NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Delegation of Certain Routine, Ministerial and Nonpolicymaking Public Meeting Agenda Items; M-00970915
[35 Pa.B. 5207] Public Meeting held
August 25, 2005Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Bill Shane, concurring and dissenting in part; Kim Pizzingrilli; Terrance J. Fitzpatrick, dissenting
Commonwealth Telephone Company PSI/SPI Filing for Year 2005; Supplement No. 94 to Tariff Telephone Pa. PUC No. 24; Supplement No. 87 to Tariff Telephone PA. PUC No. 23; R-00050551
Petition for Amended Alternative Regulation and Network Modernization Plan of Commonwealth Telephone Company; P-00961024F1000
Petition for Alternative Regulation and Network Modernization Plan of Commonwealth Telephone Company; P-00961024
Order By the Commission:
I. BACKGROUND
Before us for disposition are the Commonwealth Telephone Company (CTCo or the Company) annual 2005 Price Stability Index and Service Price Index (PSI/SPI) filing and the associated revenue and proposed tariff rate increases. CTCo's annual 2005 PSI/SPI filing was made under the provisions of the new Chapter 30 law, Act 183 of 2004, P. L. 1398 (66 Pa.C.S. §§ 3011--3019) (Act 183) and pursuant to the Company's Alternative Regulation and Network Modernization Plan (Chapter 30 Plan) that this Commission approved at Docket No. P-00961024F1000.1
CTCo possesses the statutory right under 66 Pa.C.S. § 3105(a)(1)(iii) and its approved Chapter 30 Plan to seek and obtain an automatic revenue and rate increase as contemplated by the new Chapter 30 law. Under the Company's Price Stability Plan (PSP), the PSI/SPI calculates the allowable change (increase or decrease) in rates for noncompetitive services based on the annual change in the Gross Domestic Product Price Index (GDP-PI). The PSP also addresses revenue neutral rate rebalancing/restructuring. The PSP set forth in CTCo's Chapter 30 Plan is a complete substitution of the rate base/rate of return regulation. Further, CTCo's Chapter 30 Plan acknowledges that nothing in its Plan shall be construed to limit the requirement under 66 Pa.C.S. § 1301 that rates shall be just and reasonable.
Pursuant to a previous Settlement Agreement,2 CTCo is prohibited from any increase in its SPI until its banked decreases from prior PSI/SPI filings are retired. In accordance with CTCo's Chapter 30 Plan, banked amounts, including principal and interest, shall be assumed to be retired in 12 equal monthly increments in the future PSI period and interest will accrue on such increments through the end of the month in which the increment is retired.
II. COMPANY FILING AND RATE PROPOSAL
On February 1, 2005, CTCo filed its annual PSI/SPI Price Stability Index (PSI) Report using the change in 2003 and 2004 third quarter GDP-PI that produced a 2.25% increase allowable for noncompetitive rates. On May 3, 2005, CTCo served advance notice of the forthcoming filing upon the Commission, the Office of Small Business Advocate, the Office of Consumer Advocate, and the Office of Trial Staff. Notice requirements for end-users were met via billing notices. Fifteen days later, the Company filed proposed tariff supplements seeking to consolidate the Company's existing rate groups from 12 to six and to increase monthly rates for basic dial-tone and nonpublished telephone number service with an effective date of September 1, 2005. No complaints were filed and no hearings were held.
According to CTCo, the retirement of the former banked amount combined with the 2005 PSI/SPI rate changes would result in an annualized revenue increase of $3.2 million and a new banked amount of $98,723.
CTCo submitted two tariff supplements affecting specific elements of noncompetitive local service:
* Supplement 87 to Tariff Telephone PA. PUC No. 23 increases the monthly rate for nonpublished telephone number service from $1.50 to $2.25 and affects 45,700 end-users.
* Supplement 94 to Telephone Tariff PA. PUC No. 24 consolidates existing local service rate groups from 12 to six and increases the monthly rates, thereby affecting all residential access lines, business access lines and Private Branch Exchange (PBX) trunks.
