NOTICES
PUC Filing and Reporting Requirements on Local Exchange Carriers; Doc. No. M-00041857
[35 Pa.B. 5910] Public Meeting held
September 9, 2005Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Bill Shane, dissenting--statement follows; Kim Pizzingrilli; Terrance J. Fitzpatrick, statement follows
Final Implementation Order By the Commission:
On April 15, 2005, the Commission entered a Tentative Implementation Order (Tentative Order) determining which current reporting requirements should be maintained, streamlined or eliminated for Pennsylvania local exchange companies (LECs) in accordance with the Legislative Budget and Finance Committee's (LB & FC) November 17, 2004 Report (LB & FC Report) and Act 183.1 Also, in its Tentative Order, the Commission requested comments on its preliminary determinations regarding the LECs' reporting requirements through a facilitated discussion and written comment period.
The Commission's Tentative Order was the result of a December 2004 Commission directive to the Law Bureau, the Bureau of Fixed Utility Services (FUS), and the Bureau of Consumer Services (BCS) to review the LB & FC Report regarding the reporting requirements for LECs and to submit a recommendation to the Commission regarding options to consolidate and/or streamline these reporting requirements. In accordance with this directive, the bureaus analyzed the LB & FC's specific recommendations, as well as the impact of newly-enacted Act 183, on the Commission's reporting requirements.
Based on our review of Act 183, the comments submitted in this matter and the LB & FC Report, the Commission directs the continuation, consolidation and/or elimination of certain filing and reporting requirements presently imposed on LECs operating in Pennsylvania in compliance with Act 183.
Background
1. LB & FC Report
In June 2004, the Pennsylvania House of Representatives passed House Resolution 786, which directed the LB & FC to conduct a study of the filing and reporting requirements imposed on LECs operating in Pennsylvania and to report its findings. On November 17, 2004, the LB & FC adopted its Report entitled PUC Filing and Reporting Requirements on Local Exchange Carriers. In its Report, the LB & FC had five primary recommendations. Overall, the LB & FC Report recommended that the Commission begin the process of eliminating regulations requiring reports to reduce the regulatory requirements currently existing for LECs in Pennsylvania. The LB & FC recommended that this process be performed in several ways including updating the Commission's current computer capability, consolidating similar information in various reports, and eliminating regulations requiring reports that have been temporarily waived, suspended or otherwise no longer required.
In addition, the LB & FC identified and analyzed a total of 30 reports, filings and other documents. They are as follows: Annual Financial Report, Annual Report of Certificated Interexchange Transporter (IXCs), Annual Report of Residential Account Information, Financial Earnings Report, Annual Depreciation Report, Universal Service Fund Contributions, Assessment Report, Annual Tracking of Telecommunications Relay Service Surcharges, Annual Access Line Report, Lifeline Tracking Report, State Tax Adjustment Surcharge, Physical and Cyber Security Planning Self Certification, State Certification of Universal Service Support, Chapter 30 Annual Price Stability Mechanism, Annual Assessment Bill, Interest Rate on Deposits, Monthly Universal Service Fund Carrier Worksheet, Quarterly Slamming Report, Quarterly Cramming Report, Accident Reports, Standard Service Surveillance Level Report, Traffic Usage Studies, Service Outages, Service Life Study Report, Capital Investment Plan Report, Service Records, Affiliated Interest Agreements, Network Modernization Plans, Supplemental Assessment, and Collocation Report.
2. Act 183
After the LB & FC Report was issued, the Legislature enacted Act 183 with an effective date of December 1, 2004. The Act substantially amends the Public Utility Code relating to alternative forms of regulation for LECs and, in particular, contains provisions designed to reduce the present level of annual, quarterly and other periodic reporting requirements for LECs, as well as the attendant time and expense of their preparation.
Act 183 or Chapter 30 provides that the general filing and reporting requirements for LECs are limited to the nine reports specified in the statute, and are to be ''submitted in the form determined by the Commission.'' 66 Pa.C.S. § 3015(e). Section 3015(e) provides that the Commission's filing and audit requirements for a LEC that is operating under an amended network modernization plan are limited to the following: (1) Network modernization reports filed pursuant to Section 3014(f); (2) An annual financial report consisting of a balance sheet and income statement; (3) An annual deaf, speech-impaired and hearing-impaired relay information report; (4) An annual service report; (5) Universal service reports; (6) An annual access line report; (7) An annual statement of gross intrastate operating revenues for purposes of calculating assessments for regulatory expenses; (8) An annual state tax adjustment computation for years in which a tax change has occurred, if applicable; and (9) for those companies with a bona fide retail request program, a bona fide retail request report under Section 3014(c)(9).
In addition, the Act permits the Commission to require other reports, provided that, after notice and opportunity to be heard, the Commission first finds that the additional report is necessary to ensure compliance with the Act and that the benefits of the report will substantially outweigh the costs to prepare it. 66 Pa.C.S. § 3015(f)(1). Finally, the Act allows that these provisions shall not be construed to limit the Commission's ability to seek further information ''to support the accuracy of or to seek an explanation of the reports specified in subsection (e).'' 66 Pa.C.S. § 3015(f)(2). Further, Section 3019 retains certain powers for the Commission to review and revise its quality of service standards and establish customer protection requirements.2
3. Commission's Tentative Order
On April 15, 2005, the Commission entered a Tentative Implementation Order directing the continuation, consolidation, and/or elimination of the general filing and reporting requirements presently imposed on LECs operating in Pennsylvania. In that Order, the Commission provided for further comments on the impact of Act 183 and the LB & FC's findings as they pertained to certain reporting requirements. The Commission directed that a facilitated discussion3 be held to receive additional comments on the annual financial report, the quarterly slamming reports, the Lifeline Tracking report, and the accident and service outage reports. In addition, the Commission requested written comments by May 31, 2005 on its tentative determinations concerning the LECs' current filing and reporting requirements.
