NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Joint Access Proposal in Response to Access Charge Investigation
[33 Pa.B. 97] On December 16, 2002, the Office of Consumer Advocate, the Office of Trial Staff, the Office of Small Business Advocate, The United Telephone Company of Pennsylvania d/b/a Sprint and the Rural Telephone Company Coalition, filed a Joint Access Proposal in Response to Access Charge Investigation--Phase II.
Interested parties may file comments concerning the Proposal on or before 30 days after the date of publication of this notice. Reply comments may be filed 45 days after publication. One original plus 9 copies of comments and reply comments must be filed with the Secretary of the Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. A copy of the comments and reply comments may also be filed electronically with Elizabeth Barnes of the Public Utility Commission's Law Bureau at Ebarnes@state.pa.us. Copies of the entire filing are available for full inspection and copying at the Office of the Secretary between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday.
JAMES J. MCNULTY,
Secretary
Before the
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Access Charge Investiga-
tion Per Global Order of September 30, 1999:
:
:Docket Nos. P-00991648
P-00991649
M-00021596
JOINT ACCESS PROPOSAL IN RESPONSE TO ACCESS CHARGE INVESTIGATION--PHASE II
I. Background 1. In its Global Order,1 the Pennsylvania Public Utility Commission (''Commission'') established the Pennsylvania Universal Service Fund (''PA USF''). As the Commission held:
The USF is a means to reduce access and toll rates for the ultimate benefit of the end-user and to encourage greater toll competition, while enabling carriers to continue to preserve the affordability of local service rates. Although it is referred to as a fund, it is actually a passthrough mechanism to facilitate the transition from a monopoly environment to a competitive environment--an exchange of revenue between telephone companies which attempts to equalize the revenue deficits occasioned by mandated decreases in their toll and access charges.Global Order at 142. In adopting a PA USF, the Commission approved a modified version of a settlement plan submitted by the Rural Telephone Company Coalition (''RTCC'') and Bell Atlantic-Pennsylvania, Inc. (then ''Bell,'' now ''Verizon-PA''). The PA USF was established on a revenue-neutral basis and provided for, among other things, the rebalancing of intrastate access charges, toll rates, and local rates by all incumbent local exchange carriers except Bell and GTE North (now ''Verizon-North''). The Global Order also established a rate cap limiting the average amount that residential consumers will pay for basic local service with any rate amount in excess of that cap coming from the PA USF. The Commission formalized the terms of the PA USF by rulemaking conducted after entry of the Global Order, with the PA USF officially codified at 52 Pa. Code §§ 63.161--63.171. Pursuant to those regulations, the PA USF continues until further rulemaking of the Commission.
2. In the Global Order, the Commission further stated as follows:
[W]e shall initiate an investigation on or about January 2, 2001, to further refine a solution to the question of how the Carrier Charge (CC) pool can be reduced. At its conclusion, but no later than December 31, 2001, the pool will be reduced. In addition, we shall consider the appropriateness of a Toll Line Charge (TLC) to recover any resulting reductions.Global Order at 60. The Commission also raised the possibility of instituting an intrastate Subscriber Line Charge (''SLC'') in the context of the subsequent access charge investigation. Id. Due to the significant changes subsequently taking place in the telecommunications industry and the regulation thereof, this investigation was not instituted as initially set out by the Commission. However, as discussed below, access reform continued.
3. While implementation of the Commission's proposed January 2001 access investigation was delayed, access reform by the RTCC members and Sprint continued nonetheless. Numerous RTCC members and Sprint filed revenue-neutral rate rebalancings under their respective Chapter 30 plans approved by the Commission after the entry of the Global Order, resulting in further reductions to their access charges.2
4. Further, by Order entered November 4, 1999 at Docket No. A-310200F0002 involving the merger of Bell and GTE North to form Verizon-PA and Verizon-North, the Commission adopted an agreement of the parties to that merger that provided that within 30 months of the merger closing, or on or about December 31, 2002, Verizon-PA and Verizon-North would commence an access charge proceeding specific to the Verizon companies for the purpose of further accomplishing access charge parity for those companies by developing access charge parity based on a consolidated cost study.
