COMMISSION WASHINGTON UTILITIES AND ) TRANSPORTATION COMMISSION, ) Docket No. UT-970766 Complainant, ) Volume 10 ) Pages 461 - 532 vs. ) U S WEST COMMUNICATIONS, INC., ) Respondent. ) -------------------------------) A hearing in the above matter was held on December 10, 1997 at 2:30 p.m. at 1300 South Evergreen Park Drive Southwest, Olympia, Washington, before Chairwoman ANNE LEVINSON, Commissioners RICHARD HEMSTAD, WILLIAM R. GILLIS and Administrative Law Judge C. ROBERT WALLIS. The parties were present as follows: U S WEST COMMUNICATIONS, INC. by LISA ANDERL and DOUGLAS OWENS, Attorneys at Law, 1600 7th Avenue, Room 3206, Seattle, Washington 98191. FOR THE PUBLIC, ROBERT F. MANIFOLD Assistant Attorney General, 900 Fourth Avenue, Suite 2000, Seattle, Washington 98164. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION STAFF, by GREGORY TRAUTMAN, Assistant Attorney General, 1400 South Evergreen Park Drive Southwest, Olympia, Washington 98054. AT&T, by RANDY GAINER, Attorney at Law, 2600 Century Square, 1501 Fourth Avenue, Seattle, Washington 98101. Cheryl Macdonald, CSR Court Reporter APPEARANCES (Cont'd.) MCI, by ROGELIO PENA, Senior Attorney, 707 17th Street, Suite 3600, Denver, Colorado 80202 and CLYDE MACIVER, Attorney at Law, 4400 Two Union Square, 601 Union Street, Seattle, Washington 98101. TRACER, by ARTHUR BUTLER, Attorney at Law, 5450 Two Union Square, 601 Union Street, Seattle, Washington 98101. I N D E X WITNESS: DIRECT CROSS REDIRECT RECROSS EXAM CULP 485 487 EXHIBITS: MARKED ADMITTED 1T through 26 485 (1T through 10) 487 (11 through 19) 488 (21 through 26) 488 P R O C E E D I N G S JUDGE WALLIS: Let's be on the record, please. This is a hearing before the Washington Utilities and Transportation Commission in the matter of docket No. UT-970766, Washington Utilities and Transportation Commission versus U S WEST Communications, Inc. This hearing is being held in Olympia, Washington on December 10, 1997 before the commissioners Anne Levinson, chair, Richard Hemstad and William Gillis, commissioners, and my name is Bob Wallis, and I am the presiding administrative law judge. Today's hearing is the opening evidentiary session in the rate case that is brought on by a request by U S WEST Communications Inc. for an increase in its rates and charges for service within the state. I would like to begin with appearances today and start off with the company, please. MS. ANDERL: Thank you, Your Honor. Lisa Anderl and Douglas Owens representing U S WEST Communications Inc. MR. TRAUTMAN: Greg Trautman, assistant attorney general representing Commission staff. MR. MANIFOLD: Robert Manifold, assistant attorney general appearing as public counsel. MR. ROSEMAN: Ronald Roseman representing the American Association of Retired Persons. MR. BUTLER: Arthur A. Butler appearing on behalf of TRACER. MR. PENA: Rogelio Pena representing MCI and with me, Clyde MacIver. JUDGE WALLIS: Thank you very much. Are there any other appearances to be made? Let the record show that there was no response. We would like to begin with a procedural matter Mr. Manifold, public counsel, has indicated that he has to bring before the Commission at this time. Mr. Manifold. MR. MANIFOLD: Thank you, Your Honor. I had alerted the Bench to this previously in response to the letter yesterday asking to us let us know of anything that might come up this afternoon that we didn't already know. I feel it's incumbent upon me to make a motion for a continuance. I recognize that this will not either be popular or may well not be granted, but I think it would be unwise of me to pretend that I am in a position to do an adequate job representing the public in the situation that we have before us here today. As the Bench and the Commission knows, this case has been carried out in an extremely expedited manner compared to normal. It has involved I think more issues and more paper than was probably anticipated at the beginning of the case. I'm bringing this motion at this time particularly because as the schedule called for the company filed its rebuttal testimony on the Wednesday before Thanksgiving, November, I think, 26, and I should say that they were particularly good about getting copies to us and our consultants in our various locales at that time. I should also add, as you undoubtedly know, that there were four new witnesses in the rebuttal case. Their direct case was consisted of about 17 pages of testimony, and they came back with a who will lot of pages on rebuttal. On the very next business day, when we could, we filed or served on the company data requests, approximately 90 data requests on Monday, December 12, and an additional approximately 30 on Tuesday, December 2. Under the rules in this case the responses thereto were due no later than five days later. On day 4 we had not received any responses yet. On day 5 shortly before 5:00 or someplace in that vicinity we received responses to some data requests. We received responses to more the next morning and we may have received some more that afternoon. Quite frankly, in the preparation to put all the paper here I can't swear to that one way or another. I can tell you that we received just now today this stack of additional responses to data requests (indicating). We do not serve data requests lightly. They are necessary as a part of any preparation for a case in order to discover what lies behind the testimony that a witness propounds. As the Bench knows, we previously made a motion to allow us to file surrebuttal, which was denied. We have not, obviously have not, had an opportunity to peruse these data requests some of which include objections and obviously no chance to consult on the objections or to bring those to the Commission's attention as is necessary, and it simply is not possible to do the job that I think ought to be done when $34 million a year for the foreseeable future is at stake. And I say the number $34 million because of the $70 million request we've agreed to 37 of it. As an example, and I don't mean to prolong this, I would like to walk through one of the sets of data requests we made and what frequently is the case is that one cannot simply ask a question and get the answers