Preliminarily, the Commission concluded that eight reports should be waived and subsequently eliminated, for telecommunications carriers only, either through the rulemaking process or the rescission of previous orders. The reports are as follows: Financial Earnings Report, Annual Depreciation Report, Interest on Deposits Report, Service Life Study Report, Capital Investment Plan Report, Quarterly Cramming Reports, Quarterly Slamming Report for long distance slamming, and Collocation Reports.
Also, the Commission tentatively concluded that certain reports should remain in place in accordance with Act 183. The reports are as follows: the Network Modernization Implementation Plan, the Annual Financial Report, the Annual Tracking Report of Telecommunications Relay Service Surcharges, the Residential Account Information, the Universal Service Fund Contributions and Universal Service Monthly Remittance Worksheet, the Annual Access Line Report, the Assessment Report, Annual Assessment Bill and Supplemental Assessment Bill, the State Tax Adjustment Surcharge (STAS) Report, the Chapter 30 Annual Price Stability Mechanism Report, and Affiliated Interest Agreements.4
In addition, the Commission tentatively determined that two additional reports, the Traffic Usage Studies5 and the State Certification of USF Support of Eligible Telecommunications Carriers per 47 C.F.R. § 54.314,6 should be waived. Further, the Commission determined that certain other reports should remain in place subject to the outcome of certain ongoing proceedings. The reports to remain in place are the Annual Report of Certified Interexchange Transporter,7 the Physical Cyber Security Planning Self Certification,8 the Standard Service Surveillance Level Report, per occurrence, and the Service Records, per occurrence, as required by our regulations.
Finally, the Commission, in its Tentative Order, directed that all LECs continue to file their biennial NMP update reports in the form and detail required by the Commission as of July 1, 2004.
Analysis of LB & FC's Overall Recommendations
As stated previously, the LB & FC had five primary recommendations. The Commission addressed the LB & FC's overall recommendations in its April 15, 2005 Tentative Order.9 However, the Commission's recently-approved budget impacts one of the central components of the LB & FC Report that suggests the Commission update its information systems to assist in streamlining and consolidating reporting requirements. The Commission's budget for the Fiscal Year 2005-06 provides funds to develop a new Case Management System that would provide a single entry-point to submit and access information, initiate transactions and conduct business. Information related to the Commission's progress in developing this system can be accessed at our website at http://www.puc.state.pa.us/. Otherwise, the Commission's previous disposition of the LB & FC's five primary recommendations as stated in its April 15, 2005 Tentative Order remains the same.
Analysis of Specific Reporting Requirements
Section 3015(e) of Chapter 30 provides direction to the Commission to determine what reporting requirements remain for LECs operating in Pennsylvania. Also, the LB & FC Report provides a number of recommendations that will assist the Commission in further assessing the current requirements, consolidating the collection of information, where appropriate, and eliminating duplicate reporting and obsolete regulations. In addition, the Commission's December 2004 Order and its subsequent Tentative Order have initiated the matter before us so that we can better implement the numerous provisions of Act 183.
At the same time, the Commission notes that the process of determining what reporting requirements remain for LECs operating in Pennsylvania is not an on-the-record proceeding invoking the statutory provision of ex parte communications10 and the delineation of administrative advisory and prosecutory functions.11 Rather, the Commission requested comments12 in this docket to assist us in our implementation of Act 183's provisions concerning the LECs future reporting requirements. If any subsequent enforcement action is filed, such action would be prosecutory in nature and, accordingly, would be subject to ex parte prohibitions and the separation of advisory and prosecutory staff.
Therefore, in this Order, the Commission will address our recommendations originally determined in the Tentative Order. The Commission will discuss each report identified in the LB & FC's Report and determine the proper disposition of the reporting requirement in light of the enactment of Act 183 and the comments submitted in this matter.
1. Annual Financial Report
In its Tentative Order, the Commission examined the annual financial report required by our regulations at Section 63.36.13 The Commission concluded that the annual financial report should be examined at a facilitated discussion to determine the nature and extent of the balance sheet, income statement and supporting documentation required to meet the mandates of Act 183. In addition, the Commission tentatively concluded that the annual financial report continues to be permitted by Act 183 although section 3015(e) limits the scope of the annual financial report to a balance sheet and income statement. At the same time, Section 3015(f)(2) permits the Commission to require submission of further information to support the accuracy of the reports, including the annual financial report, specified in Section 3015(e).
The LB & FC's Report stated that the annual financial report is an essential report by which the Commission monitors the financial and operational performance of LECs so that the telecommunications utilities are able to provide adequate and reliable service to the public. The LB & FC points out that, in 2001, the reporting requirements for all telecommunications carriers were appreciably abridged including a Commission restructuring of the annual financial reports.14 The annual financial report is to be filed by all jurisdictional utilities by either April 30 or July 31 reflecting the previous reporting year.15
In comments submitted on May 3, 2005 in anticipation of the facilitated discussion, the interested participants16 discussed the Commission's Tentative Order as well as the provisions of Chapter 30 concerning the LECs reporting requirements. The Commission's Bureau of Fixed Utility Services submitted comments on May 3, 2005, as well as a final form annual financial report revised in accordance with Act 183. FUS' proposed final form consists of 11 pages--eight pages requiring balance sheet and income statement data and three pages consisting of instructions, applicable notes to the balance sheet and income statement, and the verification statement.17
FUS has revised the Commission's annual financial report to specific-purpose financial statements as necessary for regulatory oversight in accordance with several provisions of Act 183.18 For example, the proposed balance sheet information concerning assets and debts provides important data with respect to receivables from or investments in affiliates. Also, FUS submits that the Telephone Plant in Service category and related accumulated depreciation information on the balance statement is necessary to monitor the LECs investment in doing business in Pennsylvania including the financial relationships between regulated entities and affiliates.19 In the liabilities and other credits category of the balance sheet, FUS recommends retaining information with respect to accounts payable to affiliates and long term debt so that the financial viability of the LECs can be assessed.20 Further, FUS recommends the retention of detailed information of state and local taxes since this information is used by the Commission to verify the state tax adjustment surcharge calculations as well as by other state and federal agencies for budgeting, regulatory and taxation policy purposes.21
Regarding the proposed annual financial report income statement, FUS has modified the income statement to reflect data associated with monitoring annual intrastate revenues of rural telecommunications carriers including different categories of services (competitive, noncompetitive, and protected services) to comply with sections 3015(b)(1) and (2).22 In addition, FUS proposes that the income statement include minimum summary data needed to monitor expenditures to determine whether they are adequate and necessary to ensure safe and reliable service.23 Finally, FUS requests that the Commission approve the annual financial report as presented in its Attachment 4 for use for the 2004 reporting year.
