BEFORE THE PUBLIC SERVICE COMMISSION OF WYOMING
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IN THE MATTER OF THE FUNDING REQUIREMENT AND PROPOSED ASSESSMENT FACTOR FOR THE JULY 2010 -- JUNE 2011 FISCAL YEAR OF THE WYOMING UNIVERSAL SERVICE FUND |
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Docket No. 90072-32-XO-10 (Record No. 12473) |
ORDER ESTABLISHING THE WYOMING
UNIVERSAL SERVICE FUND ASSESSMENT LEVEL
(Issued May 14, 2010)
This matter is before the Wyoming Public Service Commission (Commission) for the purpose of establishing the Wyoming Universal Service Fund (WUSF or Fund) assessment level for the upcoming Fund fiscal year as required by W.S. § 37-15-501 and Section 500(l) of the Commission’s Rules and other Fund parameters. The Commission, having heard the comments of the WUSF Manager, the Office of Consumer Advocate (OCA), Qwest Corporation (Qwest), Union Telephone Company (Union) and the Range Companies, having reviewed its files concerning the Fund, the documents filed by the WUSF Manager, and applicable Wyoming and federal telecommunications law and rules, FINDS and CONCLUDES:
PROCEDURAL HISTORY
1. This matter was initiated on April 1, 2010, with the filing with the Commission of a Confidential Report of the Wyoming Universal Service Fund Manager (Report). The above-captioned proceeding is required to establish [i] the weighted statewide average essential local exchange service price (the weighted statewide average); [ii] the 130% benchmark; [iii] the WUSF disbursement amounts for qualifying telecommunication companies; and [iv] the corresponding WUSF assessment level to be effective for the twelve-month period beginning July 1, 2010. The assessment level is determined under Section 500(l) of the Commission’s Rules. Because of the highly sensitive competitively valuable company-specific information in the Report, it is kept strictly confidential to protect carriers’ proprietary information.
2. As required under Section 500(k) of the Commission’s Rules, the Fund Manager’s Report details the computation of a recommended assessment level based upon the estimated amount of disbursements to be paid out of the WUSF. The Report also contains detailed summaries and supporting schedules relating to the calculation of the statewide average and the associated support benchmark. Pursuant to W.S. § 37-15-501 and Section 500(p) of the Commission’s Rules, the support benchmark is one hundred thirty percent (130%) of the statewide average.
3. On April 1, 2010, the Commission issued a Notice of Filing and Procedural Notice and Order Setting Hearing (Notice and Order). Copies of the Notice and Order were sent to each telecommunications company doing business in Wyoming with a copy of the non-confidential version of the Report and a spreadsheet containing confidential information pertaining only to the individual recipient telecommunication company’s proposed calculation and WUSF support (if it qualified). A Public Notice of the hearing was published once per week for two consecutive weeks in the Casper Star Tribune. A public service announcement with regard to the hearing was broadcast on radio five times per week in a one week period on KTWO in Casper. The Public Notice and public service announcement stated the proposed weighted statewide average of $24.68, the proposed 130% benchmark of $32.09, and the proposed an assessment level of 1.20%. In the Notice and Order, the Commission set the following procedural schedule:
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April 30, 2010, at 4:00 p.m. |
Deadline for comments |
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May 5, 2010, at 9:00 a.m. |
Hearing commences in Cheyenne |
4. On April 8, 2010, the OCA filed a Notice of Intervention and a formal request for a copy of the Report and the underlying confidential source data. After discussion at the open meeting on April 15, 2010, the Commission denied OCA’s Notice of Intervention insofar as the WUSF is a legislative rather than a contested case proceeding; and there are no parties in legislative proceedings. The Commission further determined by a quorum of the Commissioners that OCA would receive a copy of the final form of the 2010-2011 Confidential Manager’s Report and would have access to the confidential source data and work papers related to the WUSF Manager’s Report. Commissioner Lewis dissented from granting OCA access to the requested confidential information because she believes the OCA lacks a statutory right to the information under W.S. § 37-2-402(a)(i). She also expressed concern about the manner in which the OCA used this information in prior years’ proceedings. A Letter Order denying OCA’s Notice of Intervention and outlining the basic terms and conditions for OCA’s use of the confidential source data issued on April 16, 2010. The conditions to be observed by all employees of the OCA with respect to confidential materials in this and future proceedings related to the determination of WUSF parameters are as follows:
1. After receiving any confidential material in any form, OCA will acknowledge receipt of such confidential material by letter, including a description of each document received;
2. OCA will take appropriate measures to prevent unauthorized disclosure of confidential material;
3. OCA will be free to use any electronic documents that are provided as they deem necessary and may create working copies for use in the instant docket;
4. One week following the issuance of the Commission’s Order on May 21, 2010, OCA will destroy or return all copies of confidential materials, regardless of format, to the Commission;
5. OCA will provide Commission Staff an opportunity to confirm to its satisfaction that all electronic copies are deleted or destroyed;
6. The confidential source data provided to OCA in this docket and any other work papers created by OCA shall not be used or referenced in any docket except the instant one;
7. OCA will provide a final letter to the Commission certifying what confidential documents were returned or destroyed and an inventory of any original working documents created and retained by OCA; and
8. Should OCA require further access to the 2010-2011 Confidential Fund Manager’s Report or the confidential source data for any purpose, OCA shall file a request with the Commission for review of the confidential information.