II. The Phase II Proposal 5. By Secretarial Letter dated October 24, 2001, the Commission provided as follows:
The Global Order of September 30, 1999, ordered an investigation into access charges beginning on January 2, 2001, and that following said investigation a reduction of the carrier charge pool take place by the end of the year 2001.Due to the more pressing matter of Verizon's Section 271 application filing at the beginning of this year, this investigation was postponed. Also, in light of the recent ruling of the FCC, In the Matter of Multi-Association Group (MAG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers (CC Docket No. 00-256); Federal-State Joint Board on Universal Service (CC Docket No. 96-45); Access Charge Reform for Incumbent Local Exchange Carriers Subject to Rate of Return Regulation (CC Docket No. 98-77); and Prescribing the Authorized rate of return for interstate services of local exchange carriers (CC Docket No. 98-166), the Commission wishes to give the RTCC and Sprint/United time to review the FCC's Order, which may have an impact on the RTCC's and Sprint/United's intrastate access charges in Pennsylvania, before offering the Commission a proposal regarding the issue of reducing access charges.Therefore, the Commission hereby directs, that the RTCC and Sprint/United have until January 15, 2002 to submit a proposal with the Commission outlining proposed changes in access charges and a reduction in the carrier charge pool, and outlining a time frame for changes to take effect. If the RTCC and Sprint/United fail to file a proposal, a formal investigation into the reduction of access charges shall commence in January, 2002.6. Following the submission of various proposals pursuant to the October 24, 2001 letter and extensive discussions on this matter, all public parties and all ILECs except Verizon-PA and Verizon-North, specifically the Office of Consumer Advocate, Office of Trial Staff, Office of Small Business Advocate, RTCC and Sprint, have agreed to a proposal3 for further reform of access charges for the RTCC members and Sprint and a time frame for these changes to take effect. The proposal, attached in full hereto as Exhibit B, in summary provides for the following salient access charge reforms:
* Revenue-neutral rebalancings resulting in access reductions in 2003 of approximately $25 million;
* Further revenue-neutral rebalancings resulting in access reductions for the Smaller ILECs of $2.2 million on January 1, 2004;
* Opportunity for further revenue-neutral rebalancings resulting in additional access reductions in 2004;
* Establishment of a new weighted average rate cap of $18.00 from January 1, 2004 through December 31, 2006 to replace the current $16.00 rate cap, which expires 12/31/03. In a manner proposed to be consistent with the terms of the Global Order, any approved future increase in rates above the $18.00 rate cap shall also be recoverable from the USF under the exact same terms and conditions as provided in the Global Order and in orders approving RTCC members' Chapter 30 plans;
* Redistribution of a portion of Sprint's current USF receipt to the Smaller ILECs, which can be accomplished through the Fund's administration;
Further, the following benefits are readily attainable with Commission approval of the responsive proposal and implementation of those access reforms:
* All access reductions benefit the toll carriers;
* No change to the existing USF that impacts what is paid into the Fund or by whom;
* No changes are made to, or are required of, the existing PA USF which shall, as provided in the regulations, continue in place until modified by the Commission.
III. Conclusion 7. The parties to the Joint Access Proposal have provided Statements in Support, attached hereto as Exhibit A, which set forth the reasons why the party believes the proposal to be in the public interest.
