COMMISSION WASHINGTON UTILITIES AND ) TRANSPORTATION COMMISSION, ) Docket No. UT-970766 Complainant, ) Volume 14 ) Pages 1167 - 1344 vs. ) U S WEST COMMUNICATIONS, INC., ) Respondent. ) -------------------------------) A hearing in the above matter was held on December 16, 1997 at 9:05 a.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, Attorney 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. AMERICAN ASSOCIATION OF RETIRED PERSONS, by RONALD L. ROSEMAN, Attorney at Law, 2011 14h Avenue East, Seattle, Washington 98112. 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 BLACKMON 1194 1195 1175 1187 1172 1228 1219 ELLIOTT 1240 1241 1253 1254 1244 1260 1257 RAYMOND 1266 1268 1315 1330 ZEPP 1333 EXHIBITS: MARKED ADMITTED 295T, 296 1239 1241 296 1239 1243 300T - 304TC 1265 1267 305 1265 1268 306 1265 1268 307 1265 1268 308 1265 1268 309 1265 1268 310C 1267 1267 311 1295 1316 312 1326 1341 315T, 316 1332 1332 320T, 320AT, 1333 1334 321-326C 1333 1334 331T, 332T 1336 1336 333 1336 1336 216 1341 335 1342 1342 267C 1342 1342 245-279 1344 1344 RECORD REQU. PAGE 6 1193 7 1304 8 1340 P R O C E E D I N G S JUDGE WALLIS: Let's be on the record for our December 16, 1997 session in the matter of docket No. UT-970766. This morning we have concluded the marking of exhibits, and the company has distributed some documents which it has prepared and is presenting in response to record requisitions. Ms. Anderl. MS. ANDERL: Thank you, Your Honor. In record requisition No. 2 we had been asked to provide updated to current November 1997 investment data which, I believe, is an update to the response to bench request No. 27, and that document, which is confidential, has now been provided. It's a four page document and it does indicate in the upper left November 1997, and the third column, column C, shows the gross construction expenditures year-to-date, which is I believe the figure that had been requested to be updated. The current bench request was current through October. JUDGE WALLIS: This is an updated bench request; is that correct? MS. ANDERL: Yes. JUDGE WALLIS: Rather than mark it as an exhibit we'll merely attach that to the bench request. MS. ANDERL: Thank you. And I'm just confirming from my notes that was bench request No. 27. JUDGE WALLIS: Yes, attachment B. MS. ANDERL: The other document that we were requested to provide in response to record requisition No. 3 was a revised version of Mr. Inouye's exhibit, CTI-5, which is entitled Washington 1996 Revenues from New Products and Services. We were asked to update or modify that exhibit to show 1996 annual actual revenues rather an annualized which is how it had been previously shown, and also to provide year-to-date 1997 revenues which we've also done, and that is now a two page document. It does bear a date of December 15, 1997 in the lower left-hand corner of both pages. JUDGE WALLIS: May we call that Exhibit 56R for revised? MS. ANDERL: Yes. (Discussion off the record.) JUDGE WALLIS: Let's be back on the record, please. During a brief discussion off the record it's been determined that the data on the presented document 56CR is not fully complete. Consequently, that has been withdrawn, and an updated version will be provided. Is that correct, Ms. Anderl? MS. ANDERL: Yes, that is. Thank you. JUDGE WALLIS: Is there anything else of an administrative or preliminary nature before we resume? It appears that there is not. Let us welcome Ms. Jensen back to the stand, note that you have previously been sworn, and I wonder if I can ask you a question or two. THE WITNESS: Yes. Whereupon, THERESA JENSEN, having been previously duly sworn, was called as a witness herein and was examined and testified further as follows: EXAMINATION BY JUDGE WALLIS: Q. The staff, I believe, from Ms. Elliott's reply testimony, has recommended that U S WEST provide cellular phone or credits to any customer whose order for new or transferred lines is not completed within five business days rather than 30 days. Could you comment on this recommendation? A. Yes. Thank you. The company would qualify Ms. Elliott's recommendation a little differently in terms of what we would be willing to do. There are a majority of our orders that are not completed within five business days that are completed within 30 days, and typically those are where we can send out construction crews and installers who can do provisioning work without engineering designs and so forth, so it's the orders that really require almost total new provisioning end to end that go beyond 30 days, and those on average are less than 250 orders a month. Generally, if memory serves me right, though I'm sure I will get some help, probably closer to 200. And the company -- when the company knows that it is not going to be able to satisfy an order within 30 days I believe the company is willing to initiate the service guarantee program earlier than waiting the 30 days where we absolutely know that we're not going to be able to meet that order, but if we know that we will meet the order within 30 days then the company would prefer not to go into the cellular type options for a customer. That doesn't preclude us from working with each individual customer situation, and if for instance a customer wanted voice messaging and they had a medical condition or a family situation, you know, we work with each individual customer, and we try to address their need and do the right thing as a business, but as an overall standard, no, we would not support Ms. Elliott's recommendation to do it for every held order because most of those are filled within two weeks of the held order. Q. Is it true that Oregon requires cellular phone or credits after five days? A. I don't know. Q. Then I won't ask how it operates down there. Is the company able and willing to send to each qualifying delayed service customer a written description of the guarantee that is recommended by Ms. Elliott in her reply testimony? A. Yes. The company is willing to do that. I would hope to limit that, again, to those that we know are not going to be completed within two weeks, and generally we know that by the due date. We know if it's going to take a few extra days. It's not going to be within the five days but the majority of those are closed within two weeks but we would be willing to do both. Our preference would be from an expense perspective to just focus on those that will be over two. Q. In your earlier response were you saying that the company now does work with customers in the five to 30-day range to meet specific needs or that the company is willing to in the future? A. I believe the company does now. Is it a perfect process, no. I think we need to continue to work with our employees to step up to that issue. Generally, it's done when a customer is concerned and escalates the problem as opposed to automatic. Because our service representatives or installers don't generally handle the service order end to end, they handle a piece of it, it generally requires a customer to escalate their service order and then it is done. JUDGE WALLIS: Thank you very much. REDIRECT EXAMINATION BY MS. ANDERL: Q. Ms. Jensen, yesterday you were asked a number of questions by the bench and from some of the other parties about the company's willingness to commit to additional investment in the state of Washington in the amount of the increased revenues in this matter. Can you describe, please, what the company's position on that issue is. A. Yes, I would be glad to. I think it's important to recognize that the revenue requirement in this case, which I think is now 69.6 million, is based on expenses or investment the company has already made. The depreciation component of it in the range of $36 million is for investment that has been made in the past that now needs to be recovered, and the additional roughly 34 million is for expenses that the company incurred in 1996 that it has not recovered. However, I know that this is an issue that's not only important to the Commission but also to the consumers in this state, and as a result of that I made a number of phone calls last night along with Mr. McClellan, and we were able to get a commitment from the company specifically as it relates to the $34 million that a favorable result in this docket would be measured as improved climate in the state of Washington, would be received favorably by the investment community that we work very closely with, and that the company would be willing to commit $34 million to increased investment targeted for the deployment of digital service technology, primarily at offloading the Internet service provider and data communications type traffic. We are willing to provide reports to the Commission demonstrating that we are making that investment in digital services. The one concern that we have in preliminary work that we've done on this issue in anticipation of some favorable decisions is that we're finding the quotes that we're getting from our manufacturers tend to portray that investment in large lump sums and so from a tracking perspective we would not be able to demonstrate or portray to the Commission that we had in fact spent that investment