5. On April 21, 2010, the OCA filed an informational letter acknowledging receipt of the Report, with all confidential attachments thereto, and a list of the confidential source data.
6. On April 30, 2010, OCA filed its Comments of the Wyoming OCA (OCA Comments) raising issues with the Commission’s treatment of certain bundled prices and alerting the Commission to the additional federal Universal Services Funds (FUSF) Qwest is to receive beginning in the third quarter of 2010. The OCA specifically mentioned the prices of MCImetro Access Transmission Services, LLC (MCI) and McLeodUSA Telecommunications Service when discussing the use of prices associated with bundled services.
7. On April 30, 2010, Qwest filed its Comments to the Fund Manager’s Recommended [WUSF] Distribution for the 2010-2011 Fiscal Year (Qwest Comments), a Petition for Leave to Intervene and Request for Hearing (Qwest Intervention Petition) and a Petition for Confidential Treatment. The Qwest Comments stated,
The Manager has erred in calculating Qwest’s 2009-2010 (sic) Fiscal Year WUSF distribution in that he has omitted the incremental change in Qwest’s FUSF receipts in determining Qwest’s WUSF distribution. The Commission should not accept the Manager’s recommendation and should instead direct the Manger to increase Qwest’s WUSF distribution to reflect the incremental change in Qwest’s FUSF receipts.
(Qwest Comments, p. 6.)
8. On May 4, 2010, well after the April 30, 2010. deadline established by the Commission and only hours before the hearing, Union filed its Comments for [Union] and Request to Take Comments Beyond Deadline (Union Comments), which requested the Commission “calculate a forward distribution to [Union]” using the prices effective January 1, 2010. (Union Comments, p. 2.)
9. On May 4, 2010, Qwest filed its Petition for Determination Relative to its Practice of Applying Bill Credits Such That Customers Pay Less Than One Hundred Thirty Percent (130%) of the Weighted Statewide Average for Certain Enumerated Services (Qwest Petition for Determination) and an accompanying Petition for Confidential Treatment.
10. On May 5, 2010, the Commission held its duly-noticed legislative hearing on this matter. At the commencement of the hearing, the Commission denied the Qwest Intervention Petition for the same reasons OCA’s Notice of Intervention was denied, i.e., the WUSF is a legislative proceeding, not a contested case, and there are no parties in legislative proceedings. The Commission granted Qwest’s Petition for Confidential Treatment filed with the Qwest Comments.
11. The Commission first received a presentation from Ms. Denise Parrish, OCA Deputy Administrator, on the OCA Comments. She noted that the OCA’s issue remained how bundled rates are treated. She specifically stated she was unclear as to how the prices used in the Manager’s weighted statewide average calculation for MCI and AT&T Communications of the Mountain States, Inc. (AT&T) were developed. She questioned when a surrogate price would be used with respect to these companies. She stated she mentioned the increased amount of FUSF Qwest would receive beginning this year in the OCA Comments to alert the Commission.