III. DISCUSSION
A. Procedural Disposition
Chapter 30 annual PSI/SPI filings by incumbent local exchange carriers (ILECs) have previously been disposed of through the issuance of Secretarial Letters. However, due to concerns outlined below, PSI/SPI filings will now be accomplished through Commission action at the Public Meeting.
1. The new Chapter 30 law virtually provides automatic revenue and rate increases for those ILECs with price stability mechanism (PSM) plans and price cap formulas, where the statutorily mandated inflation offset values have been reduced to 0% or 0.5% depending on the amended network modernization plan option that these ILECs have selected. The past practice of issuing Secretarial Letters for annual Chapter 30 ILEC PSI/SPI filings largely addressed revenue and rate decreases that were caused by the higher values of the inflation offsets established by the Commission in the respective ILEC PSM and price cap formulas.
2. Automatic revenue and rate increases under the new Chapter 30 law annual ILEC PSI/SPI filings have concrete revenue and rate impacts on end-user consumers. The Commission should disclose these effects in a transparent and adequately documented fashion. The issuance of Secretarial Letters does not accomplish these purposes. Since these filings impact end-user consumers in a substantial fashion, the Commission will publicly rule on these filings at Public Meeting.
3. Although these filings may be uncontested, the allocation of the related revenue increases among the ILECs' categories of services may and will present issues that will be decided by this Commission at a Public Meeting.
4. The new Chapter 30 law annual ILEC PSI/SPI filings will not be separated from other proceedings that are pending before this Commission or the Federal Communications Commission, e.g., intercarrier compensation, intrastate and interstate access charge reform, intrastate and interstate universal service fund (USF) support, etc.3 The interaction of such policy issues with the ILECs' PSI/SPI filings are better decided at Public Meeting.
5. The disposition of the new Chapter 30 law ILEC PSI/SPI filings will involve issues that link the ILECs' non-competitive services with the services that have been classified as competitive under 66 Pa.C.S. § 3016(b), and ILEC ''service bundles'' that consist of protected, non-competitive, and competitive services that are offered and flexibly priced under 66 Pa.C.S. § 3016(e). Such issues are better decided at Public Meeting.
The issuance of Secretarial Letters for the disposition of matters pending before the Commission is inextricably linked with the authority delegation that this Commission has provided to its Staff Bureaus and Offices to dispose of such matters. A review of this Commission's delegation of authority to its Staff Bureaus and Office Directors discloses that the substantial revenue and rate increases that are being implemented through the new Chapter 30 law annual ILEC PSI/SPI filings should be handled through Public Meetings and the issuance of Commission Orders rather than through the issuance of Secretarial Letters.
The original intent of the Commission's delegation of authority to its Staff Bureaus and Office Directors was the reduction of the Public Meeting agenda. The Staff Bureaus and Offices would deal with certain ministerial items not requiring the formal vote of the Commission.4 Subsequent actions of the Commission delegating additional authority to the Staff Bureaus and Office Directors specifically focused on routine matters or actions that would not have had negative rate effects on end-user consumers of public utility services within the Commonwealth, or constituted uncontested compliance filings in matters previously approved by the Commission after full evidentiary adjudications. For example, the related Commission action on July 9, 1998, permitted the Bureau of Fixed Utility Services to dispose of matters pertaining to:
2. Uncontested compliance tariff filings made in response to § 1308(d) general rate increases approved by the Commission.
* * * * * 4. Uncontested local exchange telephone company extended area service filings which have no rate effect for the company's intrastate regulated services and no rate effect for the end-users of the company's intrastate regulated services.
5. Uncontested local exchange telephone company extended area service filings resulting in rate changes for the company's end-user customers into preexisting rate structure elements and or bands, and where the total overall revenue effect is either neutral or decreases the company's intrastate regulated operations [revenues].
6. Uncontested additions of routes to preexisting and preapproved optional calling plans which have no or de minimis rate and revenue effects.
