Title 52--PUBLIC UTILITIES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CHS. 63 AND 71]
[L-00010153]
Telecommunications Carriers The Pennsylvania Public Utility Commission (Commission) on November 30, 2001, adopted a final order which streamlines certain financial reporting requirements for both competitive local exchange carriers (CLECs) and local exchange carriers (ILECs), while still providing the Commission with necessary information needed to effectively monitor the telecommunications industry in this Commonwealth.
Executive Summary
In September 2000, the Commission established a collaborative consisting of all interested telecommunications carriers, Commission staff and other interested parties (Collaborative) 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 incumbent 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, these final-form regulations redefine 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 or minimal operating revenues, or both, 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. These final-form regulations also amend § 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, these final-form regulations clarify 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 semi-annual basis.
The contact persons are Carl S. Hisiro (717) 783-2812 and Elizabeth Lion Januzzi (717) 772-0696 in the Law Bureau, and Robert Wilson (717) 783-6162 in the Bureau of Fixed Utility Services.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on August 21, 2001, 2002, the Commission submitted a copy of the notice of proposed rulemaking published at 31 Pa.B. 5110 (September 8, 2001), to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Committees for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing this final-form rulemaking, the Commission has considered the comments received from IRRC, the Committees and the public.
Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), on February 13, 2002, this final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on February 21, 2002, and approved the final-form rulemaking.
Public Meeting held
November 30, 2001Commissioners Present: Glen R. Thomas, Chairman; Robert K. Bloom, Vice Chairman; Aaron Wilson, Jr.; Terrance J. Fitzpatrick
Order By the Commission:
On June 28, 2001, this Commission entered an order proposing to amend its regulations relating to financial reporting requirements for telecommunications providers. These proposed amendments to existing regulations will facilitate adoption of the various recommendations to streamline certain financial reporting requirements previously contained in the final report of the Collaborative, which was created by this Commission at M-00001374.
The June 28, 2001, order was published at 31 Pa.B. 5110. Comments were thereafter received from only three entities: the Office of Consumer Advocate (OCA), AT&T Communications of Pennsylvania, Inc. (AT&T) and IRRC. This final-form rulemaking order discusses the comments received and sets forth, in Annex A and 31 Pa.B. 5110, final amendments to the Commission's regulations necessary to adopt the recommendations contained in the Collaborative's final report filed March 15, 2001, with this Commission at M-00001374.
Discussion
None of the comments filed address concerns or disagreements with any of the proposed amendments to the existing regulations.1 Instead, the focus of the comments filed by the OCA and IRRC address more general concerns relating to how the Commission will treat financial reporting information that is designated ''confidential'' or ''proprietary'' in the future.
The OCA's primary concern is that the recommendation made by the Collaborative and adopted by the Commission in its June 28, 2001, order, relating to the preliminary designation of certain schedules or parts thereof as proprietary, will ''virtually eliminate all useful ILEC [(incumbent local exchange carrier)] information from the public view.'' OCA Comments filed October 9, 2001 (OCA Comments), at 2. This is the same concern that the OCA expressed in its minority report filed with the Collaborative's March 15, 2001, final report and rejected by the Commission when it adopted the Collaborative's recommendations in total. For the reasons expressed in this preamble and in the final report, we do not agree with the OCA that the preliminary designations of proprietary treatment for certain schedules, or parts thereof, will have the type of negative impact suggested in the OCA's comments. We believe, instead, that the preliminary proprietary designations represent an appropriate and reasonable balancing of competing interests between disclosure and nondisclosure in an evolving competitive environment.
IRRC's concern, on the other hand, relates solely to the vehicle used by the Commission to effectuate a change in how certain information designated as ''proprietary'' will be handled in the future. IRRC asserts that the change contemplated by the Commission should be implemented through the formal rulemaking process and not as a change to its internal operating procedures.
Specifically, IRRC's position is that to allow a utility to designate preliminarily certain financial information as proprietary without filing a petition for protective order is in conflict with § 71.9. Section 71.9 provides that ''financial reports are public documents'' and that ''[i]f a public utility requests proprietary treatment for information in the report,'' the utility must ''file a petition for protective order.''
After carefully reviewing IRRC's comments in regard to this issue, we conclude that no change to § 71.9 is required at this time. The change that was implemented by the Commission in its operating procedures does not affect the underlying principle that these financial reports are public documents or that a petition for protective order must be filed if there is a challenge to any ''proprietary'' designation made by a utility.2
The reality of the marketplace today in an increasingly deregulated environment is that disclosure of certain financial information may indeed cause unfair economic or competitive damage. Under current practice, telecommunications carriers have routinely designated various schedules or parts thereof of their annual financial reports as proprietary to protect themselves from damaging disclosures. The fact that they are entitled to do so notwithstanding the designation of the reports as ''public documents'' in § 71.9 is beyond question. Section 5.423 (relating to orders to limit availability of proprietary information) spells out the specific procedures that must be followed if a utility wants to designate certain information as proprietary that otherwise would be made part of the ''public record.''