On the other hand, the PTA, in its May 3, 2005 comments, indicates that the LB & FC Report is superceded by the passage of Act 183 and, thus, the annual financial report is limited to one balance sheet and income statement.24 In defining these terms, the PTA relies on a series of sources but essentially submits that the balance sheet and income statement required under Act 183 should consist of summary schedules providing financial information on assets, liabilities and equity as well as comprehensive income.25 Specifically, the PTA states that the balance sheet and income statement that is contained in the Commission's current annual financial report at schedules 8 and 10 should be the only information required to comply with Act 183.26 The PTA also submits that other types of reports, such as statements of retained earnings, changes in equity, financial position or cash flow are expressly excluded by the statute.27
Further, the PTA states that the annual financial report is not subject to the language at sections 3015(e)(9) and 3015(f)(2) of Chapter 30 which permits the Commission to determine the form of reports and to require information to support the accuracy or to seek an explanation of the reports listed in subsection(e).28 The PTA states that section 3015(e)(9) applies only to the Bona Fide Retail Request Program report which is the ninth report in this section.29
At the May 11, 2005 facilitated discussion, the interested participants further commented on the contents of the annual financial report. Specifically, FUS discussed Attachment 4 as its proposed format for the annual financial report in light of the passage of Act 183. FUS indicates that Attachment 4 is a balance sheet and income statement with explanatory notes comprising eleven pages.30 FUS also indicates that, in general, the annual financial report is a principle tool for all parts of the Commission to inform themselves of a company's level of operations.31
Specifically, FUS submits that the proposed format provides a base for year-to-year comparisons, financial monitoring and consistent information for evaluating proposed changes by the LECs. For example, FUS indicates that the proposed annual financial report will provide information on the proposed migration of services from protected to competitive designation and a company's proposed elimination of the state universal service fund.32 Also, FUS indicates that the proposed annual financial report can provide an intermediate check on the general level of investment that is being made by a particular LEC for NMP compliance. Further, the proposed annual financial report will provide limited information on dollar flows between affiliates so that regulated companies are not improperly subsidizing an affiliate, such that the LEC could not meet its Act 183 obligations.33
In addition, legislative staff indicated that the annual financial report is limited to simply a balance sheet and income statement.34 Similar comments were submitted by Representatives William Adolph, Jr.,35 Raymond Bunt, Jr. and Joseph Preston, Jr.36 In addition, other participants including the PTA37 and the OCA38 commented on the format of the annual financial report.
Moreover, written comments39 were filed on May 31, 2005 further clarifying the annual financial report. Based upon the comments received at the facilitated discussion and a subsequent informal meeting with the interested participants, FUS submitted comments reflecting further revisions to the annual financial report. FUS makes these modifications in compliance with sections 3015(e) and (f)(2) of Chapter 30 so that the Commission develops a format that includes the requisite information along with supporting documentation to permit the Commission to effectively perform its statutory obligations prescribed by Act 183.40 Specifically, FUS revised the annual financial report to incorporate line items in compliance with the Uniform System of Accounts for Telecommunications Companies at the federal level.41 However, FUS submits that companies must continue to maintain subaccounts for residential and business revenues as well as revenues and expenses for the different classifications of telecommunications services.
In addition, FUS states that it has designed the annual financial form to be applicable to both incumbent and competitive LECs and to require little follow up under section 3015(f)(2) for companies that use the form. FUS indicates that, if PTA's proposed two schedules are filed, the LECs would be subject to subsequent Commission data requests to validate the financial information so that the Commission can meet its statutory obligations.42
The PTA also submitted comments on May 31, 2005 in accordance with the Commission's Tentative Order. Although PTA objects to using the unsworn statements obtained at the facilitated discussion to support Commission findings in this docket, the PTA states its willingness to cooperate with FUS to develop an annual financial report that meets the requirements of the statute and is useful to the Commission at the same time. In that light, PTA submits that modifying Schedules 8 and 10 of the current annual financial report is acceptable as long as the modifications follow the prescribed Chart of Accounts and do not include new accounting categories such as residential and business revenues, noncompetitive and competitive services revenues, or intrastate operating revenues.43 However, PTA states that it can endorse the current breakdown of revenues listed in the Chart of Accounts which include local network, local access, network access, long distance, miscellaneous and uncollectibles.44
In terms of the balance sheet items, the PTA is willing to accept FUS' modification of including plant-in-service accounts in accordance with the Chart of Accounts categories even though this level of detail is not typically included in a balance sheet.45 On the other hand, PTA objects to including additional information in the balance sheet as proposed by FUS including identification of investments with affiliates and long-term debt information. Because of these changes, PTA submits revised income statement and balance sheet documents to reflect its modifications.46
MCI briefly addresses the issue that the annual financial report should be limited to a balance sheet and income statement. In supporting PTA's comments, MCI concurs with Ms. Dillon's comments set forth at the May 11, 2005 facilitated discussion.47
Subsequent to the close of the comment period in this docket, the interested participants continued to informally discuss the annual financial report. On August 9, 2005, the PTA and FUS submitted a written stipulation in this docket that represents an agreed-to form for the annual financial report. In addition, Appendix A indicates that the new annual financial form will be used by all LECs, incumbents as well as competitive LECs, to file their 2004 data by October 31, 2005. Specifically, Appendix A of the stipulation, as attached hereto, indicates that the Commission will be able to sufficiently monitor the changes in company accounts from year to year, particularly those related to affiliated transactions and plant investment made for local exchange services so that the Commission can fulfill its financial oversight and statutory obligations. The stipulation permits the summary level of reporting for many accounts because the smaller companies report at summary levels of accounting in accordance with FCC directives. Even though the larger telecom companies maintain separate, detailed accounts and subaccounts for local exchange and toll services and separate subsidiary operations, the Commission recognizes that that additional information is made available at the FCC for the large ILECs which negates requiring more detailed filings at the Commission. The stipulation also provides for companies to reference their explanatory notes to balance sheets and income statements as reported to stockholders. Further, the stipulation provides for a verification by a company officer which provides assurance of the validity of the submitted information.
