PROPOSED RULEMAKING
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CHS. 63 AND 71]
[31 Pa.B. 5110] [L-00010153, M-00001374]
Financial Reporting Requirements for All Telecommunications Carriers The Pennsylvania Public Utility Commission (Commission) on June 21, 2001, adopted a proposed rulemaking order which streamlines certain financial reporting requirements for both competitive local exchange carriers (CLECs) and incumbent local exchange carriers (ILECs) while still providing the Commission with necessary information needed to effectively monitor the telecommunications industry in this Commonwealth. The contact persons are Robert Wilson, Bureau of Fixed Utility Services, (717) 783-6162, Carl S. Hisiro, Law Bureau, (717) 783-2812, and Elizabeth Lion Januzzi, Law Bureau, (717) 772-0696.
Executive Summary
In September 2000, the Commission established a Collaborative consisting of all interested telecommunications carriers, Commission staff and other interested parties to determine what, if any, modifications should be adopted to the Commission's accounting procedures and financial reporting requirements in response to the opening of the local and toll telecommunications markets to competition. In particular, the Collaborative was charged with resolving a number of important issues, including whether CLECs should be held to the same financial reporting requirements as ILECs, what reports should be treated as proprietary and whether CLECs should be required to maintain separate accounting systems for their various operations.
At the conclusion of its deliberative process, the Collaborative filed a Final Report detailing its findings and recommendations. The recommendations significantly streamline the reporting requirements for both CLECs and ILECs; however, several of the recommendations require changes in the Commission's regulations. Specifically, the proposed rulemaking redefines the classes of telephone utilities in § 63.31 (relating to classification of public utilities) based on whether a carrier is an incumbent or new entrant, and, if an incumbent, whether the utility is subject to an alternative form of regulation or some type of rate based, rate-of-return regulation. The current class definitions are based solely on access lines and/or minimal operating revenues which results in CLECs and ILECs filing the same reports even though the Commission's informational needs for these two types of carriers are completely different. The proposed rulemaking also amends § 63.32 (relating to systems of accounts) to recognize that CLECs not required by the Federal Communications Commission to conform to the Uniform System of Accounts must inform the Commission of this fact in their annual reports and state what method of accounting is being utilized. Finally, the proposed rulemaking clarifies that the quarterly or annual rate-of-return financial reports required under § 71.3 (relating to filing requirements) only apply to ILECs and that the quarterly reports for the larger ILECs are reduced to a semiannual basis.
Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; Terrance J. Fitzpatrick
Public Meeting held
June 21, 2001
Proposed Rulemaking Order By the Commission:
This Commission entered an order on September 12, 2000, at M-00001374 to establish a Collaborative wherein all telecommunications carriers and interested parties have an opportunity to participate in determining what, if any, modifications should be adopted to the Commission's accounting procedures and financial reporting requirements in response to the opening of the local and toll telecommunications markets to competition. In particular, the Collaborative was charged with resolving a number of important issues, including whether CLECs should be held to the same financial reporting requirements as ILECs, what reports (or subparts thereof) should be treated as proprietary and whether CLECs should be required to maintain separate accounting systems for their various operations. At the conclusion of the 6-month process, the Collaborative filed a 31-page Final Report detailing its findings and recommendations. A copy of this Final Report without attachments is appended to this Order as Appendix A.
At the outset we wish to commend the members of the Collaborative for their efforts to resolve the many difficult issues facing them and for their professionalism and cooperation in developing the various recommendations contained in the Final Report. This Final Report would not have been possible without the significant contributions of time and effort by the industry participants and Commission staff.
After a careful and thorough review of that document, we are pleased to state that by this order we are adopting all the recommendations contained in the Final Report. These recommended changes will significantly streamline certain financial reporting requirements for both CLECs and ILECs, particularly the annual reports now required under § 63.36 (relating to filing of annual financial reports), while still providing the Commission with the necessary information needed to monitor effectively the telecommunications industry in this Commonwealth.1 The reduced reporting requirements, we believe, will have the effect of lowering entry barriers into the local telecommunications markets in this Commonwealth, thereby promoting a more competitive marketplace.2
We also note that the Collaborative's recommendations relating to the ever-troubling issue of what information should be made public and what should be protected as confidential will provide a reasonable, balanced approach in the future. Finally, several of the recommendations require changes in the Commission's regulations. In this regard, the Collaborative provided suggested language to accomplish the necessary regulatory amendments in Appendices G and H following the Final Report. We accept and approve the suggested regulatory changes and hereby institute a rulemaking proceeding to adopt these proposals as final-form regulations.
Accordingly, under sections 501 and 1501 of the Public Utility Code (66 Pa.C.S. §§ 501 and 1501); sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder in 1 Pa. Code §§ 7.1, 7.2 and 7.5; section 204(b) of the Commonwealth Attorneys Act (71 P. S. § 732.204(b)); section 745.5 of the Regulatory Review Act (71 P. S. § 745.5); section 612 of The Administrative Code of 1929 (71 P. S. § 232) and the regulations promulgated thereunder in 4 Pa. Code §§ 7.251--7.235, we are considering adopting the proposed amendments set forth in Annex A; Therefore,
It Is Ordered That:
1. The Bureau of Fixed Utility Services is hereby directed to implement the recommended changes to the Commission's financial reporting requirements contained in the Final Report of the Collaborative issued on March 15, 2001, at Docket No. M-00001374.
2. The quarterly tracking report required by order entered August 7, 1997, at Docket No. A-310203F0002 (which reports are submitted at Docket No. M-00970943) for CLECs to report their residential and business access lines by LATA is hereby repealed.
3. A proposed rulemaking is hereby instituted to amend §§ 63.31--63.33 and 71.3.
4. The proposed rulemaking will consider the regulations set forth in Annex A, as recommended in the Final Report referred to in Ordering Paragraph No. 1.