12. Mr. Phil Grate, Qwest Staff Director of Regulatory and Cost Accounting, presented the Qwest Comments. He handed out Exhibit 2 to the Qwest Comments entitled, “Need to synchronize WUSF Support with incremental FUSF receipts,” to illustrate his contentions as to why the Fund Manager’s calculation of Qwest’s WUSF distribution was incorrect. Within Exhibit 2, there are two tables: one illustrating what Qwest termed an “Unsynchronized WUSF Support Calculation” and the other illustrating its preferred “Synchronized WUSF Support Calculation.” He argued that, if FUSF is unsynchronized, a company could receive too much WUSF support when FUSF support increases and too little WUSF support when FUSF support decreases. He contended that a synchronized WUSF support calculation incorporates the anticipated amount of incremental FUSF receipts which will flow through to customers. Mr. Grate was asked about the $8.6 million dollar FUSF reserve fund retained by Qwest; and he stated that it had a balance as of March 31, 2010, of $7.1 million. In his estimation, the FUSF reserve fund is a necessary result of the targeting process and rules, stating that there is an 18 month lag between the time the funds are received and when they credited to Wyoming customers. Asked what authority he relied upon for his synchronization theory of the FUSF, he offered the following:
· Paragraphs 20 and 21 of the Stipulation and Agreement in Docket No. 70000-TR-99-480. The Order issued on June 14, 1999;
· Page 3 of the Petition of the Wyoming Public Service Commission for Waiver of the Federal Communications Commission’s Targeting Rules as found in § 54.309 and § 54.311. The Petition issued on March 30, 2000;
· Paragraph 4 of the Notice and Order issued on May 29, 2001, in Docket No. 70000-TT-01-688;
· Order issued on October 15, 2002, in Docket No. 90072-XI-02-21; and
· Paragraph 28 of the Order issued on February 5, 2004, in Docket Nos. 90072-XO-03-22 and 90072-XI-03-23.
13. Mr. Bruce Asay presented the Union Comments stating that Union would like the Commission to use the prices effective January 1, 2010, so that Union would not have to file a mid-term adjustment.
14. Ms. Liz Zerga made oral comments on behalf of the Range Companies, stating they are interested in having the benchmark and the calculation methodology remain stable. In response to the Qwest Comments and Mr. Grate’s presentation, she stated that there were years when the regulatory lag benefited Qwest, but that is not the case now and the process evens out over time.
15. Mr. Art Schmidt, Fund Manager, summarized his Report. In response to OCA’s issues regarding when a surrogate price would be used, he stated that Bresnan did not have stand alone, unenhanced local service available in 2009, and therefore a surrogate price was used for Bresnan. He explained that United Telephone of the West d/b/a Embarq (Embarq) notified the Fund about an error in the calculation on Embarq’s spreadsheet which was corrected. The error resulted in a weighted statewide average of $24.69, an increase of 1¢ with the 130% benchmark remaining at $32.09. He recommended a weighted statewide average of $24.69 and an associated 130% support benchmark of $32.09 for the fiscal year beginning July 1, 2010. He further recommended the assessment level increase to 1.20% to meet the parameters suggested by the Fund’s Auditor to have a three to four month reserve in the Fund.
16. On May 7, 2010, the Commission heard further comments from the Fund Manager. The Commission denied the Qwest Petition for Determination, but granted the accompanying Petition for Confidential Treatment. Responding to the OCA’s questions about certain bundled rates, the Fund Manager verified that the price used for MCI in the calculation was the tariff price on December 31, 2009, and the price used for AT&T was provided in AT&T’s WUSF Annual Report filed with the Fund on February 15, 2010, i.e., the rate effective for the 2009 reporting period.
17. Pursuant to W.S. § 16-4-403, the Commission held public deliberations with regard to this matter on May 7, 2010, rendered a decision and directed preparation of an order consistent with the deliberations.
18. On May 12, 2010, the OCA filed a letter certifying the return of the confidential source documents and returned the source documents to the Commission.
LEGAL AUTHORITY
19. The WUSF was created by the Wyoming Telecommunications Act of 1995. W.S. §§ 37-15-501 and 37-15-502 govern the WUSF and state,
W.S. § 37-15-501. Universal service fund created; contributions; administration.