Based on our review of the requirements of Act 183 and the proposal submitted by FUS and PTA, the Commission hereby determines that the annual financial report for incumbent and competitive LECs should consist of the information submitted by FUS and the PTA in their August 9, 2005 stipulation at Appendix A. We agree that this version of the annual financial report meets that Commission's informational needs and is consistent with the Annual Financial Report specified in Act 183. The proposed format also avoids duplication of information available to the Commission elsewhere, and is substantially streamlined from the pre-Act 183 annual report. Also, the agreed-to report format permits the Commission to undertake a meaningful review of a company's financial circumstances to fulfill our statutory duty of requiring reasonable, safe and reliable telecommunications service.
Therefore, because the proposed Annual Report is consistent with Act 183 and meets the Commission's informational needs, the Commission hereby modifies the form of the Annual Financial Report to that proposed by FUS and PTA in Appendix A of their joint stipulation. Nevertheless, the legislature has recognized that an individual company's annual financial report or circumstances may raise questions that require further review to adequately fulfill the Commission's statutory responsibilities. In that event, Act 183 provides that the Commission may require the submission of further information ''to support the accuracy of or to seek an explanation of'' the annual financial report. 66 Pa.C.S. § 3015(f)(2).
2. Annual Report of Certified Interexchange Transporter
In its Tentative Order, the Commission found that the annual report of certified interexchange transporters should remain as a reporting requirement in accordance with our regulations at section 63.107 and Act 183. The Commission also found that the statute does not limit the Commission's authority to order the filing of certain reports including those that may be necessary to monitor the market for and competitiveness of IXC services even though section 3018 provides that all interexchange services are competitive.48
The annual report of certified interexchange transporters (IXCs), i.e. long distance carriers, is required by Commission regulation at section 63.107.49 According to the Commission's regulation, the report is due annually on May 31 reflecting total revenue and traffic volume data measured in minutes of use for intrastate operations for the preceding calendar year. The LB & FC's Report states that the Commission requires this IXC report to monitor the operating revenues of the IXC industry to determine its viability. The PTA's position in the LB & FC's Report was to eliminate this reporting requirement and to require that the IXCs file the same information in their annual financial reports.
MCI filed comments supporting elimination of this reporting requirement because the interexchange (IXC) market has been competitive for a significant number of years in both Pennsylvania and nationally.50 MCI submits that additional competition has entered the IXC market since the passage of the Telecommunications Act of 1996 and Verizon's entry into the IXC market in Pennsylvania in September 2001. MCI submits that, based on these factors, there is no need for the Commission to monitor the viability or the competitiveness of the IXC market. Therefore, MCI states that this reporting requirement should be eliminated.51
No other comments were filed addressing this reporting requirement. At this time, the Commission is examining its obligations to regulate IXC carriers in a proposed rulemaking at Docket No. L-00050170.52 Once comments are received in that docket, the Commission will make its final determinations concerning the regulation of IXC carriers and their services. In the meantime, however, the Commission adopts its findings as set forth in the Tentative Order and the annual report of certified interexchange transporter at section 63.107 remains in place subject to the outcome of the above-mentioned rulemaking proceeding.
3. Annual LEC Reporting of Residential Account Information
In its Tentative Order, the Commission determined that, in accordance with Act 183, the information currently required at sections 64.201(a) and (b) is to be filed on an annual basis as part of the annual service report listed in section 3015(e)(4) of the Act. The Commission based its tentative conclusion on section 3019(b)(2) of Chapter 30 which retains the Commission's authority to review and revise its regulations concerning the ordering, installation, suspension and termination of any telecommunication service. Also, the Commission determined that our regulations at section 64.201(b) which require quarterly filings be waived to reduce the filing to an annual basis to comply with Chapter 30. Thus, we directed Commission staff to begin a rulemaking to eliminate the quarterly filings of the information required at sections 64.201(b) if no adverse comments were received.
