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H0096......................................................by STATE AFFAIRS
TELEPHONES - Amends existing law to modify the procedure for establishing
the maximum rate to be charged for basic local exchange service by
telephone corporations and for nonrecurring charges for related services by
incumbent telephone corporations; and to authorize realignment of prices
between residential and small business telephone services.
01/26 House intro - 1st rdg - to printing
01/29 Rpt prt - to St Aff
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 96
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE REGULATION OF TELEPHONE CORPORATION BASIC LOCAL EXCHANGE
3 RATES; AMENDING SECTION 62-622, IDAHO CODE, TO MODIFY THE PROCEDURE FOR
4 ESTABLISHING THE MAXIMUM RATE TO BE CHARGED FOR BASIC LOCAL EXCHANGE SER-
5 VICE AND FOR NONRECURRING CHARGES FOR SERVICES RELATED THERETO BY INCUM-
6 BENT TELEPHONE CORPORATIONS, TO AUTHORIZE REALIGNMENT OF PRICES BETWEEN
7 RESIDENTIAL AND SMALL BUSINESS SERVICES UPON A FINDING BY THE PUBLIC UTIL-
8 ITIES COMMISSION THAT SUCH REALIGNMENT IS NOT CONTRARY TO THE PUBLIC
9 INTEREST AND IS REVENUE NEUTRAL TO THE TELEPHONE CORPORATION, AND TO PRO-
10 VIDE THAT ESTABLISHMENT OF MAXIMUM ALLOWABLE BASIC LOCAL EXCHANGE RATES
11 PURSUANT TO THIS ACT SHALL BE IN LIEU OF FURTHER RATE REGULATION EXCEPT AS
12 PROVIDED IN THIS ACT.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Section 62-622, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 62-622. REGULATION OF BASIC LOCAL EXCHANGE RATES, SERVICES AND PRICE
17 LISTS. (1) The commission shall regulate the prices for basic local exchange
18 services for incumbent telephone corporations in accordance with the following
19 provisions:
20 (a) At the request of the an incumbent telephone corporation, the commis-
21 sion shall establish maximum just and reasonable rates for basic local
22 exchange service. Maximum basic local exchange rates shall be sufficient
23 to recover the costs incurred to provide the services. Costs shall include
24 authorized depreciation, a reasonable portion of shared and common costs,
25 and a reasonable profit. Authorized depreciation lives shall use forward-
26 looking competitive market lives. Authorized depreciation lives shall be
27 applied prospectively and to undepreciated balances.
28 (b) (i) At the request of the an incumbent telephone corporation which
29 had not, prior to January 1, 2001, elected to be subject to the pro-
30 visions of chapter 6, title 62, Idaho Code, the commission may find
31 that existing rates for basic local exchange services, and nonrecur-
32 ring charges for services relating thereto, shall constitute the max-
33 imum rates for such services. The commission may, or at the request
34 of the incumbent telephone corporation shall, conduct proceedings
35 pursuant to paragraph (a) of this subsection to establish a maximum
36 basic local exchange rate. The commission shall issue its order
37 establishing maximum basic local exchange rates, and nonrecurring
38 charges for services in connection therewith, no later that one hun-
39 dred eighty (180) days after the filing of a request by such incum-
40 bent telephone corporation unless the telephone corporation consents
41 to a longer period.
42 (ii) If an incumbent telephone corporation had, prior to January 1,
43 2001, elected to be subject to the provisions of chapter 6, title 62,
2
1 Idaho Code, the telephone corporation may file with the commission a
2 notice that it elects to adopt its existing rates for basic local
3 exchange service, and nonrecurring charges for services in connection
4 therewith, as the maximum rate it may thereafter charge for such ser-
5 vices. Such election shall be effective ten (10) days after filing
6 notice thereof with the commission.
7 (c) The commission shall issue its order establishing maximum rates no
8 later than one hundred eighty (180) days after the filing of the request
9 unless the telephone corporation consents to a longer period.
10 (dc) (i) An incumbent telephone corporation whose maximum basic local
11 exchange rates have been established as set forth in paragraph (b)
12 (i) or (b) (ii) of this subsection may charge prices lower than the
13 maximum basic local exchange rates established by the commission.
14 Provided however, as authorized by this section but may not charge
15 prices for such service in excess of the established maximum basic
16 local exchange rate. The prices charged by the telephone corporation
17 for each class of service shall be uniform for all customers sub-
18 scribing to such class of service within the wire center providing
19 service to such customer.
20 Provided however, the telephone corporation may petition the
21 commission for authority to realign the prices of basic local
22 exchange service between residential and small business customers
23 within the wire center serving such customers on a revenue neutral
24 basis. If the commission finds that such price realignment would not
25 be contrary to the public interest and that the realignment plan will
26 be revenue neutral to the telephone corporation, the commission shall
27 approve such petition. Upon approval of the price realignment plan,
28 the maximum basic local exchange rate for each affected class of ser-
29 vice shall be adjusted to reflect the approved plan. The commission
30 may, in addition, at the request of an incumbent telephone corpora-
31 tion, adjust maximum basic local exchange rates in an amount the com-
32 mission determines to be appropriate, to reflect commission-ordered
33 de-averaging of prices of unbundled network elements used in the pro-
34 vision of basic local exchange service. Provided however, such
35 adjustment, to the extent practicable, shall not result in either an
36 increase or a decrease in total revenues derived by the incumbent
37 telephone corporation from the provision of basic local exchange ser-
38 vice.