(a) There is hereby established the universal service fund to be administered in accordance with this section. The fund shall be administered by the commission. All telecommunications companies shall contribute to the universal service fund. The dates for contributions to the fund and disbursements from the fund shall be set by the commission, after notice and opportunity for hearing, as necessary to accomplish the objectives of the fund as specified in subsections (c) and (d) of this section. The costs of administering the fund may be included in determining required contributions.
(b) The commission shall after notice and opportunity for hearing, designate the method by which the contributions shall be calculated, collected and distributed. The commission shall authorize an additional monthly charge to customers, in the amount specified by the commission, to recover each contributor's required payment to the universal service fund. Any charge related to mobile telecommunications service shall only apply if the customer's place of primary use is in this state as provided by the Mobile Telecommunications Sourcing Act, 4 U.S.C. §§ 116 to 126. The provisions of the Mobile Telecommunications Sourcing Act shall apply to this subsection.
(c) The commission shall administer the monies in the universal service fund to assist only those customers of telecommunications companies located in areas of this state with relatively high rates for essential services. The commission, after notice and opportunity for hearing, shall determine a reasonable amount and a fair method of distributing monies. The commission may authorize a credit to customer bills, in the amount specified by the commission, to reflect distributions received by the local exchange company from the universal service fund. The commission shall ensure that the method shall promote the emergence of competition in providing local exchange service.
(d) In accordance with the method of distribution determined by the commission, a telecommunications company shall receive funds under this section to the extent that its essential local exchange service prices, after consideration of any contributions from the federal universal service fund, exceed one hundred thirty percent (130%) of the weighted statewide average essential local exchange service prices.
(e) The operation of the universal service fund may be suspended by the commission, based upon a public interest finding, after notice and an opportunity for a hearing, that the fund is not then serving its intended purpose.
(f) The commission's decisions under this section shall be subject to the provisions of the Wyoming Administrative Procedure Act.
W.S. § 37-15-502. Universal service fund eligibility and distribution to carriers.
(a) Telecommunications companies which use cellular, radio spectrum or other wireless technology to provide supported services to customers who are otherwise eligible to receive universal service support pursuant to W.S. 37-15-501, may establish eligibility to receive universal service fund distributions in an amount to be determined by the commission, provided that:
(i) The telecommunications company will offer and advertise all universal service fund supported services throughout the entire local exchange area;
(ii) The telecommunications company will provide unlimited local calling throughout an entire local exchange area for a flat fee;
(iii) The telecommunications company's bill to the customer reflects a credit for the amount of distribution the company receives from the state universal service fund for providing universal service fund supported services to that customer; and
(iv) The company and services meet such additional criteria, if any, the commission, after notice and opportunity for hearing, determines are necessary. During its consideration and determination, the commission shall consider technological and competitive neutrality.
20. Rule 500 addresses the operation of the WUSF. Portions of Rule 500 are used for the determination of the weighted statewide average, 130% benchmark and WUSF distributions. They are set out below:
Rule 500(c) states:
(c) No later than February 15th of each year, all telecommunications companies shall provide the information required by the Commission and/or the Universal Service Fund manager to perform the computations necessary for collection and distribution of the Universal Service Fund. (Emphasis added.)
Rule 500(g) states, in pertinent part:
(g) The manager shall annually compute both the statewide weighted average essential local exchange service price and each telecommunications provider’s essential local exchange service price in a consistent manner based on end of calendar year line counts and prices authorized by W.S. § 37-15-203 and W.S. § 37-15-204, taking into account the classification options available to telecommunications companies under paragraph (h) of this rule. (Emphasis added.)
The relevant portion of Rule 500(h) states:
(h) The fund manager shall apply the provisions of subsections (g) and (p) in determining required Universal Service Fund distributions under W.S. § 37-15-501(d).
Rule Subsections 500(i) through the first part of (m) state,
(i) Mid period revisions to a telecommunications company’s essential local exchange service price or to a supported wireless service, for purposes of drawing from the fund, shall only be permitted upon application and approval by the Commission.