Respectfully submitted,
Kandace F. Melillo
D. Mark Thomas Counsel for the Patricia Armstrong Office of Trial Staff Regina L. Matz Counsel for the Rural Telephone Company Coalition Philip L. McClelland Zsuzsanna Benedek Counsel for the Counsel for The Office of Consumer Advocate United Telephone Company of Pennsylvania (d/b/a Sprint) Steven Gray Counsel for the Office of Small Business Advocate
EXHIBIT B
RTCC/SPRINT/OCA/OTS/OSBA
JOINT ACCESS PROPOSAL
IN RESPONSE TO THE COMMISSION'S
ACCESS CHARGE INVESTIGATION--PHASE II
Defined Terms As employed herein, the following terms shall have these specified meanings:
* ''ILEC'' means an RTCC member or The United Telephone Company of Pennsylvania d/b/a Sprint (''Sprint'').* ''RTCC'' means Rural Telephone Company Coalition. The RTCC members are ALLTEL Pennsylvania, Inc. (''ALLTEL''), Armstrong Telephone Company--PA, Armstrong Telephone Company--North, Bentleyville Communications Corporation, d/b/a The Bentleyville Telephone Company, Buffalo Valley Telephone Company (''Buffalo Valley''), Citizens Telephone Company of Kecksburg, Citizens Telecommunications Company of New York,4 Commonwealth Telephone Company (''Commonwealth''), Conestoga Telephone and Telegraph Company (''Conestoga''), Denver and Ephrata Telephone and Telegraph Company (''D&E''), Deposit Telephone Company, Frontier Communications of Breezewood, Inc., Frontier Communications of Canton, Inc., Frontier Communications of Lakewood, Inc., Frontier Communications of Oswayo River, Inc., Frontier Communications of Pennsylvania, Inc. (''Frontier PA''), The Hancock Telephone Company, Hickory Telephone Company, Ironton Telephone Company, Lackawaxen Telecommunications Services, Inc., Laurel Highland Telephone Company, Mahanoy & Mahantango Telephone Co., Marianna & Scenery Hill Telephone Company, The North-Eastern PA Telephone Company, North Penn Telephone Company, North Pittsburgh Telephone Company (''NPTC''), Palmerton Telephone Company, Pennsylvania Telephone Company, Pymatuning Independent Telephone Company, South Canaan Telephone Company, Sugar Valley Telephone Company, Venus Telephone Corporation, and Yukon-Waltz Telephone Company.* ''Larger ILEC,'' for purposes of this Proposal only,5 means ALLTEL, Buffalo Valley, Commonwealth, Conestoga, D&E, Frontier PA, NPTC, and Sprint.* ''Smaller ILEC,'' for purposes of this Proposal only, means any RTCC member that is not a Larger ILEC.
Elements of Proposal 1) If an ILEC's intrastate traffic sensitive (TS) rates exceed its interstate TS rates, the ILEC may, at its sole discretion, lower its intrastate TS rates to match or move closer to its interstate TS rates, and simultaneously increase its Carrier Charge (CC) by a corresponding revenue neutral amount using the 12 months ended August 31, 2002, or the most current 12 month period, thereby creating a revised CC. An ILEC may, at its sole discretion, lower its intrastate TS rates to match or move closer to its interstate TS rates, and simultaneously increase its Carrier Charge (CC) by a corresponding revenue-neutral amount, again in 2004, using a recent 12 month period, thereby creating a further revised CC. All references to CC herein shall be to the then current revised CC if the ILEC has chosen to implement this element of the proposal.
2) Pursuant to an Order entered adopting this access proposal without modification, and after notice through bill insert, bill message or separately mailed notice to all customers at least 30 days prior to the date of any rate change, each ILEC will increase local rates, based upon one-day tariff compliance filing, to be effective on a date between January 1, 2003 and December 31, 2003 (as to be determined at the sole discretion of the individual ILEC) as follows:
(a) Each ILEC with a weighted average R-1 rate below $10.83 as of December 31, 2002, will increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $11. If the increase results in R-1 rates greater than 150% of the current rate, then the increase shall be implemented in two steps, the second of which shall become effective no later than December 31, 2003. This increase shall be subject to the Company's Chapter 30 Plan rate rebalancing limitation with respect to the limitation on calendar year per line increases, i.e. not more than $3.50 per line per month in rate increases in any one year, but shall not be subject to any other Chapter 30 process or requirements. To the extent that any ILEC shall not be able to complete the required rate increase within any year, such rate increase may be deferred to the following year subject to the Company's Chapter 30 Plan rate rebalancing limitations. Any rate rebalancing in excess of that specifically referenced in Paragraph 2 shall be subject to the Chapter 30 Plan rate rebalancing process and requirements.
