an attorney and pay for it out of USF. Don Howell said he wondered if she would be empowered to do that? Commissioner Miller said Commissioners talked about having the Universal Service Fund incorporated. Discussed USF being nonprofit.  Need to get it separately incorporated. -4- **Will talk to our Administrator about hiring an attorney to get things set up. Commissioner Nelson spoke to the Washington fund.  Would like to see how they did it. 6.  Lori Mann's July 24, 1991 Decision Memorandum re:  Inland Telephone Company's Application for a Rate Increase; Case No. INL-T-90-1. Commissioner Nelson said there are a couple of issues at the first of the decision memo that we can handle before the contested issues.  Both the company and staff recommended 13.25 return on equity. Commissioner Smith said that was fine with her. 7.84% overall and test year 1989 were also agreed to. Commissioner Miller said on unamortized investment tax credit, need rationale. Commissioner Nelson said it is not a proper ratebase item.  It is in there for accounting purposes.  It appears as a reduction of the ratebase.  The company didn't present it at all.  They left it out.  Syd Lansing added it in.  It is a deferred credit, reduction of ratebase.  That is standard in rate cases. Commissioner Miller said he thought that should be spelled out in the order. Commissioner Nelson commented that has been consistent treatment. Franchise fee of $3,000. Commissioner Nelson said he didn't think we should be amortizing it over three years.  It may have been proper 25 years ago but should have been written off over a period of time.  Would remove it from ratebase. **Company put it in ratebase. Syd Lansing said the last time they had a rate case was in '79.  It was in there prior and is there now. Commissioner Nelson said he would agree with that although franchise fees are not usually amortized.  They are amortizable in normal situations. -5- Syd Lansing commented he had never seen one for a telephone company.  Company didn't know what it was for. **Will disallow that from ratebase. Commissioner Smith said she would phase it out.  Are we penalizing them for not having frequent rate cases? Commissioner Nelson said he thought we were rewarding them. Stephanie Miller suggested phasing it out - you can do that without actually recovering it in rates. Commissioners Miller and Nelson suggested:  do it all at once and say we will not allow it in ratebase. Commissioner Smith said they didn't meet the burden of proof. Commissioner Miller said it didn't make sense in this circumstance. **:It was in the financial statements prior to the last rate case and after. III Results of Operations There were four areas of controversy remaining.  First was:  Directory Advertising. Commissioner Nelson said it looked like we were talking about $200 a year. Commissioner Smith asked Syd Lansing to explain. Syd Lansing said it was $10,000 in the test year, for the whole company.  There is a contract with U. S. West for about 2/3rds of it.  That contract was was renegotiated.  It comes in at $2,500 instead of $6,600.  Took the carry forward as the proper real amount that they would get in the future.  Allocated it based on lines.  Explained how he allocated it.  Explained what Hendershot thought.  Explained Hendershot thought it should be Washington. Commissioner Miller said - so Hendershot could assign a portion of the directory revenue to Washington.  Question is - do you direct portion to Washington exchanges? Commissioner Nelson asked if the reverse wouldn't be the same? -6- Syd Lansing said Hagadone took half and half. Commissioner Smith said we could say we don't know who is right, so split the difference. Commissioner Miller said on the surface, neither way is wrong. Commissioner Nelson said because it is so close, would go with the company.  Their method was not unreasonable. Commissioner Miller asked - is there any rationale for splitting the difference?  Could say because neither is unreasonable and it is a small amount. Mike Gilmore said you could just say an average of the two is reasonable. Commissioner Miller said he would go with the company on $200. **Say their method of calculation was reasonable and take their number. Commissioner Miller said when the base is different than what the test year was, do think the order should talk about that in terms of $6,000 being known and measurable change and that would be the reason for not using the test year number (this number is more accurate).  Order should talk about it in those terms. Legal Expenses $6,730 Idaho portion in lawsuit for unregulated cellular suit.  None of the income from that will be included in this.  Thought it was a weak idea that they were defending the franchise.   