19940214.docx

MINUTES OF DECISION MEETING
February 14, 1994 - 1:30 p.m.
In attendance were Commissioners Marsha Smith, Joe Miller and Ralph Nelson and staff members Scott Woodbury, Weldon Stutzman, Gary Richardson, Joe Cusick, Birdelle Brown, Beverly Barker, Treva Pline, Lori Mann and Myrna Walters.  Also in attendance was Jim Wozniak from U. S. West, Pat Stewart from U. S. West, Patty Nichols from Idaho Power Company, Woody Richards and Wayne Kidwell, Attorneys at Law.
Commission President Smith welcomed Commissioner Miller to the decision meeting.  Commissioner Miller has been out of the office for a couple of weeks because of back surgery.
Items from the February 14, 1994 Decision Meeting Agenda were discussed and acted upon as follows.
1.  Scott Woodbury's February 4, 1994 Decision Memorandum re:  Case No. INT-G-94-1  Composite Depreciation Rate.
After a brief discussion, decision was made to process the application on modified procedure.
2.  Scott Woodbury's February 9, 1994 Decision Memorandum re:  Case No. INT-G-94-2 - App. requesting changes in rate schedule LV-1 and associated General Services Provisions.
Commissioner Smith said in review - the application went out for comment and only staff chose to comment.
Commissioner Miller asked if the affected customers already had been contacted?
Scott Woodbury said they had - Northwest Industrial Gas Users was the only customer that asked for changes.  Intermountain incorporated those requested changes.
Commissioner Miller said he didn't see any potential harm to the other classes of customers.
Application was approved.
3.  Birdelle Brown's February 10, 1994 Decision Memorandum re:  U S West Advice 94-01-N which Revised U S West North Tariff to Conform with New Database and Tariff Format.
Birdelle Brown explained the filing.
After brief discussion, filing was approved.
4.  Birdelle Brown's February 10, 1994 Decision Memorandum re:  U S West Advice No. 94-02-N revising Language in the Access Service Catalog.
Approved.
5.  Bev Barker's February 10, 1994 Decision Memorandum re:  Request for Waiver of Master Metering Prohibition for Community House, Inc.
Commissioner Nelson commented - once the building is built, then you don't have any reasonable way to go back and meter it./
Commissioner Smith said she thought not.
Commissioner Nelson asked if this could pass the Design Excellence criteria?
Bev Barker said it was not inconceivable to Bill Eastlake.
Commissioner Smith said she thought the Commission should put it out on modified procedure and point out in the order that while the initial investment is higher than master metering, that the trade-off in the energy side when they put in baseboard heating.  If you go cheaper upfront it will cost you forever.  Perhaps spending more upfront would save later.
Commissioner Miller said he wasn't as concerned about the baseboard question.  Said all the Commission has been asked to approve in the master metering - yes or no.  If it can meet the Design Excellence criteria in this context, was not as worried about..or was drive to make decision on heating devices to substitute our judgement, not knowing the right way to heat this joint is.  Was just content to view it narrowly and if the three conditions are agreed to, it would probably be an appropriate place to waive master metering.  Could go out for comment, though.  
Bev Barker said everyone of the design people recognized that it was not the most cost effective in the long term.  Everybody concluded that the building needed to be built, that is why they reached that conclusion.  
Commissioner Smith said there is no question they need the building.
Commissioner Nelson commented - Commissioner Miller makes a good point, we are not design experts.
Okayed the waiver - impose the three circumstance that we have imposed in the past.
Commissioner Miller commented unless there is a problem we shouldn't hold up this project.
6.  Weldon Stutzman's February 10, 1994 Decision Memorandum re:  Case No. PIC-W-94-1, Picabo Livestock Company, Inc., dba Picabo Water Company.
Commissioner Miller asked Weldon why modified procedure?  Do we basically know that the customers generally accept this?
Weldon Stutzman said the customers have been notified.  One of the customers has responded by there didn't seem to be a huge concern.