The Commission's regulations at sections 64.201(a) and (b)53 require LECs to file residential account information reflecting billing and collection practices including customer disputes. Section 64.201(a) requires LECs that have less than 50,000 residential accounts to file an annual report by April 1 containing information about their residential accounts as prescribed by section 64.201(c)54 of the regulation. Section 64.201(b) requires that LECs with more than 50,000 residential accounts file quarterly and annual reports containing information about their residential accounts as prescribed by section 64.201(c) of the regulation.55
Comments were received concerning this reporting requirement. PTA concurs with the Commission's tentative conclusion that the residential account information described herein should be included in the annual service report at section 3015(e)(4) but limited to annual reports for all LECs.56
On the other hand, MCI submits that the national competitive LECs, such as itself, do not maintain the information in the present format and request that the Commission modify the regulation to permit company-specific filings.57 Also, MCI states that this report is not necessary for the Commission to monitor trends in customer services and telecommunications competition. MCI submits that telecommunications competition can be analyzed through other means including access line reports and revenues that are provided through other reporting requirements. Although MCI does not believe that the information contained in this report is related to customer service, MCI opines that customer service trends can be monitored through informal complaints received by BCS.58
In addition, MCI comments that the information contained in this report is not necessary to protect consumers, especially in light of the changed telecommunications market in Pennsylvania. MCI submits that the telecommunications market is no longer a monopoly and customers have choices in their providers and services.59 MCI believes that this reporting requirement should be eliminated since it is not listed in section 3015(e).
Further, MCI states that this reporting requirement is problematic because the report requires basic, non-basic and toll information which is an outdated format since many providers offer bundled services that do not recognize a distinction between local and toll charges. In addition, carriers such as MCI do not separate uncollectible amounts according to different types of services.60 Therefore, MCI supports elimination of this reporting requirement but, in the alternative, requests the Commission to modify the regulation to permit carriers to report according to the manner in which the information is collected by companies.61
In reviewing the comments submitted by MCI and the provisions of Chapter 30, the Commission determines that both incumbent and competitive LECs will continue to provide information in accordance with our current regulations at section 64.201 but on an annual basis. We find that company-specific information regarding residential account information is not practical and, in fact, may violate the provisions of Act 183. If the Commission would allow company-specific information to be filed concerning residential account information from numerous companies, Commission staff would find it necessary to request additional clarifying information from each carrier resulting in increased reporting information and responsibilities rather than decreased reporting requirements as prescribed in Chapter 30. Also, the Commission finds that the use of standardized data permits the Commission to compare companies on service quality issues over time as permitted by section 3019 of Chapter 30 so that it can review and revise its regulations to address and update service quality standards.
Therefore, we conclude that the determinations reached in our Tentative Order are affirmed and direct Commission staff to begin a rulemaking to change the quarterly filings requirement at sections 64.201(b) to annual reporting consistent with the provisions of Chapter 30 and the discussion in this Order.
4. Financial (Earnings) Report
In the Tentative Order, the Commission decided to continue to waive the financial earnings report as required in our regulations at section 71.362 as set forth in the March 11, 2005 Secretarial Letter at this docket. At the same time, the Commission directed staff to immediately initiate a rulemaking proceeding to eliminate this regulation, for telecommunications carriers only, in accordance with the discussion in the Tentative Order. Further, in accordance with Section 703(g) of Title 66,63 the Commission concluded that it would rescind its December 4, 2001 Order that streamlined the reporting requirements for financial earnings information filed by LECs, subject to consideration of any comments to the contrary.
The financial earnings report is required from those companies with annual intrastate gross revenue in excess of $1 million but less than $10 million on an annual basis. The companies with annual intrastate gross revenue in excess of $10 million must file semiannually. In 2001, the Commission streamlined the reporting requirements for the financial earnings information by reducing the filing intervals as described above.64
The PTA submits general comments in this docket indicating that, if specific reports do not appear in section 3015(e)(1)--(9), the Commission cannot require them under Act 183. Also, the PTA opines that the Commission cannot reinstate any reports not related to rates unless it uses the process outlined in section 3015(f) of Chapter 30.65 The PTA also submitted, at the time of the LB & FC Report, that the reports under section 71.03 should be eliminated if the ILEC has an approved alternative form of regulation. Beyond the PTA comments, no participant filed comments on this reporting requirement after the Commission entered its Tentative Order.
The Commission affirms its conclusion reached in the Tentative Order that the list of reports permitted by Act 183 does not include a separate financial earnings report of the type required by section 71.3 of our regulations. Therefore, we shall rely on the income statement data in the annual financial report permitted by Section 3015(e)(1) to monitor the earnings and financial health of LECs. Consequently, we direct staff to immediately initiate a rulemaking proceeding to eliminate this regulation, for telecommunications carriers only, in accordance with the discussions in our Tentative and Final Orders at this docket. Further, in accordance with Section 703(g) of Title 66,66 the Commission rescinds its December 4, 2001 Order that streamlined the financial earnings reporting requirement for LECs pursuant to our discussion set forth herein.
5. Annual Depreciation Report
The Commission also determined, in its Tentative Order, that the annual depreciation report required at section 73.367 of our regulations is waived and subject to elimination through the rulemaking process. The Commission determined that sections 3014(f)(1) and 3015(e)(1) permit the filing of depreciation reports in the form specified by sections 73.3--73.4 with NMP biennial reports. At the same time, we directed staff to determine whether a streamlined form of the information specified in sections 73.3--73.4 can be adequate to verify LEC compliance with its NMP obligations.
As stated in the Tentative Order, this reporting requirement applies to all telecommunications carriers with over 50,000 access lines and all public utilities that have annual gross intrastate operating revenues in excess of $20 million. Currently, eight telecommunications companies68 are required to file this annual report. The Commission, in the LB & FC Report, indicated that the purpose of this LEC filing is to provide detailed annual depreciation expense for each company for the annual financial report and the biennial network modernization plan (NMP) report. In essence, this report, in conjunction with the service life study report and the capital investment plan report, assists the Commission in monitoring on a regular basis the depreciation practice and capital planning of a public utility.69
No comments were filed concerning this reporting requirement at this docket except for the PTA's general comments concerning the specific reports listed in section 3015(e) and the process described in section 3015(f) as mentioned above. The PTA, at the time of the LB & FC Report, proposed to eliminate this reporting requirement because the annual depreciation information is similar information provided in a company's annual financial report.70 In addition, the PTA noted that LECs governed by Chapter 30 plans are required to provide information on depreciation as part of their biennial NMP reports.
