Docket UT-971140
September 24, 1997
Page 1
Agenda Date:  September 24, 1997
Item Number:  2A

Docket: UT-971140
Company: Washington Exchange Carrier Association

Staff:  Betty Erdahl, Revenue Requirements Specialist
  Maurice Twitchell, Regulatory Consultant
  Tim Zawislak, Policy Research Specialist

Recommendation:

Issue a Complaint and Order Suspending Tariff Revisions in Docket UT-971140 and 
set this docket for hearing.

Discussion:
On July 15, 1997, the Washington Exchange Carrier Association (WECA) filed to
revise Sheets 1, 3 and 9 of its tariff.  The net effect of the proposal is to 
increase revenues
by $572,000. The increase in revenue attributed to terminating access is 
approximately $1,652,000, which is offset by a reduction in universal service 
fund revenue of approximately $1,080,000.
 
Under RCW 80.36.120 and WAC 480-80-048 of the Commission's rules, and pursuant 
to the Commission's orders in Cause No. U-85-23, et al., WECA is authorized to 
file for its members (carriers with less than one million access lines) a 
collective Non-Traffic Sensitive (NTS) access tariff.  The NTS access tariff 
sets forth rates that are primarily paid by the providers of intrastate toll 
services.  These NTS revenues are distributed to the LECs in the form of a 
common carrier line (CCL) rate and universal service fund (USF) rate.  The 
total NTS revenue requirement is pooled for all 19 WECA member companies who 
serve approximately 223,000 access lines (approximately 6.6 percent of total 
access lines) in Washington state.  The USF rate is calculated based on the 
average state loop cost and provides revenue to those carriers who have a 
higher than average loop cost.  This rate is collected based on all minutes of 
use (MOU) in the state.  The CCL revenue requirement is distibuted to the WECA 
members based on their costs submitted to the pool less the amount received 
from the universal service fund.  This CCL rate is calculated based on MOU and 
collected by LECs based on their own MOU. 

Proposed Tariff Sheets 1 and 3 are revisions to remove United Telephone Company 
of the Northwest (United) and to add Pend Oreille Telephone Company, Inc. (Pend 
Oreille) to the list of participating local exchange carriers.  Sheet No. 9 
proposes to increase Carrier Common Line (CCL) Premium and Non-Premium 
Terminating Access Service Rates; and decrease the Carrier Common Line 
Universal Service Fund (USF) Rate.  


The following table shows the rates and relative increase or decrease:

Carrier Common Line Service   Current  Proposed  Percent
 (per access minute of use)     Rates    Rates    Change  

   Premium Access
 Terminating    $0.05587  $0.06133     9.77%
 Originating    $0.01000  $0.01000      N/A

   Non-Premium Access
 Terminating    $0.02793  $0.03067     9.81%
 Originating    $0.00500  $0.00500      N/A

   Universal Service Fund   $0.00152  $0.00136    -10.50%


The request for the revenue increase is based upon 1997 projected NTS revenue 
requirements and projected demand MOU.  Additionally, adjustments are made to 
remove United from the USF and NTS pools because United has become a primary 
toll carrier, to add Pend Oreille to the USF and NTS pools, to remove payphone 
operations from each LEC’s NTS revenue requirement, to adjust the rate of 
return used by the WECA companies from 11.44 percent to 10.50 percent for those 
companies participating in the WECA CCL and USF pools, and to modify the 
formula for calculating the CCL rate to limit CCL recovery to no more than 25 
percent of a LEC’s unseparated NTS revenue requirement.  If a LEC’s CCL revenue 
requirement exceeds 25 percent of its unseparated NTS revenue requirement, the 
amount over 25 percent is recovered from the USF rate element.

WECA’s counsel has been working with staff to provide the support for each 
company's asserted revenue requirement and demand projections.  Staff is in the 
process of analyzing the companies' projected revenue requirements, 
investments, rates of return, tax calculations and allocation factors.  At this 
time staff is not comfortable that the filing adequately demonstrates the need 
for an increase.  Additionally, other interested parties would like to address 
this filing and the modification to the USF formula (which was originally set 
out in the Seventeenth, Eighteenth and Nineteenth Supplemental Orders in 
U-85-23).  

Therefore, staff recommends that the commission issue a complaint and order 
suspending tariff revisions in Docket UT-971140 and set this docket for 
hearing.