Commissioner Miller commented he couldn't recall modified being used on small companies.
Commissioner Smith said she thought it was not unreasonable to ask the company to give individual notice so we can do modified procedure.
**Go modified.
7.  Lori Mann's January 25, 1994 Decision Memorandum re:  MCI Telecommunications and Deaveraging of MTS Rates:  Case No. GNR-T-93-9.  (Held from previous meetings).
Commissioner Smith commented - we can talk about it and see if it is a right answer or right policy for deaveraging.
Commissioner Nelson said he was thinking of having different rates by the Latas, but this doesn't appear to do that.  in light of MCI being the second largest carrier and their offering all these throughout the state, probably means there is no discrimination being practiced.  Think there is a potential but doesn't know if it is for MCI.  It appears they could fix this pretty easily.
Joe Cusick said their operator services Option K would have to be reduced slightly but they also have some that are mileage sensitive which mirror some that AT&T has since changed.  Those would have to be changed also.
Commissioner Smith said when you set the operator service rate, is that what we are talking about?
Joe Cusick said MCI has three or four table that are deaveraged so they would have to change 3 or 4 tables.
Commissioner Smith asked - you are saying that in order to comply with the statute their operator service rates have to be ...
Joe Cusick explained.  When you are talking about mileage and per minute rates, the cost of a one rate...when you talk about mileage rates the cost appears in the set-up.
Commissioner Smith asked - MCI has a surcharge and a table besides?
Birdelle Brown explained.  These are the rates hotel/motels might charge.
Commissioner Smith asked - these are not for residences, businesses, they would be for payphones?
Joe Cusick explained.  If you opted for MCI you would pay that.
Explained what staff's position is.  Code says they have to be deaveraged over the distance.
Commissioner Miller asked - what relevance is cost?
Joe Cusick said marketing realities force them to price differently.  Staff has no objection to MCI's exception.  If you want to price differently, file for an exemption.
Commissioner Nelson asked about averaging?
Birdelle Brown explained.  Gave an example.  
Commissioner Smith asked if one person buys service as residential and someone else as hotel, what happens?
Birdelle Brown said it was staff's interpretation it didn't matter what kind of customer, the Code doesn't address it.
**Eileen Benner was in attendance at this time.
Commissioner Smith asked - do you truly believe that the section intended that they couldn't distinguish between classes?
Joe Cusick said yes.  If you allow discrimination, where does it stop?  If you allow this, where do you stop?  You allow the companies to define their own market segments.  Some companies might define it one way, others another.  What we are saying is the Code is broad and it says they will be averaged.
Lori Mann said she didn't think the code makes distinction between residential and business.  It kind of provides for business rates in the last sentence where it allows volume discounts.
Joe Cusick said when it was residential that was the norm.  Think that is the context in which the code was written.
Birdelle Brown said - the phone call itself - there is very little difference between the calls (the big difference is the equipment).
Commissioner Nelson said it did seem they could file one tariff.
Commissioner Miller said he didn't have a complete answer.  Was not sure he understands each of the different rate options or the implications of a decision one way or another, for other cases and other carriers.  But his general attitude are:  do have a very difficult time accepting the idea the Legislature legislated one MTS rate.  The statute doesn't clearly say that and it seems to him the policy we are trying to promote here, seems to him there is potential for public benefit when you allow a company to take basic MTS and change it in different ways to suit individual customer classes better than one MTS rate and that is what the so-called competitive market lets you do.  It lets people price by end user needs or perceived end user needs.  To him that seems to be in general terms a positive result.  Customers have more choices in types of rate packages that particularly suit their needs.  So to him from a legal point of view, the idea that we would in this so-called competitive environs, that we would try and there is some regulatory benefit to limiting providers to a single rate.  To him the surcharge volume discount answer isn't really the answer.  If you are going to permit different rates, just permit different rates and allow marketing based on that.
