2000 Legislation
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HOUSE BILL NO. 670 – Telephone, local exch service, rate

HOUSE BILL NO. 670

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H0670......................................................by STATE AFFAIRS
TELEPHONE CORPORATIONS - Adds to existing law to permit incumbent telephone
corporations to elect to establish a cap on rates for basic local exchange
service; and to provide the method of determining the cap rate.
                                                                        
02/23    House intro - 1st rdg - to printing
02/24    Rpt prt - to St Aff

Bill Text


 H0670
                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 670
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE ESTABLISHMENT OF A CAP ON RATES FOR BASIC LOCAL EXCHANGE  SER-
  3        VICES  PROVIDED  BY  INCUMBENT TELEPHONE CORPORATIONS; AMENDING CHAPTER 6,
  4        TITLE 62, IDAHO CODE, BY THE ADDITION OF  A  NEW  SECTION  62-605A,  IDAHO
  5        CODE,  TO  PERMIT  INCUMBENT  TELEPHONE CORPORATIONS TO ELECT TO ESTABLISH
  6        CAPS ON RATES FOR BASIC LOCAL EXCHANGE SERVICE AND TO PROVIDE  THE  METHOD
  7        OF DETERMINING THE PRICE CAP RATE.
                                                                        
  8    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  9        SECTION  1.  That  Chapter  6,  Title  62, Idaho Code, be, and the same is
 10    hereby amended by the addition of a NEW SECTION, to be known and designated as
 11    Section 62-605A, Idaho Code, and to read as follows:
                                                                        
 12        62-605A.  ELECTION TO ESTABLISH PRICE CAPS FOR BASIC LOCAL  EXCHANGE  SER-
 13    VICE  --  PROCEDURE. (1) An incumbent telephone corporation which, pursuant to
 14    section 62-604, Idaho Code, and section 62-605, Idaho  Code,  has  elected  to
 15    exclude  its  telecommunications services other than basic local exchange ser-
 16    vice from regulation under title 61, Idaho Code, may file with the  commission
 17    a  notice  that  such telephone corporation elects to establish its prices for
 18    basic local exchange services in accordance with the provisions of  this  sec-
 19    tion. Upon such election, the telephone corporation shall establish price caps
 20    upon  basic local exchange services as provided herein. Thereafter, the prices
 21    for such telephone corporation's basic local exchange services and  such  uni-
 22    form  noneconomic  regulatory requirements as may be determined by the commis-
 23    sion to be necessary shall be established pursuant to the provisions  of  this
 24    chapter.  Price  caps  established as provided herein shall also apply to non-
 25    recurring charges for services used or useful in the provision of basic  local
 26    exchange  service  as  set forth in the telephone corporation's regulated ser-
 27    vices tariff on file with the commission on the date of the notice of election
 28    given in accordance with this section.
 29        (2)  An incumbent telephone corporation which had not, on  or  before  the
 30    first  day  of  January  2000,  elected to exclude telecommunications services
 31    other than basic local exchange service from regulation under title 61,  Idaho
 32    Code,  may  make such election and, at the same time, may, but is not required
 33    to, elect to establish the prices for basic local exchange service pursuant to
 34    the provisions of this section.
 35        (3)  For incumbent telephone corporations which, prior to January 1, 2000,
 36    had elected to exclude telecommunications  services  other  than  basic  local
 37    exchange  service  from regulation under title 61, Idaho Code, and whose rates
 38    for basic local exchange services on the date of the notice of  election  pro-
 39    vided herein, were set by the commission based, in part, upon cost allocations
 40    established  by  the  commission  pursuant to section 61-622A, Idaho Code, the
 41    price cap on rates for basic local exchange services offered by such telephone
 42    corporations shall be the rate for such services in effect on the day  of  the
 43    notice  of election as set forth in subsection (1) of this section, subject to
                                                                        