As directed by the Commission in the Tentative Order, Commission staff has examined the current depreciation information received in compliance with our regulations. In doing so, Commission staff has included in the agreed-to annual financial report the necessary annual depreciation data needed to verify the LECs NMP obligations. In addition, depreciation information is submitted in a LEC's NMP biennial report in accordance with section 3014(f)(1). Because these two reports will furnish the appropriate annual depreciation information needed to verify the LECs NMP obligations, the annual depreciation information is streamlined so that the annual depreciation report required by our regulations can be eliminated.
In addition, based upon our review of Chapter 30, the list of reports permitted by Act 183 does not include a separate annual depreciation report of the type required by section 73.3 of our regulations. As noted by the PTA, depreciation information is submitted as part of the annual financial report and, in our judgment, will remain a critical component to support the accuracy of the LECs' income statements. Therefore, as we determined in our Tentative Order, this filing requirement is waived as it pertains to general filing and reporting obligations, and staff will immediately commence a rulemaking proceeding to eliminate the regulation.
At the same time, we note that sections 3014(f)(1) and 3015(e)(1) continue to require the filing of biennial reports in the detail and form required by the Commission as of July 1, 2004,71 unless the Commission reduces such reporting requirements. The Commission's reporting requirements for biennial updates currently include a requirement to file depreciation reports in the form specified by sections 73.3--73.4. Therefore, each LEC remains obligated to file this information with its NMP biennial report consistent with sections 3014(f)(1) and 3015(e)(1).
6. Universal Service Fund Reports
In the Tentative Order, the Commission examined the universal service fund contributions report as well as the USF remittance worksheet and concluded that these reports can continue to be required under Chapter 30 at section 3015(e)(5).72 Moreover, the Commission determined that these reports are necessary to manage Pennsylvania's universal service fund.
The LB & FC Report examined our regulations at section 63.16573 which requires an annual submission by all telecommunications carriers of their total intrastate end-user telecommunications retail revenues for the preceding calendar year. This information is necessary to calculate the amount each carrier will owe the Pennsylvania Universal Service Fund the next calendar year.74
Also, the LB & FC Report reviewed the monthly universal service fund carrier remittance worksheet as required by our regulations at section 63.169.75 This worksheet is filed with a LEC's monthly USF contribution. Currently, the Commission has opened an investigation into the intrastate access charges of the rural ILEC carriers (including Sprint/United) to determine whether the Pennsylvania USF should continue after December 31, 2006.76 The Commission's decision in that proceeding will impact this reporting requirement.
The PTA indicated in the LB & FC Report as well as its comments77 at this docket that no changes should be made to these reporting requirements. The OCA concurs with the Commission's language in its Tentative Order that we are required by federal regulations to certify to the Federal Communications Commission (FCC) and the Universal Service Administrative Company (USAC) that carriers in Pennsylvania will use federal high cost support monies received only for the provision, maintenance, and upgrading of the facilities and services eligible for support. The OCA submits that this certification requirement applies to high cost support and any type of federal universal service support received.78
In considering the comments received and in accordance with Chapter 30, the Commission affirms its determinations in the Tentative Order at this time. Therefore, we find that section 3015(e)(5) permits the continuation of the universal service fund contributions report and the remittance worksheet in one report as prescribed in our regulation at section 63.165. However, we may revisit this issue once a final determination has been made concerning Pennsylvania's universal service fund at Docket No. I-00040105 as discussed herein.
7. Assessment Reports
In its Tentative Order, we determined that the Commission is statutorily required to notify all public utilities of the amount of their assessment.79 Because of this statutory requirement,80 we determined that the Commission is obligated to render an annual assessment bill based on all public utilities' gross intrastate revenues. Thus, we found that no changes were needed regarding the Commission's annual assessment report and bill.81
As required by section 510(b) of the Public Utility Code, 82 the assessment report provides gross intrastate operating revenues for the preceding year for all public utilities, including telecommunications carriers, so that each company is assessed its appropriate share for that year. The information contained in a company's statement is vitally necessary to calculate the annual assessment amounts for each public utility to fund the continued operation of the Commission, Office of Consumer Advocate, and Office of the Small Business Advocate.83
The PTA states that the assessment report and subsequent bill should remain in its current form and is permitted under section 3015(e)(7) of Chapter 30.84 Also, the PTA indicated in the LB & FC Report that no changes are necessary in the annual assessment bill.85 No other comments were filed addressing this reporting requirement.
We agree with the PTA that sections 510(b) and 3015(e)(7) of the Public Utility Code requires LECs to file an annual statement of gross intrastate revenues for assessment purposes. Therefore, we affirm our decision in the Tentative Order to continue the assessment report and bill in accordance with sections 510(b) and 3015(e)(7).
8. Annual Tracking Report of TRS Surcharges
In the Tentative Order, the Commission found that the LECs are to file the annual tracking report of TRS surcharges in accordance with our regulations,86 previous orders and Act 183 at section 3015(e)(3). Specifically, the Commission concluded that Act 183 at section 3015(e)(3) requires LECs to provide an annual deaf, speech-impaired and hearing-impaired relay information report which includes the annual tracking report mentioned herein.
As stated in the LB & FC Report, the Commission uses the annual tracking report of TRS surcharges as required by section 69.513 of our regulations to monitor carrier surcharge submittals to the TRS Fund in comparison to the carrier's access line counts to verify that the appropriate surcharge is collected from end users. In addition, the Commission also uses this information to perform its annual audit of the TRS Fund.87
The PTA advocates that this tracking report is permissible under section 3015(e)(3) as part of the annual deaf, speech-impaired and hearing-impaired relay information report.88 No other participant commented on this reporting requirement.