At the other end of the spectrum the statute is clear that even though in his mind differences based on distance, isn't, at what point it becomes a difference based on geography is the hard question to devise a rule for.. that provides pricing flexibility that was contemplated.  This doesn't allow pricing differentiality on discounts, how you translate that into a decision, don't know.
Lori Mann said she thought the companies can be as competitive as they can be because they will be setting their own rates.
Commissioner Miller said once we set a certain rate, we are saying you can't choose something else.  What public benefit accrues when a mandated rate for everybody, what is the public benefit other than guarding against geographic deaveraging?
Lori Mann said she didn't know but still think they can price it to be competitive.  They will have a rate just like every other MTS provider.
Commissioner Miller asked - if you allow the surcharge rate to circumvent the rate, what are you going to accomplish?
Lori Mann said she thought it protected the more rural customer plus they will want to be competitive.
Joe Cusick said he thought 12 cents represented base line rate.  To the extent there is a business customer out there that needs different rate to be competitive, they can provide reductions to that rate.  They still have to establish the base line rate.
Commissioner Nelson said that clearly would be deaveraged.  Gave an example.  MCI rate was 10 cents and regular was 18 cents.  Was thinking that competition would drive the customer to a competitor with a better deal.  Lets say it was Inmate Phone Service who filed their competitive rate for inmate and their regular MTS as the same or higher?
Birdelle Brown said we told a facility they couldn't do that.
Commissioner Smith quoted the section.  It didn't say calls provided to every class of user have to be priced identically for long distance.
Birdelle Brown said the code exempts WATS.  We did put the definition of WATS in there.
Commissioner Smith said in her mind they knew there were residence and business and they were priced differently.  Part of this was to open up options in the MTS areas.  Said independent companies insisted on this.  From Boise to Caldwell it is Rate Y and from Rockland to Burley it is 2 times Y.
Said - you are saying MCI is selective which of these options they offer?
Eileen Benner said they are giving the Commission the ability to allow competition on the basis that benefits the customers...by allowing the Commission to make exceptions to the one schedule mandate.  They say if a company wants to offer two/three different products, Commission can allow... if it doesn't discriminate.  They bring out a MTS product that is 12, then they bring out higher, then they withdraw the 12 cents.  There are all kinds of ways to control who has.. if you only had one product, you couldn't switch.  Why even bother having averaging if there wasn't some concern?
Joe Cusick said if a carrier was the only carrier in an exchange, obviously those people have no alternatives.  
Commissioner Miller asked - we would permit that?
Joe Cusick said - we wouldn't always know what they are offering.
Commissioner Miller said he did see staff's concern.  Had a problem if you have one rate... when there are public benefits to differences based on the end user profiles.  Didn't seem an optional proposal.  Having to use the one rate rule to guard against these, is where he has a problem.
Lori Mann said if you allowed for deaveraged rates, how would those customers be protected where they roll out the different rates and only allow Albion 40 cents?
Commissioner Miller said if they started out with 12 and they wiped out 12 and moved everybody to 20 or 30, it would be objectionable but it would not be... from a customer point of view you wouldn't like it but from a regulatory point of view, what would you have to do with that?  If they wiped out 12 cent rate for Albion that would work like deaveraging.
Eileen Benner explained different offerings is deaveraging.
Commissioner Miller asked - has anyone attempted to do that?
Eileen Benner said no.
Commissioner Nelson asked if it could say a statewide class of customers?
Eileen Benner said she thought the exceptions would be the way to go.
Commissioner Miller said - assuming you wanted to get into case by case basis on whether MCI should be granted options or not.
Joe Cusick said h e had a problem with K.  1-800 collect, no problem.  It is clearly marketed nationally.  Said his first sympathies are they are not in harms way and the rate at K is higher.
Commissioner Nelson asked - do we know of any exchanges in Idaho that don't have an alternative available?
Response was Whitebird.
Decision meeting was adjourned at this point, to be continued on February 24.
Dated at Boise, Idaho, this 16th day of February, 1994.
Myrna J. Walters
Commission Secretary
mins/21494