                                       2
                                                                        
  1    any adjustments permitted by this section.  The effective date  for  any  such
  2    price  caps  shall  be not later than thirty (30) days following the filing of
  3    the notice of election.
  4        (4)  For incumbent telephone corporations  whose  rates  for  basic  local
  5    exchange  services on the date of such notice of election were set by the com-
  6    mission without an allocation of costs between telecommunication services pro-
  7    vided pursuant to title 61, Idaho Code, and telecommunication services  to  be
  8    provided  pursuant to title 62, Idaho Code, the commission shall make a deter-
  9    mination within thirty (30) days of the date of the notice of election whether
 10    such allocations will be required prior to establishing a price cap  on  rates
 11    for basic local exchange service.  In the event that the commission determines
 12    that  cost allocations are required prior to establishing  price caps on basic
 13    local exchange rates pursuant to this section, the commission shall  establish
 14    such cost allocations and establish a just and reasonable rate for basic local
 15    exchange service provided by said telephone corporation in the manner provided
 16    and  pursuant  to  the provisions of title 61, Idaho Code, and section 62-622,
 17    Idaho Code. The commission shall make such decision within one hundred  eighty
 18    (180)  days  of the filing of the notice of election in subsection (1) of this
 19    section. The telephone corporation filing such notice of election may withdraw
 20    such notice and elect to continue regulation and pricing of  its  basic  local
 21    exchange  services  under title 61, Idaho Code, at any time during the process
 22    described herein, including following a decision of the commission  establish-
 23    ing price caps on rates for basic local exchange service.
 24        (5)  An  incumbent  telephone corporation may charge prices that are lower
 25    than the price cap established pursuant to this section either throughout  its
 26    service  territory or within an individual local exchange area or a portion of
 27    a local exchange area.  Provided however, upon the petition of a  nonincumbent
 28    telephone  corporation  that  is providing local exchange service in the local
 29    exchange area(s) in which a rate decrease has occurred, the  commission  shall
 30    establish  a  minimum  price  for  the incumbent telephone corporation's basic
 31    local exchange service, if the commission finds, by  a  preponderance  of  the
 32    evidence,  that  the  incumbent  telephone  corporation's reduced rates in the
 33    affected area(s) are below the incumbent telephone corporation's average vari-
 34    able costs of providing such service in such area(s).
 35        (6)  An incumbent telephone corporation shall not charge rates that exceed
 36    the price caps established in accordance with this section unless the  commis-
 37    sion  finds, pursuant to section 62-622, Idaho Code, that basic local exchange
 38    rates in a local exchange calling area should not be regulated because  effec-
 39    tive  competition exists for basic local exchange service throughout the local
 40    exchange calling area. The commission shall authorize increases in  the  price
 41    caps on rates for basic local exchange service:
 42        (a)  To  cover the costs of implementation and operation of any commission
 43        ordered extended area service (EAS) which  results  in  the  expansion  of
 44        local calling areas served by incumbent telephone corporations;
 45        (b)  To  directly  reflect any commission ordered deaveraging of prices of
 46        unbundled network elements used in the provision of basic  local  exchange
 47        service;
 48        (c)  To  facilitate  the  commission's  elimination  of implicit subsidies
 49        under section 62-623(1)(a) and (c), Idaho Code, and its creation of a uni-
 50        versal service funding mechanism under this  chapter  including,  but  not
 51        limited to:
 52             (i)   The application of universal service charges;
 53             (ii)  Increasing  the rate for universal services to an affordability
 54             benchmark level in commission designated high cost areas;
 55        (d)  To cover any tax, surcharge  or  fee  imposed  by  federal  or  state
                                                                        
                                       3
                                                                        
  1        authorities  and applicable to basic local exchange services following the
  2        date of the notice of election described in subsection (1)  of  this  sec-
  3        tion; or
  4        (e)  For such other purpose as the commission deems to be just and reason-
  5        able.

Statement of Purpose / Fiscal Impact


                STATEMENT OF PURPOSE
                      RS10088C1
                           
The Proposed legislation authorizes Idaho's rate 
regulated telephone corporations that have elected 
Title 62 Status, to elect to cap their rates for 
basic local exchange service at PUC approved levels. 
Basic local exchange service is residential service 
and business service covering five lines or less. 
Price caps would, under this proposal, serve as an 
alternative to rate of return regulation. The 
proposal establishes the procedure for a telephone 
corporation to exercise the election to utilize 
price caps as an alternative form of rate regulation.
 
The legislation only authorizes an increase in the 
price cap at the direction of the Idaho Public 
Utility Commission to account for the following: 

commission ordered de-averaging of prices, commission 
ordered changes to address implementation of the 
state's universal service fund, or the imposition 
of new regulatory fees or taxes. The proposal permits, 
but does not require, the commission to increase the 
price cap for reasons the commission deems to be just 
and reasonable. 
     
                    FISCAL IMPACT 
     
There is no fiscal impact associated with the 
legislation 

Contact 
Name- Elizabeth Criner
Phone: 385-8692 

STATEMENT OF PURPOSE/FISCAL NOTE           H 670