Commissioner Smith said there is a mismatch.  They also failed to meet their burden of showing - no benefit directly or otherwise to the telephone company. Commissioner Nelson said testimony of Hendershot about the partnership is - if we ordered them to serve by BETRS, it would do the same thing.  Think it was a weak argument. Commissioner Miller said if some portion is to be included in basic local exchange, doesn't seem to make it. Commissioner Nelson said disallow the $6,730 for legal fees. -7- Depreciation Company had exhibit on depreciation.  Staff did not. Commissioner Nelson said the company wants to shorten the lives. Went over Exhibit 4 of the Company.  If we allowed 5 years and they started taking 2657, would they take it until it runs out, or every year? Syd Lansing explained. 20% times whatever is in the asset balance. Commissioner Miller asked if it was true that the company's rates are similar to other small companies we have authorized? Syd Lansing said Midvale has 5. Commissioner Miller said if we gave shorter lives and managing their assets to conform with depreciation rates, maybe they would do something. Syd Lansing said it is not hard for them to do that.  Explained how they could do it.  They just don't watch it. Commissioner Smith said she would go with 5 years and tell them to clean up their books. Commissioner Nelson said - could approve 5 year life but wouldn't approve proposed depreciation that goes along with that.  Say right now you don't get any depreciation. Commissioner Miller said if we say you can have 5 year life on vehicles, is there a way to clean that up? Syd Lansing said it has to be a new vehicle. Commissioner Nelson said for the test year, they don't have any depreciable base. Asked Syd Lansing about Line 5 on Page 5 of the exhibit. Commissioner Miller said somehow they have a $7,000 adjustment.  Can't we just take that out? Commissioner Smith said - tell them we will go with 5 year life and tell them to propose salvage. -8- Commissioner Miller asked what was wrong with just taking their $7,000 adjustment so it gets into rates? Commissioner Nelson said overall it is not a terrible imbalance.  It is 6%.  It is just these three accounts that are out of wack.  Suggested saying we will accept everything but these three accounts and get them straightened out for next time.  When you have more depreciation than assets it is tough to justify increase.  Said he would go with the staff on this one.  Have accepted all other company recommendations. Commissioner Smith asked how much revenue requirement are we talking about? Syd Lansing said $700. Commissioner Smith said she would like to tell them to go with 5 years but it needs to be cleaned up before they can do that. Commissioner Nelson explained what these were. Commissioner Miller said he didn't mind saying in that service territory 5 years seemed reasonable if they can get their books straightened around. Headquarters Expense Commissioner Nelson said in review:  company wanted to allocate 18% to Idaho.  Controversy comes on the allocation of management's time. Syd Lansing is recommending 25% and Hendershot 13.5%. Discussed:  Like directory assistance allocation problem, they are equally reasonable or unreasonable.  Wish we had a rule on allocations, rule that would be the rule and avoid these difficult to decide allocations.  Total company number is:  18.21%. Commissioner Miller said he would go with total company number. Other commissioners agreed. -9- IV  Rate of Return Decision:  Actual capital structure.   **Took a break at this time to get actual revenue requirement number. V.  Rate Allocation and Rate Design Discussed letting local companies make 5¢.  Independent companies billed by U. S. West are charged 35¢, does staff recommend charging 40¢? Birdelle Brown said she didn't mind it being 38¢. Telephone company was going to charge Inland 37 and they were going to charge 40¢. Explained her rationale. Back to rate allocation. $50,318 was the number. Commissioner Nelson said Inland proposed $16,000 thru schedule on Page 10 and staff proposes to reach $13,000 through schedules and add toll access charge. Commissioner Smith asked if there was a reason why we didn't go to 125%? Birdelle Brown responded.  It would be an underearning. Commissioner Smith asked if this included the business rate? This would assume business rates at 125%. Commissioner Miller asked about the $3188? Commissioner Smith asked - are these calculations what is in place now or based on what was handed out? Birdelle Brown said those are the old ones. Commissioner Nelson said if Inland's rates were set as Page 14, they would qualify for $3,300 from USF. COmmissioner Smith said it increases their toll access. -10- Commissioner Miller asked how does the company get to 12¢ toll access with USF and we get to 13? Birdelle Brown said they were attempting to get to the minimum requirement but were using total minutes.  