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PA Bulletin, Doc. No. 98-2007

NOTICES

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Petition of The Pennsylvania Telephone Association for Waiver of 52 Pa. Code § 64.41; Doc. No. P-00981357

[28 Pa.B. 5925]

Public meeting held
November 4, 1998

Commissioners Present:   John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; David W. Rolka; Nora Mead Brownell; Aaron Wilson, Jr.

Order

By the Commission:

   By Petition filed April 3, 1998, The Pennsylvania Telephone Association (PTA) requests a waiver of the Commission's regulation found at 52 Pa. Code § 64.41, which reads:

§ 64.41.  Interest.

   Interest at the rate of 9% per annum shall be payable on deposits without deductions for taxes thereon. Interest shall be paid annually to the customer or, at the option of either the LEC or the customer, shall be applied to the customer's bill.

   This section was initially included in the proposed rulemaking to rescind obsolete regulations regarding telephone and residential telephone service, 52 Pa. Code Chapters 63 and 64, at Doc. No. L-00960113. We note that the proposed rulemaking intended to change the section to be consistent with § 56.57, which provides that the interest rate be determined by the average rate of 1-year Treasury Bills for the months of September, October and November of the previous year. Acting on PTA's comments, we were prepared to change our regulation from the current 9% to 6%, which is the current legal rate in the Commonwealth of Pennsylvania, despite OCA's comments that the rate should remain at 9% so that consumers will not be hurt if the market is paying higher interest.

   We believed then, as we do now, that it is more important to set the interest rate at a level that provides incentive to collect a deposit in appropriate situations than to set the interest rate to ensure no loss in value to the consumer. Consumers who are dissatisfied with the interest paid on deposits need only pay their bills on time for 12 consecutive months to receive a refund of this money. See 52 Pa. Code § 64.37(3).

   We removed this section from the rulemaking, however, when PTA filed this Petition, although removal was with the intent to include it in a future rulemaking. PTA states that its new position is justified

. . . in view of the increasingly competitive marketplace and the associated financial pressures that LECs now face. PTA requests that the Commission adopt a formula for the calculation of interest on deposits which mirrors the present financial climate faced by LECs. Specifically, the PTA requests that the Commission grant an immediate waiver of the current regulation and allow LECs to pay interest rates on customer deposits based on the rates of interest posted for one year U.S. Treasury bills for the months of September, October, and November, of the previous year. This method would allow for annual adjustment of interest rates to reflect accurately the current financial conditions faced by LECs and enjoyed by consumers, and is consistent with the Commission's regulations at 52 Pa. Code § 56.57. Petition, pp. 2--3.
The Petition further states that this
. . . waiver will ultimately benefit consumers of telecommunications services in the Commonwealth by reducing interest payments made by LECs. It also should foster an increased willingness on the part of LECs to require customer deposits in situations that warrant such measures. Both the LEC and the ultimate consumer should thereby benefit by possible reductions in uncollectable revenues. Petition, p. 3.

   We agree. Notice of the PTA request was published on June 6, 1998, 28 Pa.B. 23, with a 20-day comment period set. Since there has been no response, hence no opposition filed to this Petition, we will grant it with the requirement that the affected utilities keep records indicating the effectiveness of this standard, which will aid us in determining how to best proceed in the future rulemaking; Therefore,

It Is Ordered That:

   1.  The Petition of the Pennsylvania Telephone Association in this docket is hereby granted.

   2.  The Commission's regulation appearing at 52 Pa. Code § 64.41 is hereby temporarily waived, consistent with the discussion in the body of this order, for all jurisdiction LECS and CLECS.

   3.  All jurisdictional LECs shall calculate interest rates on customer deposits based on the rates of the interest posted for 1-year U.S. Treasury bills for the months of September, October and November of the previous year.

   4.  To gauge the effectiveness of this standard, all jurisdictional LECs desiring to employ the revised interest rate standard permitted by this order shall keep records and shall submit a report comparing the customer deposits taken for the calendar year following entry of this order to the customer deposits taken for prior calendar years. Said report shall be filed at this docket by January 30, 2000.

   5.  The Secretary shall deposit this order with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.

   6.  This order shall become effective upon its publication in the Pennsylvania Bulletin and shall remain in effect pending further Commission action, subsequent to review of reports filed under ordering paragraph no. 4, above.

JAMES J. MCNULTY,   
Secretary

[Pa.B. Doc. No. 98-2007. Filed for public inspection December 4, 1998, 9:00 a.m.]


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