20030106_353.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RANDY LOBB
DON HOWELL
LYNN ANDERSON
JOE CUSICK
BIRDELLE BROWN
CAROLEE HALL
DOUG COOLEY
BEVERLY BARKER
MARGE MAXWELL
GENE FADNESS
TONY A CLARK
RON LAW
WORKING FILE
FROM:WAYNE HART
DATE:JANUARY 3, 2002
RE: HORNER COMPLAINT ABOUT QWEST SPECIAL FACILITIES
CHARGES.
BACKGROUND
On October 30, 2002, Richard Homer contacted the Commission Consumer Staff
complaining about a special facilities charge that Qwest Corporation had indicated he must pay
in order to provide telephone service to an apartment complex he was constructing in Rexburg.
Upon the inquiry of the Consumer Staff, Qwest's executive office complaint staff sustained the
charges, indicating they were imposed in accordance with its Basic Local Exchange Tariff
Section 4, page 4, paragraph 4.
At this point, the complaint was referred to the Telecom Section, who made further
inquiry of Qwest's Idaho Regulatory Staff, as this appeared to be a new application of the
language of the tariff and inconsistent with Staff s understanding of the Commission s policies in
regards to a company s responsibilities for upgrading its facilities inside its network.
DECISION MEMORANDUM JANUARY 3 , 2003
On November 13 2002, Qwest's Manager of Regulatory Affairs for Idaho , John Souba
provided a written response to Staffs inquiry explaining the Company s position and indicating
the Company believed the charges were consistent with the language of the tariff, and requesting
that the complaint be brought before the Commission if Staff does not agree that the charges are
valid.
In his response, Mr. Souba indicated the area in question was originally cabled for single-
family residential service and, as Mr. Homer s development was for seven 6-plex apartment
complexes, it required "special" facilities and the imposition of such charges was consistent with
the language of the tariff. Qwest had to install 1400 feet of new 100-pair aerial cable at a cost of
303 in order to provide service to these apartments. Homer was charged $3 528 ($6 303
minus the cost of the actual cable, which Qwest indicated is re-useable.) A copy of Mr. Souba
response is attached.
The specific language of the tariff is as follows:
4.5.
SPECIAL SERVICE ARRANGEMENTS
SPECIAL ASSEMBLIES, FACILITIES AND FINISHES OF EQUIPMENT
Rates and charges in connection with special assemblies, special
facilities and special finishes of equipment will be based on the
costs involved in each individual case.
STAFF POSITION
Staff maintains that the tariff language cited by Qwest in supporting these charges does
not apply in these circumstances. The facilities Qwest proposes to use to provide the service
the apartments are not "special", but are very typical ofthe facilities normally used by the
Company to provide service to this type of a development.
Qwest argues that the development of multi-family units in an area originally cabled as
residential makes these facilities "special". Staff disagrees. There is nothing uncommon or
special about single-family residential areas that are next to other commercial and/or multi-
family areas being converted to commercial or multifamily use. This is a natural progression as
a community grows, and is exactly the type of development that a company should plan for and
expect. The costs for keeping up with such natural growth within a company s existing network
are a normal cost of doing business and as such are already built into the rate base of the
DECISION MEMORANDUM JANUARY 3 , 2003
company. If the pace of growth increases, Staff believes the proper response is to seek a change
in rates, not to selectively place the burden of that increased growth on some of those responding
to that growth.
The Company also infers in Mr. Souba s response that the current rapid growth in the
Rexburg area, which is due to the changes brought on by the change from Ricks College to
BYU-Idaho , somehow makes this is a "special" development and eligible for different treatment.
The pace of development is seldom constant. It is very normal for this pace to vary from year to
year and from location to location. This is also a common occurrence for which companies
especially one the size of Qwest, should expect and plan.
This specific instance is a clear example of the normal growth for which a company
should expect and plan. The property in question is situated approximately ~ block north of the
intersection of 4th West and 4th South in Rexburg, on the east side of 4th West. This section of 4th
South is a major arterial through the City of Rexburg. This street used to be Highway 20
(Yellowstone Highway) and one of the busiest highways in the state until the construction of the
new bypass around town. It is still one of the most highly traveled streets in the area. 4th South
remains one of the primary routes to the campus ofBYU-ldaho.
One of the area s nicer motels, the Best Western Cottontree, is located at the northwest
comer 0 f 4th South and 4th West, directly across the street from the property being developed.
The area along 4th South is clearly commercial with multiple businesses, including a Les Schwab
tire store, a used car lot, an auto body shop, a skating rink, and a church, storage units, as well as
other multi-family housing developments. There are other apartment units located on 4th West
south of 4th South, and on the south side of 4th South, between 4th West and 3rd West. (See map
and aerial photo.