Said 12¢ is correct the way they calculated it. Commissioner Nelson said he would suggest using the rates on Page 14 except for the business rates.  Think $22 is an appropriate figure. Commissioner Smith asked - does the calculation of the USF include Leon at $14.45? Birdelle Brown said yes at $14.45. There are 32 Leon customers. Commissioner Nelson said these customers probably have same relationship as up at Setters and Rock Creek. Commissioner Smith asked if the portion of providing service to Uniontown in our case? Syd Lansing explained how that number was reached. Commissioner Smith asked if there would be a billing problem? Syd Lansing said there will be a billing change necessary. Discussed the cost. Commissioner Miller spoke to taking the Washington rate. Commissioner Smith asked what the urban rate was? Commissioner Nelson said 125% of base residential rate - $14.50 and $22.50. Commissioner Smith said she started out charging the same as Washington - can go with $15 on the theory that we have done away with mileage, etc.  That would make them pay a little more than Lenore.  (Leon). Commissioner Nelson said that should solve their software problem.  Would go with the Washington urban figure. Business at 1.5 times residential. -11- Commissioner Smith said .40 on DA and no free calls, toll access at 125%. SUB PAC Commissioner Nelson said he thought company should offer them. Commissioner Miller said since they made the election to be Title 62, do we have authority to order them? Lori Mann suggested leaving it status quo. Commissioner Miller said if there is a way to get where we want to get with USF, would prefer external route through USF. Commissioner Smith said we don't have enough to decide EAS.  Would have to tell these people that is their option. Commissioner Nelson said he would like to put in there that we authorize the company to offer it and then say U. S. West will continue to carry it.  Would like to be able to say if U. S. West is forced to price it below what they are receiving for access, that that additional amount should be billed back to Inland and gotten from USF.  But don't know how to do that. Birdelle Brown asked if that any harder than taking EAS out of Universal Service Fund? Commissioner Smith said there wasn't enough information in here that the price of SUB PAC was correct. SUB PAC RATE Commissioner Miller asked how many subscribers are there to SUB PAC now? Lori Mann responded - somewhere between 7 and 23. Commissioner Miller said maybe for this case we could grandfather current customers and not offer it to new customers until we do something else. Commissioner Smith said something else to her was investigating the possibility of EAS. Commissioner Nelson said we will probably get an EAS petition. -12- Commissioner Smith said and make everybody parties in it - AT&T and U. S. West North.  Didn't think the SUB PAC was sustainable. Commissioner Miller said what if we decide U. S. West should be offering SUB PAC? Commissioner Smith said we regulate that.  The quicker the case is started the better. Commissioner Miller said we may conclude discount plan is the way to go.  Then could deal with the shortfall. Commissioner Smith said you could require company to bill a lower toll access rate for all minutes under the plan so that PNB has reduced expense and revenue deficiency of Inland would be bigger and they could collect that from USF.  Only question is do we have a threshold problem with meeting 125%? CONCENSUS:  Freeze those current customers and open a separate docket to explore EAS and to explore alternate toll discount plans to be offered by the toll carriers in the region. **Investigation into appropriate way to serve this area. Staff will have to be creative in that case. Company Practices Commissioner Miller said he thought Birdelle Brown's recommendations were good there.  Would go with her on payphones. **Get tariff updated. Okayed staff recommendations on tariffs. Commissioner Smith said to give them 60 days to work on the tariff. 5.  Special Services and Facilities Commissioner Smith said company needs to have something in the tariff for this. Birdelle Brown and Ray Hendershot are to work on the wording. -13- Directory Information Published our information. Meeting was adjourned.         DATED at Boise, Idaho this       day of September, 1991.                           PRESIDENT                           COMMISSIONER                           COMMISSIONER ATTEST:                               Commission Secretary 0057M