View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
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 - 2005
IN 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 of the an 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 of the an 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 no
13 later than one hundred eighty (180) days after the filing of the request
14 unless 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 established by the commission. Pro-
19 vided 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 for the an 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 exchange
52 rates, aAn incumbent telephone corporation may shall change its tariffs or
53 price lists reflecting to 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