(b) Each ILEC with a weighted average R-1 rate between $10.83--$12 as of December 31, 2002, will increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $13.50.
(c) Each ILEC with a weighted average R-l rate between $12.01--$14 as of December 31, 2002, will increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $15.
(d) Each ILEC with a weighted average R-l rate between $14.01--$16 as of December 31, 2002, will increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $16.
(e) Each ILEC may, at its sole option, increase its weighted average Business line rate by up to the same amount on a dollar basis that its weighted average R-1 rate is increased, but in no event may the B-1 rate be less than the R-1 rate.
3) Pursuant to an Order entered adopting this access proposal without modification, and after notice through bill insert, bill message or separately mailed notice to all customers at least 30 days prior to the date of any rate change, each ILEC may increase local rates, based upon a one-day tariff compliance filing, to be effective on a date between January 1, 2004 and December 31, 2004 (as to be determined at the sole discretion of the individual ILEC) as follows:
(a) Each ILEC with a weighted average R-1 rate of $11 (or less) as of December 31, 2003 (as described and calculated in Step 2 above) may increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $13.50.
(b) Each ILEC with a weighted average R-1 rate of $13.50 as of December 31, 2003 (as described and calculated in Step 2 above) may increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $15.
(c) Each ILEC with a weighted average R-1 rate of $15 as of December 31, 2003 (as described and calculated in Step 2 above) may increase its R-1 rates in a manner to achieve a weighted average R-1 rate of $17.
(d) Each ILEC with a weighted average R-1 rate of $16 as of December 31, 2003 (as described and calculated in Step 2 above) may increase its R-1 rates in a manner to achieve a maximum weighted average R-1 rate of $18.
(e) Each ILEC may, at its sole option, increase its weighted average Business line rate by up to the same amount on a dollar basis that its weighted average R-1 rate is increased, but in no event may the B-1 rate be less than the R-1 rate.
Any rate rebalancing in excess of that specifically referenced in Paragraphs 2 and 3 shall be subject to the Chapter 30 Plan rate rebalancing process and requirements.
4) The monthly $16.00 cap on R-l average rates established in the Global Order and any ILEC-specific weighted average rate cap which may have been established in any individual ILEC's Chapter 30 Plan will be increased for all ILECs to the weighted average $18.00 cap for a minimum three (3) year period January 1, 2004 through December 31, 2006. As to any ILEC which as of July 1, 2002 has hit the $16.00 cap and takes a credit from the USF, the ILEC shall continue to receive and apply the credit but would be limited to recovering from its customers future R-1 increases of $2.00 under the foregoing $18.00 cap reflecting the USF credit in effect as of July 1, 2002. Any approved future increases in rates above the $18.00 rate cap for any ILEC shall also be recoverable from the USF under the exact same terms and conditions as approved in the Global Order. For example, if ILEC A's R-1 rates are currently $17.25, then their customer is billed $17.25 but receives a credit of $1.25 from USF, receiving a net bill of $16.00. ILEC A could, as of December 31, 2004, implement the provisions of Paragraph 3 hereof, increase its rates, if justified, by $2.00 to $19.25, charge its customers $19.25, reflect a credit of $1.25 to its customers, receive $1.25 from the USF, and then send a net bill to its customers of $18.00. If ILEC A justified an R-l rate of $20.25, then it would be entitled to $2.25 from the USF and will send a net bill to its customers of $18.00.
5) Pursuant to an Order entered adopting this access proposal without modification, each ILEC shall have the right, in whole or in part, in lieu of raising local service rates as provided in Paragraphs 2 and 3 hereof to raise rates on other services by an equivalent amount, based on a one-day tariff compliance filing.