39 (ii) Uupon the petition of a nonincumbent telephone corporation, the
40 commission shall establish a minimum price for the an incumbent tele-
41 phone corporation's basic local exchange service if the commission
42 finds, by a preponderance of the evidence, that the incumbent tele-
43 phone corporation's prices for basic local exchange services in the
44 local exchange area are below the incumbent telephone corporation's
45 average variable cost of providing such services.
46 (ed) After the commission has established maximum basic local exchange
47 rates, aAn incumbent telephone corporation may shall change its tariffs or
48 price lists reflecting to reflect changes in the availability, price,
49 terms and conditions for basic local exchange service, which changes shall
50 not result in a rate for basic local exchange service in excess of the
51 maximum basic local exchange rate established in accordance with this sec-
52 tion. Such changes shall be effective not less than ten (10) days after
53 filing with the commission and giving notice to affected customers. Pro-
54 vided however, cChanges to tariffs or price lists that are for nonrecur-
55 ring services and that are quoted directly to the customer when an order
3
1 for service is placed, or changes that result in price reductions for
2 basic local exchange services or state the price of new service offerings,
3 shall be effective immediately upon filing with the commission and no
4 other notice shall be required.
5 (e) An incumbent telephone corporation that has elected to establish a
6 maximum basic local exchange rate shall not, from and after the establish-
7 ment of such rate, be subject to further price regulation of basic local
8 exchange services provided by the telephone corporation, except as pro-
9 vided in subsections (1)(b) through (1)(d) of this section.
10 (2) The commission shall not regulate the prices for basic local exchange
11 services for telephone corporations that were not providing such local service
12 on or before February 8, 1996. Provided however, such telephone corporation
13 providing basic local exchange services shall file price lists with the com-
14 mission that reflect the availability, price, terms and conditions for such
15 services. Changes to such price lists shall be effective not less than ten
16 (10) days after filing with the commission and giving notice to affected cus-
17 tomers. Changes to price lists that are for nonrecurring services and that
18 are quoted directly to the customer when an order for service is placed, or
19 changes that result in price reductions or new service offerings, shall be
20 effective immediately upon filing with the commission and no other notice
21 shall be required.
22 (3) The commission shall cease regulating basic local exchange rates in a
23 local exchange calling area upon a showing by an incumbent telephone corpora-
24 tion that effective competition exists for basic local exchange service
25 throughout the local exchange calling area. Effective competition exists
26 throughout a local exchange calling area when either:
27 (a) Actual competition from a facilities-based competitor is present for
28 both residential and small business basic local exchange customers; or
29 (b) There are functionally equivalent, competitively priced local ser-
30 vices reasonably available to both residential and small business custom-
31 ers from a telephone corporation unaffiliated with the incumbent telephone
32 corporation.
33 (4) Telephone corporations shall not resell:
34 (a) A telecommunications service that is available at retail only to a
35 category of subscribers to a different category of subscribers;
36 (b) A means-tested service to ineligible customers; or
37 (c) A category of service to circumvent switched or special access
38 charges.
39 (5) The commission shall determine the noneconomic regulatory require-
40 ments for all telephone corporations providing basic local exchange service or
41 designated as an eligible telecommunications carrier pursuant to sections
42 62-610A through 62-610F, Idaho Code, including, but not limited to, such mat-
43 ters as service quality standards, provision of access to carriers providing
44 message telecommunications service, filing of price lists, customer notice and
45 customer relation rules.
RS 10633
The proposed legislation authorizes Idaho's rate regulated
telephone corporations to elect to cap their rates for
residential and small business customers at levels approved by
the Idaho Public Utilities Commission. Price caps, which
constitute the maximum rate that can be charged by the telephone
company for such services, would, under this proposal, serve as
an alternative to existing rate of return regulation. The
legislation establishes the procedure for rate regulated
telephone corporations to elect to utilize price caps as an
alternative form of rate regulation. This legislation will not
affect pricing by telephone corporations that began offering
local residential or small business telephone service after
January 1, 1988, because such companies are not presently
subject to state price regulation. For the consumer, the
utilization of price caps by rate-regulated telephone companies
provides stability and predictability of pricing. For the
telephone corporation, the use of price caps, rather than rate
of return regulation, encourages investments in the
infrastructure and rewards efficiency in business management.
This legislation will allow regulated telephone corporations to
better manage their business operations and infrastructure
investments, address competitive issues, and permit the free
marketplace to work. At the same time, the consumer will be
assured of price protection through utilization of Commission
established maximum rates until such time as the customer has
choices as to products and prices as a result of competitive
forces within the customer s local exchange area.
FISCAL IMPACT
There is no fiscal impact associated with the legislation
Contact
Name: Elizabeth Criner, Quest
Phone:
208/385 8692
STATEMENT OF PURPOSE/FISCAL NOTE H9