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H0069.........................................by ELLSWORTH, JAQUET AND WOOD 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; to authorize realignment of prices between residential and small business telephone services; and to provide Public Utility Commission authority to establish a minimum price for basic local exchange service upon complaint by another telephone corporation relating to below variable cost pricing for such services by telephone corporations not subject to Title 61, Idaho Code. 01/28 House intro - 1st rdg - to printing 01/31 Rpt prt - to St Aff
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature First Regular Session - 2005IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 69 BY ELLSWORTH, JAQUET AND WOOD 1 AN ACT 2 RELATING TO THE REGULATION OF TELEPHONE CORPORATION BASIC LOCAL EXCHANGE RATE; 3 AMENDING SECTION 62-622, IDAHO CODE, TO MODIFY THE PROCEDURE FOR ESTAB- 4 LISHING THE MAXIMUM RATE TO BE CHARGED FOR BASIC LOCAL EXCHANGE SERVICE 5 AND FOR NONRECURRING CHARGES FOR SERVICES RELATED THERETO BY INCUMBENT 6 TELEPHONE CORPORATIONS, TO AUTHORIZE REALIGNMENT OF PRICES BETWEEN RESI- 7 DENTIAL AND SMALL BUSINESS SERVICES UPON A FINDING BY THE PUBLIC UTILITIES 8 COMMISSION THAT SUCH REALIGNMENT IS NOT CONTRARY TO THE PUBLIC INTEREST 9 AND IS REVENUE NEUTRAL TO THE TELEPHONE CORPORATION, AND TO PROVIDE THAT 10 ESTABLISHMENT OF MAXIMUM ALLOWABLE BASIC LOCAL EXCHANGE RATES PURSUANT TO 11 THIS ACT SHALL BE IN LIEU OF FURTHER RATE REGULATION EXCEPT AS PROVIDED BY 12 THIS ACT; AND AMENDING CHAPTER 6, TITLE 62, IDAHO CODE, BY THE ADDITION OF 13 A NEW SECTION 62-622A, IDAHO CODE, TO PROVIDE PUBLIC UTILITY COMMISSION 14 AUTHORITY TO ESTABLISH A MINIMUM PRICE FOR BASIC LOCAL EXCHANGE SERVICE 15 UPON COMPLAINT BY ANOTHER TELEPHONE CORPORATION RELATING TO BELOW VARIABLE 16 COST PRICING FOR SUCH SERVICES BY TELEPHONE CORPORATIONS NOT SUBJECT TO 17 TITLE 61, IDAHO CODE. 18 Be It Enacted by the Legislature of the State of Idaho: 19 SECTION 1. That Section 62-622, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 62-622. REGULATION OF BASIC LOCAL EXCHANGE RATES, SERVICES AND PRICE 22 LISTS. (1) The commission shall regulate the prices for basic local exchange 23 services for incumbent telephone corporations in accordance with the following 24 provisions: 25 (a) At the request ofthean incumbent telephone corporation, the commis- 26 sion shall establish maximum just and reasonable rates for basic local 27 exchange service. Maximum basic local exchange rates shall be sufficient 28 to recover the costs incurred to provide the services. Costs shall include 29 authorized depreciation, a reasonable portion of shared and common costs, 30 and a reasonable profit. Authorized depreciation lives shall use forward- 31 looking competitive market lives. Authorized depreciation lives shall be 32 applied prospectively and to undepreciated balances. 33 (b) (i) At the request ofthean incumbent telephone corporation which 34 had not, prior to January 1, 2005, elected to be subject to the pro- 35 visions of chapter 6, title 62, Idaho Code, the commission may find 36 that existing rates for basic local exchange services, and nonrecur- 37 ring charges for services relating thereto, shall constitute the max- 38 imum rates for such services. The commission may, or at the request 39 of the incumbent telephone corporation shall, conduct proceedings 40 pursuant to paragraph (a) of this subsection to establish a maximum 41 basic local exchange rate. The commission shall issue its order 42 establishing maximum basic local exchange rates, and nonrecurring 43 charges for services in connection therewith, no later than one hun- 2 1 dred eighty (180) days after the filing of a request by such incum- 2 bent telephone corporation unless the telephone corporation consents 3 to a longer period. 4 (ii) If an incumbent telephone corporation had, prior to January 1, 5 2005, elected to be subject to the provisions of chapter 6, title 62, 6 Idaho Code, the telephone corporation may file with the commission a 7 notice that it elects to adopt its existing rates for basic local 8 exchange service, and nonrecurring charges for services in connection 9 therewith, as the maximum rate it may thereafter charge for such ser- 10 vices. Such election shall be effective ten (10) days after filing 11 notice thereof with the commission. 12(c) The commission shall issue its order establishing maximum rates no13later than one hundred eighty (180) days after the filing of the request14unless the telephone corporation consents to a longer period.15 (dc) (i) An incumbent telephone corporation whose maximum basic local 16 exchange rates have been established as set forth in paragraph (b)(i) 17 or (b)(ii) of this subsection may charge prices lower than the maxi- 18 mum basic local exchange rates establishedby the commission. Pro-19vided however,as authorized by this section but may not charge 20 prices for such service in excess of the established maximum basic 21 local exchange rate. The prices charged by the telephone corporation 22 for each class of service shall be uniform for all customers sub- 23 scribing to such class of service within the wire center providing 24 service to such customer. 