6) To offset the increase to local rates described above in Paragraphs 2 and 3, each ILEC (except Sprint) will file a compliance tariff(s) to reduce its CC or TS rates, or any combination thereof, by a revenue-neutral amount (depending upon changes undertaken in Paragraph 1, above), effective on dates consistent with the increases in Paragraphs 2 and 3.
7) In addition to any rate modifications undertaken pursuant to Paragraphs 2 and 3, each Smaller ILEC that increases its rates consistent with Paragraph 2, above, or is at the $16.00 capped rates on December 31, 2003, will additionally reduce its CC or TS rates, or any combination thereof, by the equivalent of $2 per line per month effective January 1, 2004 and shall receive an equal (a revenue-neutral) amount of support from the PA USF (annual total for all Smaller ILECs ranging from an estimated $1.8 million to $2.2 million), as provided in Paragraph 8.b. For ease of administration, the amount of additional USF received by the Smaller ILECs under this proposal will be determined as of December 31, 2003, and will be applied effective January 1, 2004 and each year thereafter for the duration of the Pa. USF (as addressed in Paragraph 1 of the Conditions of Proposal.) Beginning in 2005, any growth in access lines shall be accounted for in accordance with the annual USF calculation in 52 Pa. Code § 63.165 and the Smaller ILECs' total receipt from the Pa. USF, including the amount provided for herein, shall be included in the Smaller ILECs' prior year funding.
8) (a) To offset the increase to Sprint's local rates described above in Paragraph 2, above, Sprint will file compliance tariff(s) to reduce its CC or TS rates, or any combination thereof, by a revenue-neutral amount (depending upon changes undertaken in Paragraph 1, above) effective on dates consistent with the increases in Paragraph 2.
(b) Beginning on or after January 1, 2004, Sprint will reduce its receipt from the current PA USF equal to the $2 per line per month reduction to the CC or TS, from Smaller ILECs as expressed in Paragraph 7. These dollars (annual total ranging from an estimated $1.8 million to $2.2 million) will be directly paid to the Smaller ILECs, as described in Paragraph 7, from the PA USF to offset the Smaller ILECs' reduction in access charges on a revenue neutral basis.
9) On/or after January 1 of each year beginning in 2005 each ILEC may request such rate changes or rate rebalancing as are permitted by any Chapter 30 Plans and/or applicable statutory and regulatory provisions.
Conditions of Proposal 1) The only change to the existing universal service fund in PA is that Sprint will be shifting a portion (estimated to be $1.8 m--$2.2m) of its current fund receipt ($9 million) to Smaller ILECs as noted in Paragraphs 7 and 8 above. This Proposal is dependent upon all other aspects of the PA universal service program and the USF regulations remaining intact, including the recovery of rates above the rate cap into the future, specifically beyond December 31, 2003. The existing universal service fund, including the recovery of monies under Paragraph 4 of Elements of Proposal above, and regulations promulgated thereunder shall, as provided in the regulations, continue in place until modified by further Commission rulemaking.
2) Each ILEC reserves the right, subject to Chapter 30 Plan requirements, to change its access rates to ensure that each access rate element at least recovers its cost and the ILEC's service price index continues to be equal to or less than the ILEC's price stability index, in the event the ILEC's access rates are determined to be below cost based upon the development of a cost study.
3) This proposal is made in its entirety and no part hereof is valid or binding unless all components are accepted by all parties. Should any part be specifically modified or otherwise adversely impacted at any later date as to any ILEC or party, the ILEC or party shall have full unilateral rights to withdraw from the plan or revisit the plan in its sole discretion. This potential agreement is proposed by the parties to settle the instant controversy and is made without any admission against or use that is intended to prejudice any positions which any party might adopt during subsequent litigation, including further litigation in related proceedings. This agreement is conditioned upon the Commission's approval of all terms and conditions contained herein, except for the terms of this paragraph. If the Commission should fail to grant such approval or should modify the terms and conditions herein, this agreement may be withdrawn upon written notice to the Commission and all parties within five business days by any of the parties and, in such event, shall be of no force and effect. In the event that the Commission does not approve the Settlement or any party elects to withdraw as provided above and any proceeding continues, the parties reserve their respective rights to submit testimony or other pleadings and briefs in this or a related proceeding.