Based on our review of section 69.513, our Order89 and Act 183, we find that the telecommunications carriers are required to file the annual tracking report of TRS surcharges with the Commission in accordance with our regulation at section 69.513(a) and Chapter 30. Therefore, we affirm our determinations in the Tentative Order as discussed herein and the reporting requirement prescribed at section 69.513(a) remains in place.
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1 66 Pa.C.S. §§ 3011 et seq. (2005).
2 66 Pa.C.S. §§ 3019(b)(2) and (3).
3 The Commission's facilitated discussion took place on May 11, 2005 where participants submitted unsworn comments that were transcribed.
4 The Affiliated Interest Agreements are to be filed only for notice, and not for approval purposes.
5 This report is required by 52 Pa. Code § 63.72 but is being reviewed by the Commission in a rulemaking proceeding at Docket No. M-00031703.
6 This report is presently suspended pursuant to Petition of the Pennsylvania Independent Telco Coalition for Designation as Eligible Telecommunications Carriers for both State and Federal Purposes, Docket No. P-00971264 (Order entered June 11, 2004).
7 This reporting requirement is addressed in Proposed Rulemaking for Revision of Chapter 63 of Title 52 of the Pennsylvania Code Pertaining to Regulation of Interexchange Telecommunications Carriers and Services, Docket No. L-00050170 (Order entered March 29, 2005).
8 This reporting requirement has been required pursuant to Revised Final Rulemaking Order Re: Public Utility Security Planning and Readiness, Docket No. L-00040166 (Order entered March 10, 2005), 35 Pa. B. 3299 (June 11, 2005).
9 See PUC Filing and Reporting Requirements on Local Exchange Carriers, Docket No. M-00041857 (Order entered April 15, 2005) at 4-6.
10 66 Pa.C.S. § 334(c). As defined in section 334(c), a contested on-the-record proceeding is a proceeding required by a statute, constitution, published commission rule or regulation or order in a particular case, to be decided on the basis of the record of a commission hearing, and in which a protest or petition or notice to intervene in opposition to requested commission action has been filed.
11 Further, we note that the LEC reporting requirements matter at the above-referenced docket number is not a proceeding to determine a possible violation of the Commission's rules and regulations. Rather, the LEC reporting requirements matter was initiated by the Commission to examine its own regulations and prior orders, in light of the LB & FC's report and the passage of Act 183, to determine whether certain reporting requirements should be consolidated or streamlined. Thus, the Commission concludes that this docket is not a matter invoking the separation of prosecutory and advisory functions.
12 Concurrently, on April 15, 2005, the Commission issued a Secretarial Letter setting the date for the facilitated discussion as well as the procedures for participating in the discussion. The Commission provided for comments and/or presentations to be filed at the docket in anticipation of the May 11, 2005 facilitated discussion. The interested participants were able to submit comments approximately seven days before the facilitated discussion was convened. In addition, the interested participants were provided an opportunity to make presentations at the facilitated discussion as well as to file written comments by May 31, 2005.
13 52 Pa. Code § 63.36. Historically, the annual financial report has been a comprehensive report with multiple schedules and supporting documentation.
14 The Commission restructured the annual financial reports by industry segment and reduced the number of pages in half. The carriers continue to be required to provide up to 39 schedules of financial information. LB & FC Report at 4.
15 The Commission determined that the April 30 due date for the annual financial report for LECs be suspended as set forth in its March 11, 2005 Secretarial Letter in this docket.
16 Comments or letters of participation were filed by the Pennsylvania Telephone Association (PTA), MCI, Representatives William F. Adolph, Jr., Raymond Bunt, Jr., Joseph Preston, Jr., Fran B. Cleaver, Esquire for Senator Robert M. Tomlinson, Office of Consumer Advocate (OCA), the Commission's Bureaus of Consumer Services and Fixed Utility Services.
17 FUS May 3, 2005 Comment of Robert F. Wilson at 4.
18 Id. at 4-8.
19 Id. at 7-8.
20 Id. at 8.
21 Id. at 9.
22 Id.
23 Id. at 10.
24 PTA May 3, 2005 Comments at 4-6.
25 Id. at 10-11.
26 Id. at 12.
27 Id. at 11.
28 66 P.C.S. at §§ 3015(e) and (f).
29 PTA May 3, 2005 Comments at 4-5.
30 Tr. at 39. FUS indicates that Attachment 4 represents a redesign of schedules to try and better reflect post Act 183 operating conditions.
31 Id.
32 Tr. at 39-40.
33 Tr. at 40.
34 Comments of Fran Cleaver, Esquire for Senator Tomlinson's Office, Tr. at 15-16.
35 Representative Adolph submitted comments stating: ''House Bill 30 . . . limits the Annual Report to a balance sheet and income statement . . . . these two are intentionally referenced and no others are permitted.'' Comments of Representative William F. Adolph, Jr., 165th Legislative District, Tr. at 19-20.
36 Representatives Bunt and Preston submitted the following comments: ''[T]he Commission may ask for nine reports enumerated above and may request additional clarifying information on the nine reports where necessary. No further reports or additional information can be requested or mandated unless the aforementioned findings are made.'' Comments of Representatives Raymond Bunt, Jr., Majority Caucus Secretary and Joseph Preston, Jr., Democrat Chairman Consumer Affairs Committee, Tr. at 23.
37 Comments of Karen Dillon, Commonwealth Telephone Company, Tr. at 29-32. Ms. Dillon identified several items in FUS Attachment 4 that she believed did not fall into the category of income statement or balance sheet. Also, Ms. Dillon asked for clarification of particular categories included in FUS Attachment 4 to indicate that PTA wishes to limit its reporting to a balance sheet and income statement. Tr. at 32.
38 Comments of Phillip McClelland, Esquire, Office of Consumer Advocate, Tr. at 37. Mr. McClelland stated that OCA supports FUS Attachment 4 as proposed with some clarifications. Also, Mr. McClelland stated that the OCA's goal is ''to get an accurate jurisdictional picture of the company, both their assets and income available, so that we could evaluate their financial health.'' Id.