(j) Each company’s incremental Federal Universal Service Fund receipts resulting from changes in the company’s high cost loop fund support shall also be credited, monthly, to the bills of customers on a per line basis. The amount of the credit for each of the customers shall be computed and authorized by the Commission, in a manner consistent with federal receipt of such funds. The total amount of this credit shall equal the difference between the amount of Federal Universal Service Funds received in the most recent calendar year and the amount of Federal Universal Service Funds most recently used in the computation of rates.
(k) No later than April 1st of each year, the Universal Service Fund manager shall file with the Commission and with each affected telecommunications company, a report that details the computation of the recommended assessment rate that shall be applied to gross retail revenues. This recommended assessment rate shall be based on the computed amounts needed for payment to telecommunications companies, the prior year gross retail revenues, and any over or under collection in the fund from the previous year. Wyoming Universal Service Fund assessment charges shall appear as a separate line item on each customer’s bill unless a specific waiver is requested and granted by the Commission.
(l) No later than May 15th of each year, the Commission shall by order set the Universal Service Fund assessment rate for the twelve-month period beginning July 1st of each year.
(m) All telecommunications companies realizing intrastate revenue from operations in Wyoming are required to report such gross revenues to the fund manager and pay into the fund the assessment amount calculated by multiplying the company’s gross revenue, less any wholesale transactions described in paragraph (n) by the assessment rate. Reports of revenue and payments of assessment are required no less often than quarterly. The due date of such reports and payments shall be determined for an individual telecommunications company as follows:
(i) If the assessment for the first or second month of the calendar quarter (plus any unpaid assessment amount of $100 or less from any prior month of the calendar quarter) exceeds $100, then the report of revenue and payment of assessment for such period is due on or before the last day of the month after the month in which the unpaid assessment exceeded $100. If the assessment is $100 or less, a report and payment is not required, and the unpaid assessment shall carry over to the next month. The report of revenue and payment of assessment whatever the amount, is required on or before the last day of the first month after the end of any calendar quarter in which a telecommunications company realizes any intrastate revenue from its operations in Wyoming.
(ii) Assessments not timely paid shall be subject to a late payment charge equal to one and one-half percent (1.5%) on the unpaid amount for each month, or part thereof, that the assessment remains unpaid.
Rule Subsections 500(o) through (p) state:
(o) Affected telecommunications providers subject to paragraph (k) of this rule include but are not limited to: local exchange companies; competitive access providers; interexchange companies; cable companies providing telephony; cellular providers; wireless providers; commercial radio common carriers; personal communications service providers; paging service providers; and pay telephone providers. All telecommunications companies as defined by W.S. § 37-15-103(a)(xi) and companies which provide telecommunications services as defined by W.S. § 37-15-103(a)(xii) shall report and pay into the fund as provided for in paragraph (m).
(p) Distributions from the fund shall be made monthly. Pursuant to W. S. § 37-15-501(d) and W.S. § 37-15-502, and consistent with the Commission’s administration of the fund as specified in these rules, telecommunications companies shall receive funds to the extent that their essential local exchange service prices or supported wireless service price(s), after consideration of any contributions from the Federal Universal Service Fund, exceed one hundred thirty percent (130%) of the weighted statewide average essential local exchange service prices.
(i) Distributions to telecommunications companies shall equal: the sum of the products resulting from the difference, expressed in dollars, by which each essential local exchange service price or supported wireless service price exceeds one hundred thirty percent (130%) of the statewide weighted average essential local exchange service price multiplied by the total number of lines or subscribers to which that price applies.
(ii) Telecommunications companies receiving
Wyoming Universal Service Funds support shall display the amount of such
support as a separate line item credit on each affected customer’s bill unless
a specific waiver is requested and granted by the Commission.
21. Docket No. 90072-XI-02-21 (Sub 21) was an investigation into the compliance of Wyoming telecommunications carriers with Rule 500(j) which describes how FUSF is considered in the calculation of WUSF support, and which had been amended prior to the investigation. The Order in Sub 21, issued on October 15, 2002, states at paragraph 21, “The Commission concurs with Qwest’s assertion that the amended rule provisions should be uniformly applied to all companies in a nondiscriminatory manner.”