4) Elements of this Proposal shall constitute rate rebalancings or rate filings as defined and allowed under each ILEC's Chapter 30 Plan only to the extent of determining the maximum amount of an increase allowed per year, but shall not preclude the filing of one additional rate restructuring/rebalancing filing in the calendar year so long as the total rate rebalancing rate increases do not exceed the maximum annual increase allowed and comply with other Chapter 30 Plan limitations and requirements. That is, implementation of proposed Paragraphs 2, 3 and 5 under Elements of Proposal are not considered rate rebalancings under the Chapter 30 Plans except in determining the maximum limitation on per year line rate increases to monthly dial tone rates. All parties retain all other rights under the approved Chapter 30 Plan to implement or oppose all rate rebalancings and other rate filings permitted under its Chapter 30 Plan. All parties reserve all rights in any proceedings relative to Chapter 30.
5) Increases to weighted average business rates on a dollar basis will be less than or equal to the increases to weighted average residential rates on a dollar basis.
6) This access proposal will be revenue neutral relative to each ILEC implementing a rate change. Absolutely no changes shall be required which are not revenue-neutral. Other access reductions that are not revenue neutral are permissible at the ILEC's sole option, but not required.
7) When notice is sent to each company's customers as provided in Paragraphs 2 and 3 under elements of Proposal, it will also be served upon all parties to this Proposal.
______
1 Joint Petition of Nextlink Pennsylvania, Inc. et al., and Joint Petition of Bell Atlantic-Pennsylvania, Inc., et al., Docket Nos. P-00991648 and P-00991649, Order entered September 30, 1999 (''Global Order'').
2 See e.g. Pa. PUC v. Denver and Ephrata Telephone and Telegraph Company, Docket No. R-00016682, Order entered November 30, 2001; Pa. PUC v. North Pittsburgh Telephone Company, Docket No. R-00016681, Order entered November 30, 2001; Pa. PUC v. Conestoga Telephone & Telegraph Company, Docket No. R-00016321, Order entered June 21, 2001; Pa. PUC v. Buffalo Valley Telephone Company, Docket No. R-00016320, Order entered June 21, 2001; Pa. PUC v. The United Telephone Company of Pennsylvania d/b/a Sprint, Docket No. P-00981410, Order entered October 24, 2002; Pa. PUC vs. Frontier Communications of Pennsylvania, Inc., Frontier Communications of Breezewood, Inc., Frontier Communications of Canton, Inc., Frontier Communications of Lakewood, Inc. and Frontier Communications of Oswayo River, Inc., Docket No. P-00951005, Order entered June 15, 2001; Pa. PUC vs. Frontier Communications of Pennsylvania, Inc., Docket No. R-00027424, Order entered July 1, 2002; Pa. PUC vs. Frontier Communications of Lakewood, Inc., Docket No. R-00027427, Order entered July 1, 2002.
3 Extensive highly confidential and proprietary data, detailing the specific impact of this Joint Access Proposal, has been provided to Commission Staff by the signatory companies and has been reviewed in detail by the statutory parties to this Proposal.
4 Because Citizens Telecommunications Company of New York has and continues to operate under New York access tariffs, it is not to be deemed a party to this proposal. Likewise, West Side Telephone Company was not included in the Global proceeding and is excluded here.
5 The designation of larger and smaller ILEC was based upon the factor of 20,000 access lines and was for purposes of this Proposal only, for the purpose of redirecting monies out of the existing USF that were previously allocated to Sprint.
[Pa.B. Doc. No. 03-42. Filed for public inspection January 3, 2003, 9:00 a.m.]
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