25 Provided however, the telephone corporation may petition the 26 commission for authority to realign the prices of basic local 27 exchange service between residential and small business customers 28 within the wire center serving such customers on a revenue neutral 29 basis. If the commission finds that such price realignment would not 30 be contrary to the public interest and that the realignment plan will 31 be revenue neutral to the telephone corporation, the commission shall 32 approve such petition. Upon approval of the price realignment plan, 33 the maximum basic local exchange rate for each affected class of ser- 34 vice shall be adjusted to reflect the approved plan. The commission 35 may, in addition, at the request of an incumbent telephone corpora- 36 tion, adjust maximum basic local exchange rates in an amount the com- 37 mission determines to be appropriate, to reflect commission-ordered 38 deaveraging of prices of unbundled network elements used in the pro- 39 vision of basic local exchange service. Provided however, such 40 adjustment, to the extent practicable, shall not result in either an 41 increase or a decrease in total revenues derived by the incumbent 42 telephone corporation from the provision of basic local exchange ser- 43 vice. 44 (ii) Uupon the petition of a nonincumbent telephone corporation, the 45 commission shall establish a minimum price forthean incumbent tele- 46 phone corporation's basic local exchange service if the commission 47 finds, by a preponderance of the evidence, that the incumbent tele- 48 phone corporation's prices for basic local exchange services in the 49 local exchange area are below the incumbent telephone corporation's 50 average variable cost of providing such services. 51 (ed)After the commission has established maximum basic local exchange52rates, aAn incumbent telephone corporationmayshall change its tariffs or 53 price listsreflectingto reflect changes in the availability, price, 54 terms and conditions for basic local exchange service, which changes shall 55 not result in a rate for basic local exchange service in excess of the 3 1 maximum basic local exchange rate established in accordance with this sec- 2 tion. Such changes shall be effective not less than ten (10) days after 3 filing with the commission and giving notice to affected customers. Pro- 4 vided however, cChanges to tariffs or price lists that are for nonrecur- 5 ring services and that are quoted directly to the customer when an order 6 for service is placed, or changes that result in price reductions for 7 basic local exchange services or state the price of new service offerings, 8 shall be effective immediately upon filing with the commission and no 9 other notice shall be required. 10 (e) An incumbent telephone corporation that has elected to establish a 11 maximum basic local exchange rate shall not, from and after the establish- 12 ment of such rate, be subject to further price regulation of basic local 13 exchange services provided by the telephone corporation, except as pro- 14 vided in subsections (1)(b) through (1)(d) of this section. 15 (2) The commission shall not regulate the prices for basic local exchange 16 services for telephone corporations that were not providing such local service 17 on or before February 8, 1996. Provided however, such telephone corporation 18 providing basic local exchange services shall file price lists with the com- 19 mission that reflect the availability, price, terms and conditions for such 20 services. Changes to such price lists shall be effective not less than ten 21 (10) days after filing with the commission and giving notice to affected cus- 22 tomers. Changes to price lists that are for nonrecurring services and that 23 are quoted directly to the customer when an order for service is placed, or 24 changes that result in price reductions or new service offerings, shall be 25 effective immediately upon filing with the commission and no other notice 26 shall be required. 27 (3) The commission shall cease regulating basic local exchange rates in a 28 local exchange calling area upon a showing by an incumbent telephone corpora- 29 tion that effective competition exists for basic local exchange service 30 throughout the local exchange calling area. Effective competition exists 31 throughout a local exchange calling area when either: 32 (a) Actual competition from a facilities-based competitor is present for 33 both residential and small business basic local exchange customers; or 34 (b) There are functionally equivalent, competitively priced local ser- 35 vices reasonably available to both residential and small business custom- 36 ers from a telephone corporation unaffiliated with the incumbent telephone 37 corporation. 38 (4) Telephone corporations shall not resell: 39 (a) A telecommunications service that is available at retail only to a 40 category of subscribers to a different category of subscribers; 41 (b) A means-tested service to ineligible customers; or 42 (c) A category of service to circumvent switched or special access 43 charges. 44 (5) The commission shall determine the noneconomic regulatory require- 45 ments for all telephone corporations providing basic local exchange service or 46 designated as an eligible telecommunications carrier pursuant to sections 47 62-610A through 62-610F, Idaho Code, including, but not limited to, such mat- 48 ters as service quality standards, provision of access to carriers providing 49 message telecommunications service, filing of price lists, customer notice and 50 customer relation rules. 51 SECTION 2. That Chapter 6, Title 62, Idaho Code, be, and the same is 52 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 53 ignated as Section 62-622A, Idaho Code, and to read as follows: 4 1 62-622A. COMMISSION AUTHORITY TO ESTABLISH MINIMUM PRICING OF BASIC LOCAL 2 EXCHANGE SERVICE. A telephone corporation may file a petition with the commis- 3 sion alleging that another telephone corporation, not subject to regulation 4 pursuant to title 61, Idaho Code, is offering basic local exchange service to 5 customers in a local exchange calling area at a price below its average vari- 6 able cost of providing such service in the local exchange calling area. The 7 commission shall, if after hearing it finds by a preponderance of the evidence 8 that the allegations contained in the petition are true, establish a minimum 9 price for basic local exchange service of the telephone corporation in the 10 local exchange calling area, which minimum price shall reflect the telephone 11 corporation's average variable cost of providing such service.
STATEMENT OF PURPOSE RS 14711C1 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 NOTE There is no fiscal impact associated with this legislation. Contact Name: Rep. Julie Ellsworth, Rep. Wendy Jaquet, Rep. JoAn Wood Phone: (208) 332-1000 STATEMENT OF PURPOSE/FISCAL NOTE H 69