22. In Docket No. 90072-XO-03-22 (Sub 22), the Commission established the funding requirement and proposed assessment factor for the 2003-2004 WUSF fiscal year. Docket No. 90072-XI-03-23 (Sub 23) was an investigation on the Commission’s own motion into the calculation of the weighted statewide average and 130% benchmark. After the investigation was opened, the Commission consolidated the dockets and they proceeded in a contested case format. The Commission’s February 24, 2004, Order in Subs 22 and 23 states at paragraphs 28 and 29:
28. Based upon the evidence of record, in this proceeding, the Commission concludes that the current WUSF manager should be directed to recalculate the weighted statewide average local exchange rate for the 2003-2004 fiscal year in the following manner:
a. The revised calculation shall use local exchange service rates which are net of incremental FUSF receipts. (Emphasis added.)
b. The revised calculation shall include multi-party and PAL lines since they constitute, in the Commission’s opinion, “essential services” as defined by W.S. § 37-15-103(a)(iv). (Emphasis added.)
29. Based upon the evidence of record, in this proceeding, the Commission concludes that revised WUSF support, including support for multi-party and PAL lines, which is based upon the revised weighted state-wide average local exchange service rate support bench-mark should be made effective January 1, 2004.
In the Subs 22 and 23 Order, the Commission directed the Fund Manager to determine the weighted statewide average using net local exchange service rates. It established that WUSF support payments would be based on the weighted statewide average using net rates. The Fund Manager further determined the required WUSF support payments using the net rates. Telecommunications companies were directed to provide their net rates in the WUSF Annual Report due on February 15th each year. Net rates are among the first inputs into each company-specific spreadsheet.
COMMISSION DISCUSSION OF COMMENTS
23. To begin deliberations, Deputy Chairman Oxley moved, for purposes of discussion, to accept the Fund Manager’s Report with the weighted statewide average, 130% benchmark and 1.20% assessment.
24. Chairman Minier discussed the concerns of Union, observing that the rule requires the use of prices in effect as of December 31, 2009; and that is what the Fund Manager used. He would reject the modification proposed by Union. Regarding OCA’s comments, the two main points of contention were directly addressed by the Fund Manager’s explanation of the derivation of the prices of MCI and AT&T used in the Fund Manager’s Report.
25. Regarding the points raised by Mr. Grate, Deputy Chairman Oxley did not find the presentation compelling as to why the Fund Manager should not use end of year prices and FUSF credits. Chairman Minier stated Ms. Zerga encapsulated Mr. Grate’s example when she stated if the Fund is allowed to run, it will zero itself out. He stated Mr. Grate’s discussion overlooked that point. He noted that Mr. Grate, among Qwest representatives who have discussed its existence or non-existence, was more forthcoming than others regarding the FUSF reserve fund in that the funds are placed in a Qwest general cash account and do earn interest; but that interest is not credited to universal service and is not returned to customers. In the Chairman’s opinion, that is not accomplishing the public purpose of the FUSF. He stated that he had reviewed the orders Mr. Grate relied upon for his discussion of synchronized calculation. Chairman Minier stated the orders did not support the Commission’s use of Qwest’s special “synchronized” method of calculating its WUSF or that this was a ratemaking exercise. Chairman Minier stated this was not a ratemaking. The WUSF is to be administered in the public interest consistent with stringent timelines set out by law. The Commission has to use the information it has available. Chairman Minier was not persuaded by Qwest’s presentation. He is satisfied with the Fund Manager’s Report and calculations presented this year.
26. Deputy Chairman Oxley agreed with the Chairman’s observations. He asked Mr. Grate about the envisioned end of the WUSF and whether it would leave Qwest with a remaining undistributed FUSF balance. The Deputy Chairman believed a way in which the undistributed FUSF balance could be eliminated or disgorged to the credit of customers should be discussed at that time. Mr. Grate’s repeated use of the terms “ratemaking” and “test year” was based on his general body of experience in regulatory accounting, which was in rate base/rate of return regulation not applicable in Wyoming. It further appeared this inapt use of terms was laid before the Commission as an invitation to consider the administration of the WUSF as a contested case proceeding under the Wyoming Administrative Procedure Act. The Commissioners all found these observations to be thoroughly inaccurate and inappropriate.