5. The Secretary shall submit this Order and Annex A to the Office of Attorney General for review as to form and legality and to the Governor's Budget Office for review of fiscal impact.
6. The Secretary shall submit this Order and Annex A for review and comment to the Independent Regulatory Review Commission and the Legislative Standing Committees.
7. The Secretary shall certify this Order and Annex A, and deposit them with the Legislative Reference Bureau to be published in the Pennsylvania Bulletin. The Secretary shall specify publication of the Order in accordance with 45 Pa.C.S. § 727.
8. An original and 15 copies of any comments referencing the docket number of the proposed rulemaking shall be submitted within 30 days of publication in the Pennsylvania Bulletin to the Pennsylvania Public Utility Commission, Attn.: Secretary, P. O. Box 3265, Harrisburg, PA 17105-3265. Reply comments will not be entertained.
9. A copy of this Order and Annex A shall be served upon the Pennsylvania Telephone Association, the Telecommunications Resellers Association, all jurisdictional telecommunication utilities, the Office of Trial Staff, the Office of Consumer Advocate and the Small Business Advocate.
JAMES J. MCNULTY,
SecretaryFiscal Note: 57-222. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 63. TELEPHONE SERVICE
Subchapter C. ACCOUNTS AND RECORDS § 63.31. Classification of public utilities.
For accounting and reporting purposes, telephone public utilities are classified as follows:
(1) Class A. [Public utilities having 50,000 or more access lines.] Telephone public utilities that are incumbent local exchange carriers subject to an alternative form of regulation, including, but not limited to, price cap formulas, under 66 Pa.C.S. Chapter 30 (relating to alternative form of regulation of telecommunications services).
(2) Class B. [Public utilities having less than 50,000 access lines.] Telephone public utilities that are incumbent local exchange carriers subject to rate base/rate of return regulation or the Plan B Simplified Ratemaking Plan approved by the Commission under 66 Pa.C.S. Chapter 30.
(3) Class C. [Telephone public utilities having average annual operating revenues exceeding $10,000 but not more than $50,000.] Telephone public utilities that provide competitive local telephone exchange services and that are not the incumbent provider in any local exchange area within this Commonwealth.
[(4) Class D. Telephone public utilities having average annual operating revenues not exceeding $10,000.]
§ 63.32. Systems of accounts.
(a) Class A and Class B telephone public utilities shall keep their accounts in conformity with the requirements prescribed by the Federal Communications Commission (FCC), under ''Common Carrier Services; Revision; Uniform System of Accounts (USOA); Classes A, B, and C Telephone Companies,'' 51 Fed. Reg. 43498 (December 2, 1986) (to be codified at 47 CFR Part 32). The symbol ''32'' which forms the initial component of each account number in the system of accounts, as published, may not be considered as a prescribed part of the account number for accounting and reporting purposes.
(b) [(Reserved).
(c) Class C and D telephone public utilities, in the absence of a prescribed system of accounts for Class C and Class D telephone public utilities, shall keep the accounts as will be adequately informative for reasonable and forseeable regulatory purposes.] A Class C telephone public utility which is not required by the FCC to conform to the USOA and does not do so, shall inform the Commission of this fact on its annual financial report. The Class C utility shall also state the method of accounting utilized to compile the financial information reported, including the Generally Accepted Accounting Principles (GAAP).
[(d) A telephone public utility may adopt a system of accounts prescribed for a higher class of telephone public utilities, if the Commission is first notified of the intention of the utility to do so.]
§ 63.33. Integrity of reserve accounts to be preserved.
[Amounts] With respect to those companies which keep their accounts in conformity with the requirements prescribed by the Federal Communications Commission under the ''Common Carrier Services; Revision; Uniform Systems of Accounts (USOA); Classes A, B and C Telephone Companies'', 51 Fed. Reg. 43498 (December 2, 1986) (to be codified at 47 CFR Part 32), amounts in Class A and Class B accounts 169--173 inclusive, and in Class C accounts 185 and 190, reserved as of the effective date of the appropriate system of accounts prescribed in § 63.32 (relating to systems of accounts), [shall] may not, except by permission of the Commission, be used for any purpose other than the specific purpose for which reserved.
CHAPTER 71. FINANCIAL REPORTS § 71.3. Filing requirements.
(a) The following public utilities shall file a financial report for the 12-month period ending each March 31, June 30, September 30 and December 31:
* * * * * (2) [Local exchange telecommunications utilities with annual intraState gross revenues in excess of $10 million.
(3)] * * *
[(4)] (3) * * *
(b) Incumbent local exchange telecommunications utilities with annual intraState gross revenues in excess of $10 million shall file a financial report for the 12-month period ending each June 30 and December 31.
(c) The following public utilities shall file a financial report for the 12-month period ending each December 31:
* * * * * (2) [Local] Incumbent local exchange telecommunications utilities with annual intraState gross revenues in excess of $1 million but which do not exceed $10 million.
* * * * * [(c)] (d) * * *
[(d)] (e) * * *
______
1 We should add that we agree with the Collaborative's assessment in its report that with the reduced reporting obligations, noncompliant companies should expect more consistent and tougher enforcement efforts by the Commission to ensure compliance, including the filing of formal complaints seeking civil penalties, the suspension or revocation of certificates of public convenience or any other appropriate remedies. See Final Report at 2.
2 The streamlined reporting requirements we adopt today are not necessarily the end of the road. As recommended by the Collaborative at page 4 of its report, we will continue to evaluate whether further streamlining is appropriate as deregulation and competition take hold in the various Commonwealth telecommunications markets.
[Pa.B. Doc. No. 01-1644. Filed for public inspection September 7, 2001, 9:00 a.m.]
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