39 The PTA, OCA, MCI and FUS filed written comments on May 31, 2005.
40 May 31, 2005 Comments of Robert A. Rosenthal, Director, Bureau of Fixed Utility Services, at 1-2.
41 47 C.F.R. § 32 (Uniform System of Accounts for Telecommunications Companies (hereinafter referred to as Chart of Accounts).
42 Id. at 2-3.
43 PTA May 31, 2005 Comments at 7-9.
44 Id. at 8.
45 Id. at 9.
46 Id. and PTA June 1, 2005 Attachment.
47 MCI May 31, 2005 Comments at 3.
48 66 Pa.C.S. § 3018(d)(2).
49 52 Pa. Code § 63.107(In practice, the IXC transporters submit their annual filing on April 30). On March 23, 2005, the Commission adopted a proposed rulemaking to revise our regulations regarding interexchange telecommunications carriers (IXCs) as a result of Act 183. Proposed Rulemaking for Revision of Chapter 63 of Title 52 of the Pennsylvania Code Pertaining to Regulation of Interexchange Telecommunications Carrier and Service, Docket No. L-00050170 (Order entered March 29, 2005).
50 MCI May 31, 2005 Comments at 3-4.
51 MCI May 31, 2005 Comments at 4.
52 Proposed Rulemaking for Revision of Chapter 63 of Title 52 of the Pennsylvania Code Pertaining to Regulation of Interexchange Telecommunications Carrier and Service, Docket No. L-00050170 (Order entered March 29, 2005).
53 52 Pa. Code §§ 64.201(a) and (b).
54 52 Pa. Code § 64.201(c) requires that LECs include information regarding the average number of residential accounts per month, the average monthly residential customer bill, the average number of overdue residential accounts per month, the average overdue residential customer bill per month, the average number of residential basic service suspension notices and suspensions per month, LECs' gross revenues from residential accounts, LECs' gross and net write-offs of uncollectible residential accounts, and the total number of Chapter 64 disputes.
55 The LB & FC Report states that the Commission uses these reports to monitor all LECs billing and collection practices and billing dispute volumes to determine trends in customer service including problem areas and corrective actions. The Commission also states, in the LB & FC Report, that this information is used for operational audits and measuring residential telecommunications competition. LB & FC Report at 7.
56 PTA May 3, 2005 Comments at 6.
57 MCI May 31, 2005 Comments at 4.
58 Id. at 4-5.
59 Id. at 5.
60 Id. at 6. MCI indicates that it has requested a waiver of the Commission's regulations at section 64.201(c)(4) since it does not track overdue account information on a state-specific basis. The Commission granted the waivers pertaining to section 64.201(c) as requested by MCI. Petitions of MCIMetro Access Transmission Services, LLC for Waiver of Local Exchange Reporting Requirements at 52 Pa. Code 64.201, Docket No. P-00042139 (Order entered September 9, 2005).
61 MCI May 31, 2005 Comments at 6-7.
62 Section 71.3 requires that LECs with annual intrastate gross revenue in excess of $1 million file financial earnings reports. 52 Pa. Code § 71.3.
63 66 Pa.C.S. § 703(g).
64 Adequacy and Interpretation of Existing Accounting Procedures and Financial Reporting Regulations for All Telecommunications Carriers, Docket No. L-00010153 (Order entered December 4, 2001).
65 PTA May 31, 2005 Comments at 7.
66 66 Pa.C.S. § 703(g).
67 52 Pa. Code § 73.3.
68 Alltel, Commonwealth Telephone Company, Conestoga Telephone Company, D & E Telephone Company, North Pittsburgh Telephone Company, United Telephone Company, Verizon North Inc. and Verizon Pennsylvania Inc. LB & FC Report at 11. Concerning these eight LECs, the annual depreciation report is reviewed in conjunction with the company's NMP report to determine each LEC's progress towards meeting its modernization objectives.
69 Id.
70 Id. at 12.
71 Implementation of Chapter 30 of the Public Utility Code: Reporting Requirements for Biennial Updates of Network Modernization Plans Filed Pursuant to 66 Pa.C.S. § 3003(b)(6), Docket No. M-00930441 (Order entered May 17, 1999).
72 Act 183 at § 3015(e)(5).
73 52 Pa. Code § 63.165.
74 LB & FC Report at 13.
75 52 Pa. Code § 63.169.
76 Intrastate Access Charges and IntraLATA Toll Rates of Rural Carriers and the Pa. Universal Service Fund, Docket No. I-00040105 (Order entered December 20, 2004). On August 30, 2005, the Commission entered an Order staying this proceeding for one year in light of the Federal Communications Commission's ongoing proceedings concerning intercarrier compensation.
77 PTA May 3, 2005 Comments at 6; PTA May 31, 2005 Comments at 5-6.
78 OCA May 3, 2005 Comments at 5.
79 66 Pa.C.S. § 510(c).
80 As stated previously, Act 183 did not repeal Section 510 of the Public Utility Code, thus, the Commission's statutory obligations at this section remain in effect.
81 As stated in our Tentative Order, we note that the filing referenced here is not a report but the actual bill and/or supplemental bill sent to all public utilities so they can remit payment of their assessment.
82 66 Pa.C.S. § 510(b).
83 LB & FC Report at 14.
84 PTA May 3, 2005 Comments at 6-7.
85 LB & FC Report at 22.
86 52 Pa. Code § 69.513.
87 LB & FC Report at 15.
88 PTA May 3, 2005 Comments at 6.
89 PA Telecommunications Relay System and Annual Tracking Report of PA Telecommunications Relay Service Surcharges, Docket No. M-00900239 (Orders entered August 3, 1990 and September 11, 1992).
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