27. Commissioner Lewis stated that between 1995 and 2007 when there were amendments to the Wyoming Telecommunications Act, Qwest was the strongest advocate for deregulation regarding ratemaking. On July 1, 2007, the Commission’s role in ratemaking for telecommunications companies was substantially diminished. She stated that the FUSF reserve fund, which accumulated interest which has not been applied to the benefit of customers, goes against the purpose of the FUSF and the WUSF. The purpose of the WUSF is to provide affordable essential telecommunications services for Wyoming customers, not to provide a revenue stream for telecommunications companies.
28. Deputy Chairman Oxley noted that Qwest did not know (and had not inquired) as to the position the Universal Service Administrative Company (USAC) would take on the company keeping the interest on FUSF payments. He thought it would be important to inquire as to what USAC thinks about the practice of Qwest keeping the interest on the FUSF monies.
29. The Commission was not persuaded by Mr. Grate’s argument that interest could not be credited to the undistributed FUSFs because the funds, when placed in a Qwest general cash account, constituted only an “accounting entry.” It was also unanimous in finding the “synchronizing” argument of Qwest unpersuasive.
30. The Commission determined it would accept the Confidential Report of the Wyoming Universal Service Fund Manager with the correction to the Embarq calculation.
LEGAL CONSIDERATIONS
31. The application of the incremental FUSF is at issue again in this docket. Returning to Subs 22 and 23, Qwest’s witness offered testimony regarding consistent treatment among telecommunications companies and “recommended that the WUSF calculations for the 2003-2004 fiscal year be re-run taking incremental FUSF receipts into account, for all companies, on the same basis. (Tr., p. 127.)” (Subs 22 and 23 Order, paragraphs 19 and 20, quotation at paragraph 20.)
32. In Subs 22 and 23, the OCA offered testimony “that WUSF calculations must be performed using net rates in order to be consistent with applicable statutory provisions and rules. (Tr., p 140)” (Subs 22 and 23 Order, paragraph 21.) In the OCA’s pre-filed direct testimony in those cases, Ms. Parrish gave four examples of how to calculate the statewide average and advocated that the Commission follow Example Four, stating:
In this example, the statewide average rate is based on the net rate per line, rather than the gross rate per line. * * * In this case, it is assumed that companies are required to return any incremental FUSF funds to customers in the form of a bill credit, and those incremental amounts are used in the computing the statewide average and WUSF distributions. * * * The only situation in which customers pay 130% of the statewide weighted average rate or less is in Example Four. This is the only example where the incremental federal universal service funds are: used for computing the statewide weighted average, used in making WUSF distributions, and are retuned directly to customers. This is the method that the Commission should be using. (Prefiled Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page 11.)
Later in her prefiled testimony, Ms. Parrish stated:
However, this practice of basing the gross rates on the year end authorized levels appears to be inconsistent with the timing of some of the estimates made by the manager regarding the net rates and the level of the FUSF the net rates and the level of FUSF credit. Specifically the April 7th confidential Appendix II shows that Qwest’s gross rate (used for the computation of the statewide average rate) contains both the approved TSLRIC-based rate as of December 2002, as well as the FUSF credit as of the end of 2002. This timing is consistent with that of the line counts and rates for the other companies. However, the inconsistency seems to appear when there is then included in the net rate an additional FUSF credit for Qwest, reflecting the FUSF credit totals that did not take effect until mid-2003. * * * In other words, for Qwest, there is too much FUSF credit included in the net rate which then forms the basis for its Wyoming universal fund receipts. * * * The WUSF computation only works if the data is consistent within each year among companies, and is consistent from year-to-year for individual companies. By using only the credits in the Qwest tariff as of December 31st each and every year, the Commission can assure customers that each year’s incremental FUSF amount has been incorporated in rates and will be passed on to customers – whether it is an increase or a decrease. (Prefiled Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page 18.)
Ms. Parrish stated further:
By using the net rate, each company includes its full amount of FUSF receipts and bill credits in the computation. Thus, the use of the net rate is more competitively neutral, that is the use of the gross rate. (Prefiled Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page 19.)