Mr. Homer informed Staff that the property was zoned commercial before the
development was proposed, and he had to get it changed to high density residential before
proceeding with his apartment complex. The upper half of the block of the east side of 4th West
between 3rd South and 4th South, the property to the immediate north of the Homer project, is
zoned medium density residential.
In response to questions from Staff, Qwest identified two other developers in the Rexburg
area that had paid charges under similar circumstances in accordance with its interpretation of
DECISION MEMORANDUM JANUARY 3, 2003
the tariff. Qwest has yet to respond to questions regarding any other such charges in other parts
of its exchange.
Staff believes the imposition of charges in circumstances such as this reflects a change in
Qwest's policy. This opinion is supported by Mr. Homer , who indicated he had not been
charged any amount for providing service to a similar project developed in early 2001. Homer
indicated Qwest had to reinforce the facilities available in that area in order to serve those units
yet he was not charged for that service.
STAFF RECOMMENDATION
Staff recommends the Commission find Qwest's application of its tariff to be in error and
order the charges collected from Mr. Homer in accordance with this interpretation to be
refunded.
Staff also recommends the Company be directed to refund all such charges collected
from any other applicants involving similar interpretations of this tariff section.
COMMISSION DECISION
Does the Commission agree?
Wayne Hart
i:udmemos/qwest homer comp1aint dm
DECISION MEMORANDUM JANUARY 3 , 2003
Boise, Idaho
November 13 2002
Wayne Hart
Carol Cooper
Idaho Public Utilities Commission
O. Box 83720
Boise, Idaho 83720-0074
RE: QWEST QUOTATION FOR SPECIAL FACILITY CHARGES TO
RICHARD HORNER FOR SERVICE TO APPLEWOOD APARTMENTS IN
REXBURG, IDAHO
Dear Wayne
At the request of Debbie Drew I have reviewed the complaint of Mr. Homer regarding
provision of service to his new apartment complex in Rexburg, Idaho. Based upon this
review and my discussion with the Qwest engineer who prepared the quotation I believe
the charges requested from Mr. Homer ($3 528) have been quoted correctly and
consistently with current practice. I would like to provide you some background
information to assist in your investigation.
Mr. Homer s development is a result of rapid expansion of housing for college students
associated with Rick's Colleges recent change to a four year institution. In Mr. Homer
case a home (with current service) with a grandiose back yard is having the back yard
area converted to commercial use to include seven 6-plex apartment units. This
development is in the middle of a 20 year old single-family-home residential subdivision.
To provide service to the forty-two apartments Qwest is installing a new 100 pair aerial
cable for 1400 feet from a service pedestal with adequate facilities to handle an expected
demand of63 lines (42 home units with 1.5 lines each). The use of the 100 pair cable is
caused by ordering a standard cable size (ie. 50 pair and 100 pair choices) and would, of
course, provide for unusual or unexpected future service needs to the area.
Qwest could not have planned for such an extreme demand for service when it originally
engineered and placed its cabling to serve this area of Rexburg. Mr. Homer has indicated
that there are several other multifamily developments which have sprung up around the
one he is developing. I have confirmed with the Qwest engineer in the area that nearly all
of these apartments were billed for special facility charges calculated the same way the
charges for Mr. Homer were prepared.
Qwest is relying upon its Basic Local Exchange Tariff Section Section 4, page 4
paragraph 4.1 for this quotation. It says: "Rates and charges in connection with special
assemblies, special facilities and special finishes of equipment will be based on the cost
involved in each individual case." In this case, the building of commercial apartments in
an area originally cabled for single-family service requires installation of special facilities
for the unique demands of this customer. In its billing quotation to Mr. Homer, Qwest is
only charging for the placement of the new cable. The actual cost of the aerial cable is
not being billed to Mr. Homer as it is considered a reusable facility for the future. In fact
Qwest's total charges for the engineering, material and placement of the cable to
Applewood Apartments is 303. Qwest believes this approach strikes an appropriate
balance between it investing in providing new service to this commercial application and
a customer contribution based upon its impact on the existing network.
The Company engineer indicates that the relatively small financial impact to provide
telephone service to new apartments that are placed in locations such as Mr. Homer
typically cause little or no concern to developers. Qwest's engineer is moving forward
with the final drafting of the job and ordering material for the Applewood Apartments
with the understanding that Mr. Homer will be willing to pay 'under protest' the Qwest-
quoted charges. If Staff agrees that the quoted charges are reasonable and consistent with
our tariff, no refund will be made by Qwest. If Staff does not agree that the charges are
valid, Qwest requests that this complaint be brought to the Commissioners for formal
determination through a decision meeting agenda item.
If! can be of further assistance in this matter, please call me on 385-8666.
Sincerely,
John Souba
Mgr. Regulatory Affairs
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