that one is ultimately hoping for. Sometimes one needs to ask a question, look at the response and then either say, gee, you didn't really answer the question or, okay, well that response then brings up this question. So there's an iterative process to it. We provided -- based upon Ms. Jensen's direct testimony regarding allegations of improved service quality and adding new employees we sent a data request No. 132. The company responded to that one. We followed up with data request 185 asking for the -- how did the company modify its network or customer operations policies and procedures to achieve the improved service quality that it's talking about, and the reason we asked is that in the revenue requirements portion of the case part of what our analysis does is to look at what's unusual compared to the past. Well, if it's unusual is there a reason for it or is it incorrect or should it be adjusted or normalized or does it make perfect sense because something different happened. Excuse me. We asked did the company modify its network and customer operations policies. The response provided was no, they did not modify them. That response I believe we had by the time we filed our direct testimony. The company supplemented its response on December 2nd, a week ago yesterday, saying, see response to our request No. 375, and in 375 the company refers to some changes in plant facilities and contracted resources as identified in the rebuttal testimony of Mr. Bowling. Well, reading the rebuttal testimony of Mr. Bowling doesn't help us prepare our direct testimony which was filed weeks before that at all. In addition, it seems to change their earlier answer of no, we didn't, to we did something. There was another supplemental response last Friday, December 5th, saying, please see the response to public counsel 377 and that response, among other things, says that the documentation is confidential and extremely voluminous and will be made available for review by contacting the company's attorney. This is the same question that was initially responded to as did you do this and the answer was no and as it works through time the answer is, well, it's so voluminous we can't send it to you. That's difficult to prepare when you don't have the information or you even have different information than subsequently appears to be the case. We have not contacted the company's attorney to review the voluminous information. We received this last Friday and there was obviously no time to do that between then and today's hearing. And that is part of the reason of our request for surrebuttal is to be able to look at such things and respond to them. I would expect that a reasonable question you would ask me is, well, if you want a continuance how long do you want. And that's a little hard to answer. What we probably need is the opportunity to finish this round of data requests and perhaps Ms. Anderl can tell me, but I don't know if what I've gotten now completes the company's responses. There are some objections so that process is not completed. We do not have the capability to sit here and do cross-examination and also review these and prepare cross-examination on the answers we just got nor to do anything about the objections to some of them, so what we need is adequate time to both digest these and to respond to any that need to be responded to with either objections working them out or asking the next round of questions, and I suspect the most efficient thing after that would be for us to be able to file testimony responding to such things. I don't know what period of time to estimate that that will take. I do know that the company is extremely busy. They have often not been able to respond to our data requests within the five days that was set in this case. Since most of the information is in their possession, any particular set time frame against which we then need to pry the information from them works to our disadvantage, and that is a disadvantage we're facing here today. So that's why I'm making a motion for continuance. I recognize it's not convenient. I recognize that we would all rather get this over with and go home and celebrate the holidays and probably don't really want to be engaging this further over the holidays, and I personally share that sentiment, but in my professional capacity I cannot pretend to go forward when I'm not adequately prepared to do that. JUDGE WALLIS: Ms. Anderl. MS. ANDERL: Thank you, Your Honor. U S WEST opposes any continuance in this matter. As a matter of procedure, I understand, I think, why Mr. Manifold waited to make the motion until today. Perhaps he was hoping that he would feel confident that he would be ready to go, but the scheduling constraints that he complains of and upon which he bases his request for a continuance have been present since he initially complained about the schedule in September and October, and I don't think anything has changed substantially since then. I think that these are tight time lines, but that the Commission has already considered whether there was enough time allotted for the conduct of this case, and the Commission has decided that the schedule set in this matter is reasonable. The Commission's third supplemental order issued on October 2 addressed that very question, and the Commission stated that at that time the schedule adopted was appropriate for the conduct of this proceeding, and noting that the prior rate case had been a massive undertaking and that many principles were decided in that docket that did not need to be relitigated in this case and that it was appropriate to go forward on a more restricted or tighter schedule here. When the Commission first established the schedule for prefiling testimony and holding hearings U S WEST's rebuttal testimony was due on the 26th of November. We did file that timely, and everyone knew even then in September that there would only be a matter of a very few work days between the filing of the company's rebuttal and the first day of hearing in this matter. And I think that those problems could have been anticipated. At a minimum, given the assemblage today had public counsel been sincere about wanting to bump