She then recommended that “[t]he Commission should direct that the 2003-2004 support levels be recomputed using only the Qwest FUSF bill credits in place as of December 31, 2002.” (Prefiled Direct Testimony of Denise Kay Parrish in Subs 22 and 23, page 19.) Thereafter, in the OCA’s Post-Hearing Brief in Subs 22 and 23, the OCA states:
The method proposed by the OCA, and illustrated in Ms. Parrish’s “Example Four” includes incremental FUSF in the computation of the Statewide Average, the use of net rates in the calculation of WUSF distributions, and the explicit direct crediting to customers of FUSF support to the extent it effects the amounts of their bills. (OCA Ex. 1, pp. 4, 11-12.)
(OCA Post-Hearing Brief in Subs 22 and 23, p. 5.)
The OCA defines “Incremental FUSF Support” in footnote 1 as “that which is not included in tariffed rates.” (OCA Post-Hearing Brief in Subs 22 and 23, p. 5.)
33. Union would like the Fund Manager to calculate the weighted statewide average, 130% benchmark and Union’s WUSF support amount using its rates effective January 1, 2010. Commission Rule 500(g) requires the use of end of year prices in the weighted statewide average. Union’s request must be denied as unmeritorious (and untimely).
34. The Fund Manager computes the weighted statewide average and the amount of WUSF support using prices and FUSF credits listed on the tariffs on file at the end of the year, or December 31, 2009, as directed by Rule 500(g). Only Qwest and Embarq have tariffed FUSF credits.
COMMISSION DETERMINATIONS
35. The Commission accepts the Confidential Report of the Wyoming Universal Service Fund Manager with the noted correction to the error on Embarq’s spreadsheet, and will allow the Wyoming Universal Service Fund assessment level for the twelve-month period beginning July 1, 2010, to increase to one point two percent (1.20%). This takes into account, inter alia:
36. For the twelve-month period beginning July 1, 2010, the weighted statewide average local exchange service rate is established at $24.69. The associated 130% support benchmark is established at $32.09. Therefore, no Wyoming customer should pay more than $32.09 per month (excluding taxes, fees, surcharges, custom calling features and other optional services) for basic local exchange telephone service.
37. As required by Section 500(o) of the Commission’s Rules, beginning July 1, 2010, telecommunications providers shall report and pay into the Fund the 1.20% assessment in conjunction with the monthly and quarterly reporting requirements of Section 500(m) of the Commission’s Rules.
IT IS THEREFORE ORDERED:
1. Pursuant to the hearing held on May 5 and 7, 2010, and deliberations on May 7, 2010, the Commission accepts the Confidential Report of the Wyoming Universal Service Fund Manager, with the correction made to Embarq’s spreadsheet, and sets the Wyoming Universal Service Fund assessment level, effective for the twelve-month period beginning July 1, 2010, at 1.20 percent (1.20%) of gross intrastate retail telecommunications revenues. The assessment level will be applicable to all telecommunications customer billings rendered on and after July 1, 2010.
2. The Commission establishes the weighted statewide average local exchange service rate for the twelve-month period beginning July 1, 2010, at $24.69. The associated support benchmark for the twelve-month period beginning July 1, 2010, is established at $32.09. Therefore, no Wyoming customer should pay more than $32.09 per month, excluding taxes, fees, surcharges, custom calling features and other optional services, for basic local exchange telephone service.
3. The Commission has provided to the twelve telecommunications companies eligible to receive Wyoming Universal Service Fund support a confidential spreadsheet denoting the amount of WUSF support the company is eligible to receive. The aggregate amount of WUSF support proposed to be distributed monthly is $273,361.
4. The Commission’s Staff is directed to investigate and report to the Commission on any USAC policy regarding interest on FUSF disbursements.
5. This Order is effective immediately.
MADE and ENTERED at Cheyenne, Wyoming, this 14th day of May, 2010.
Public Service Commission of Wyoming
ALAN B. MINIER, Chairman
STEVE OXLEY, Deputy Chairman
(SEAL) KATHLEEN A. LEWIS, Commissioner
Attest:
J. BLAIR BALES, Assistant Secretary