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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
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
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