Indeed, § 5.423(b)(4) clearly supports the type of process the Commission has set up herein, whereby a utility does not file a petition for protective order until there is a specific challenge to a proprietary designation. Under that subsection, the party claiming the privilege must only file a petition for protective order ''within 14 days of the date the request for information was received.'' As the General Instructions to the new Annual Reports at page 2 clearly provide, the preliminary classifications ''as to what may be proprietary are not final or binding on the Commission or any party wishing to challenge these [proprietary] designations nor are they binding on any party seeking to have additional schedules, or parts thereof, declared proprietary.'' (Emphasis added.) These same General Instructions also instruct the company on when it has to file a petition for protective order under § 5.423 to preserve its proprietary designation. We, therefore, believe that the procedures utilized for designating certain financial information as proprietary are consistent with the terms of § 71.9 and no amendment to this section is necessary.
In discussing whether allowing certain financial information to be designated ''proprietary'' runs counter to the current regulation's declaration that the financial reports are ''public documents,'' IRRC also points out an apparent typographical error in the text of § 71.9 which cites to ''§ 5.43 (relating to petitions for issuance, amendment, waiver or repeal of regulations).'' IRRC suggests that the proper cite should have been to § 5.423 (relating to orders to limit availability of proprietary information) and not to § 5.43.
In researching this issue back to when Chapter 71 (relating to financial reports) was originally proposed in the early 1990s, we find that the advance notice of proposed rulemaking Re: Public Utility Earnings, Docket No. L-00910061 entered September 24, 1991, did cite to § 5.423, and not to § 5.43. The cite to § 5.423, however, was later changed, inadvertently it appears, in the proposed rulemaking order at the same docket entered March 3, 1992, and was not discovered by anyone until now. We agree with IRRC that the appropriate cite in § 71.9 should be to § 5.423. Section 5.43 relates to petitions filed with the Commission to change a regulation; it has nothing to do with petitions seeking proprietary treatment. After consulting with the Legislative Reference Bureau regarding the proper way to handle this issue, we are amending § 71.9 as set forth in Annex A to make this technical correction to the citation found in that section.
Finally, the OCA also suggests that the Commission should have taken this opportunity to develop information to help consumers better understand which companies offer service in their area and what those services may be. OCA Comments at 7-9. The OCA contends that with this type of information, it could provide consumers with a shopping guide listing the companies that provide services in each incumbent's territory and how to contact these companies. While we agree that the provision of the information would be beneficial to consumers, this rulemaking proceeding dealing with financial reporting requirements of telecommunications carriers is not the proper vehicle for addressing this issue.3
Conclusion
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 5 of the Regulatory Review Act (71 P. S. § 745.5) and 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 find that the regulations in §§ 63.31--63.33, 71.3 and 71.9 should be amended as set forth in Annex A; therefore,
It Is Ordered that:
1. The regulations of the Commission, 52 Pa. Code Chapters 63 and 71, are amended by amending §§ 63.31--63.33 and 71.3 to read as set forth at 31 Pa.B. 5110; and by amending § 71.9 to read as set forth in Annex A.
2. The Secretary shall certify this order, 31 Pa.B. 5110 and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
3. The Secretary shall submit this order, 31 Pa.B. 5110 and Annex A to the Office of Attorney General for approval as to legality.
4. The Secretary shall submit this order, 31 Pa.B. 5110 and Annex A to the Governor's Budget Office for review of fiscal impact.
5. The Secretary shall submit this order, 31 Pa.B. 5110 and Annex A for review by the designated standing committees of both houses of the General Assembly, and for review and approval by the IRRC.
6. A copy of this order, 31 Pa.B. 5110 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 OCA and the Small Business Advocate.
7. The final-form regulations embodied at 31 Pa.B. 5110 and in Annex A shall become effective upon publication in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 32 Pa.B. 1362 (March 9, 2002).)
Fiscal Note: Fiscal Note 57-222 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 71. FINANCIAL REPORTS § 71.9. Financial reports as public documents.
The financial reports are public documents. The reports will be maintained by the Secretary and will be available for public inspection. If a public utility requests proprietary treatment for information in the report, it shall be incumbent upon that utility to file a petition for protective order under § 5.423 (relating to orders to limit availability of proprietary information).
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1Indeed, AT&T's comments consist of a one-page letter in lieu of comments stating its support of the adoption of the new rules. In addition, AT&T urges the Commission to continue to monitor the condition of the Pennsylvania marketplace and to be prepared to take further steps to ensure that the remaining reporting requirements do not act as a barrier to entry in Pennsylvania.
2We must emphasize that the only modification made to the proprietary designation process is to the timing of when the petition for protective order has to be filed with the Commission. If the petition was required to be filed at the same time the annual report has to be filed with the Commission, we could fairly expect the Commission to be inundated with repetitive petitions to protect the confidentiality of the requested information.
3It is worth noting that the Commission at its Public Meeting of November 9, 2001, adopted a Tentative Order seeking comments on whether it should create a standard method for comparing local telephone offers at M-00011580; the very issue raised by the OCA in its comments. The order was entered on November 13, 2001.
[Pa.B. Doc. No. 02-520. Filed for public inspection April 5, 2002, 9:00 a.m.]
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