Delegation of Additional Routine, Ministerial and Nonpolicymaking Public Meeting Agenda Items, Docket No. M-00970915, adopted July 9, 1998, 28 Pa.B. 3566 (July 25, 1998) (emphasis added).
The new Chapter 30 law annual ILEC PSI/SPI filings do not constitute ''compliance filings'' and are not encompassed within ''pre-existing'' authority delegation parameters which may have not been established in the first place for two key reasons.
First, the ILECs' PSI/SPI filings cannot be ''compliance filings'' since their compatibility with the ILECs' respective new Chapter 30 law Amended Chapter 30 Plans must be adjudicated anew by this Commission each time these filings are made. Furthermore, the Commission still has the statutory mandate, authority, and responsibility under 66 Pa.C.S. § 3019(h) to adjudicate whether the proposed rate changes are just and reasonable and non-discriminatory respectively under sections 1301 and 1304 of the Public Utility Code, 66 Pa.C.S. §§ 1301 and 1304. This mandate and responsibility is not compatible with the nature of ''ministerial acts'' that this Commission can easily delegate to one of its Staff Bureaus or Offices.
Second, a ''compliance filing'' also presupposes a previous evidentiary adjudication of a matter before the Commission that has specified the basic parameters of the ''compliance filing.'' Naturally, such an adjudication cannot take place in advance for the new Chapter 30 law annual ILEC PSI/SPI filings since neither the changes in the annual GDP-PI index are known in advance, nor have the ILECs themselves decided on how to implement their respective proposed revenue and rate increases until they make these filings with the Commission, i.e., what services will absorb these proposed revenue and rate increases. Thus, these matters are not of a ''routine ministerial'' nature that can be disposed of through delegation of authority to a Staff Bureau or Office and the issuance of summary Secretarial Letters.
The Commission conducts full evidentiary adjudications and decides via Public Meeting votes on the rate increase requests by water and wastewater utilities amounting to a few thousand dollars. Accordingly, ILEC requests under the new Chapter 30 law for multimillion dollar revenue and rate increases should be processed with the same degree of transparency.
B. Substantive Compliance
1. Banked Revenues
The new Chapter 30 law annual ILEC PSI/SPI submissions must conform to their corresponding Commission-approved Amended Chapter 30 Plans. The instant Commonwealth PSI/SPI filing contains the disposition of past PSM accumulated revenue decreases that have been ''banked'' by the Company. CTCo's 2003 and 2004 ''banked'' revenue decreases were carried forward and are being retired through the present PSI/SPI filing. The retirement of these ''banked'' decreases is carried out in the Company's present PSI/SPI filing purportedly in compliance with a related settlement that this Commission approved at Docket No. P-00032020, et al.5
Based on our review, some confusion exists relating to the Company's presentation of the retirement of the banked principal and interest from 2003 and 2004. While the Company's calculation appears to be correct, the presentation in the instant filing was unclear, because the banked amount from the years 2003-2004 to be carried forward to the 2005 filing was not clearly identified. CTCo is directed to work with Bureau of Fixed Utility Services to clarify and re-file its Exhibit 3 (from its original filing) to resolve this confusion.
2. Rate Group Restructuring
The present Commonwealth PSI/SPI submission does not simply implement a PSM revenue and rate increase; it also includes the restructuring of basic local exchange service rates. The Company in its current filing is consolidating its 12 basic local exchange service dial-tone line groups to six. According to the Company's Amended Chapter 30 Plan, in the event that the Company proceeds with a ''rate rebalancing and restructuring,'' the ''Company shall provide cost studies of each service for which a rate change is proposed at the time of the filing where such rate change is proposed.'' CTCo, Chapter 30 Plan, Part B.3. Although the proposed rate increases may be compatible with other provisions of the Company's Amended Chapter 30 Plan relating to rate increase limitations (Amended Chapter 30 Plan, Part B.1 (a)), the submission of the cost studies as specified in the Amended NMP has not been made.