this schedule out, the motion could have at a minimum been made on Monday or Tuesday of this week in order that the people not be gathered for the hearing here. I don't think that the motion is timely therefore, and I don't believe that it's well taken. U S WEST has made every effort to respond to the discovery that's been asked in this case in a timely manner. Sometimes we have not made the five day deadline. It has always been in an effort to provide more complete responses and we have not sought to delay the proceeding. We are well aware that failure to respond to discovery in a timely manner might be a pointed upon which other parties might ask for a continuance in the schedule. We did not want that to happen. We did want however to be responsive to the discovery and we made every effort to do so and are continuing to do that. There have been already over 500 data requests issued in this docket and we have responded to the vast majority of them. We have supplemented the data request responses when additional information has been made available to us. However, we don't think that that prejudices public counsel in any way. The one specific example that Mr. Manifold has walked you through with regard to requests being first answered with a one word response "no" and then subsequently developed. The way the first question was asked was, "Did you do anything since the last rate case?" and the answer that we gave, which we have not withdrawn or modified, was "No," and that was accurate because the expanded answer is we were doing things before then, and what we've tried to provide in the supplemental responses and in the references to the other data request responses is to explain more fully what those processes were and had been ongoing at the time even of the rate case order. So I don't think that the company answered the first data request incorrectly. I don't think that the additional supplemental information that we have provided even beyond the scope of the original request does anything to prejudice public counsel. In fact, it provides more information than was asked. I do understand that the data requests process, as Mr. Manifold pointed out, is a process upon which you get responses to questions and then you have other questions that flow from that and that does take additional time. However, data requests were the vehicle of discovery that public counsel chose to use in this docket. He was not limited to that. He could have deposed company witnesses. Depositions have been conducted in the past in rate case type proceedings, and those were not sought or discussed in this matter. So, the fact that data requests were the only method of discovery used and that that necessarily took time that perhaps a deposition wouldn't have where you could ask follow-up questions immediately I don't think is necessarily a reason for bumping the schedule out in this case. Since we don't want a continuance and would like to proceed expeditiously to hearing I think that would conclude my remarks. JUDGE WALLIS: Mr. Trautman, do you have any -- MR. TRAUTMAN: Staff is neutral on the request. JUDGE WALLIS: Other counsel wish to speak to this? MR. BUTLER: Yes, Your Honor. From TRACER's perspective we find it troubling that public counsel has not had in its view an adequate opportunity to prepare and present its case, and we would support some reasonable accommodation to give it an opportunity to at least complete the discovery efforts in order to do so. Perhaps that would evolve some supplemental proceeding of an informal nature. I don't know. We don't have a concrete proposal on the table in terms of the specific continuance or whatever, but we do support in concept an accommodation to allow them an opportunity to deal with a lot of complex information and present their part of the case. We are not specifically addressing revenue requirement issues directly in hearings ourselves, but I can understand just by seeing the volume of paper that's come across my desk that this is a daunting task. JUDGE WALLIS: Thank you, Mr. Butler. Other comments? MR. ROSEMAN: AARP would like to join in Mr. Manifold's motion. We are cosponsoring a witness in this case, and the cry that we have from this witness constantly is the inability to get timely responses to data requests and once they filed testimony then in rebuttal testimony the company comes back with information that they said or a study that they said was not available to our witness and then puts it in their case. We have no opportunity to explore that on this short time frame, and we certainly strongly support as we did in a formal motion that we filed for a continuance in this proceeding. JUDGE WALLIS: Mr. Manifold, brief response. MR. MANIFOLD: Yes, thank you, a brief response. The original schedule was set based upon five day turn around for data responses, and the company agreed to that is my recollection of the transcript of the pre-hearing conference, and that has not been what has transpired. Secondly, I want to be very clear as will I think become clear, should be clear from Mr. Brosch's testimony and I presume will on any cross he receives, that we are in our case staying within the box. We have not attempted to relitigate or go into issues that were not already within those defined by the make whole concept. We don't, as you know, agree with the make whole concept but we have, in part, because there wasn't time to do anything else, stayed within that in our testimony. Thirdly, the specific data requests 185 says, and I quote, "Did the company modify any of its network and customer operations, policies and procedures to achieve improved service quality since the last rate case test period in Washington." That isn't the order. That's the test period which, if recollection serves, ended in October of '94. And the question goes on to be complete here. "If affirmative, please identify and describe each such change of significance and provide the effective date of such changes." Finally, quite frankly, I did think about deposing the company's direct witness, Ms. Jensen. It doesn't appear that that would have been a very effective strategy since all of the revenue requirement i