3. Nonpublished Telephone Number Service
The Company is proposing a 50% rate increase in the rate element for non-published directory numbers of residential and business customers from $1.50 per month to $2.25 per month. The use of nonpublished directory numbers is often linked with such issues as the protection of personal privacy, domestic abuse situations, public safety agency interests and operations, etc. Under the new Chapter 30 law, the Commission retains jurisdiction over ''quality of service standards'' that address the ''privacy of telecommunications services.'' 66 Pa.C.S. § 3019(b)(2). There has not been an adequate justification presented on whether a 50% proposed rate increase for nonpublished directory numbers is in the public interest and whether it will negatively affect the ability of those CTCo residential and business customers to protect their privacy for legitimate reasons. Furthermore, since the Company did not submit any cost studies with its filing, the Commission cannot ascertain whether this particular rate element will now be providing a higher residual profit to the Company's operations at its new monthly level. For this reason, this proposed increase for the nonpublished directory numbers is not adequately supported and is contrary to the above-referenced public interest considerations; Therefore,
It Is Ordered That:
1. The new Chapter 30 law annual ILEC PSI/SPI filings with revenue and rate increases that are made under the provisions of 66 Pa.C.S. § 3015, be presented to the Commission for disposition at the Commission's Public Meeting.
2. The proposed revenue and rate increase proposed by Commonwealth Telephone Company through the consolidation of its 12 basic local exchange service dial-tone line groups to six be permitted to go into effect as filed.
3. The Company submit a revised Exhibit 3 (from its original filing) within 30 days of the entry date of this Order.
4. The Company's failure to file any cost studies associated with its rate rebalancing and restructuring proposals is not in compliance with its Amended Chapter 30 Plan.
5. The Company's 2005 PSI/PSM filing is in partial compliance with its Commission-approved Amended Chapter 30 Plan.
6. The Company be given the alternative to either ''bank'' the proposed revenue increase associated with the nonpublished telephone number service or, alternatively, allocate the proposed revenue increase amount associated with the nonpublished telephone number service to the basic local exchange services and rate elements that are the subject of Moving Paragraph No. 2 in accordance with the applicable provisions of the Company's Amended Chapter 30 Plan, and that the Company provide the appropriate notification to the Commission within ten (10) days after the date of entry of the Commission's Order disposing of this matter. In the event that the Company does not accept either alternative, the proposed revenue and rate increase for nonpublished telephone number service will be suspended and investigated for a period not to exceed six months on whether it is just and reasonable under 66 Pa.C.S. § 1301, whether it negatively impacts the privacy protection interests of the Company's end-users, and whether it complies with the Company's Commission-approved Amended Chapter 30 Plan.
7. The Company file the appropriate modified tariff supplements to become effective on one day's notice in accordance with the above-referenced ordering paragraphs.
8. The Commission Order in this matter be published in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 05-1755. Filed for public inspection September 16, 2005, 9:00 a.m.] _______
1 Petition for Amended Alternative Regulation and Network Modernization Plan of Commonwealth Telephone Co., Docket No. P-00961024F1000 (Order entered March 3, 2005).
2 Commission Order adopting the Recommended Decision of Administrative Judge Smolen at P-00032020, P-00961024F0002, P-00961024, and R-00027695, dated July 21, 2003.
3 See generally Investigation Regarding Intrastate Access Charges and IntraLATA Toll Rates of Rural Carriers, and the Pennsylvania Universal Service Fund, Docket No. I-00040105; In re Developing a Unified Intercarrier Compensation Regime, (FCC Rel.: March 3, 2005), CC Docket No. 01-92 (Further Notice of Proposed Rulemaking, FCC 05-33).
4 Delegation of Certain Routine, Ministerial and Nonpolicymaking Public Meeting Agenda Items, Docket No. M-00970915, adopted March 13, 1997, 27 Pa.B. 2220 (May 3, 1997).
5 Petition of Commonwealth Telephone Company For Recognition of an Exogenous Event Under Its Alternative Regulation Plan, et al., Docket Nos. P-00032020, P-00961024F0002, P-00961024, R-00027695 (Order entered July 21, 2003).
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