AT&T and MCI’s Response to Bench Request No. 105
WUTC Docket No. UT-960369
8/10/98

Request No. 105

The Hatfield Model includes a common cost factor of 10.4%.  What account 
expenses are being recovered through this value?  For each of the accounts 
listed on the attached spreadsheet, please identify those accounts that are 
treated in the Hatfield Model as a function of investment, some other cost 
driver (please specify the cost driver, e.g., number of loops), or classified 
as common.

Response:

 Details on how the HAI Model treats expenses can be found in Appendix C of the 
HAI Model Release 5.0a, Inputs Portfolio.  A summary of that document is 
included below.

 All expenses in the HAI Model are applied on an investment basis except:

 NID expense – applied dollar per line
 
Network Operations (ARMIS accounts 6512, 6531, 6532, 6533, 6534, and 6535) – 
applied per line

The amount is based on historical ARMIS expenses multiplied by the Forward 
Looking Network Operations Factor (default 50%).

 Other Taxes -  model cost are grossed up by the other tax rate (default 5%)

Carrier-to-Carrier Customer Service (ARMIS accounts 7150, 7170, 7190, and 7270) 
– applied per line

The model takes the embedded amount across all Tier 1 LECs times 70%.  This 
results in $1.69 per line.

Common Cost - (represents ARMIS accounts 6711, 6712, 6721, 6722, 6723, 6724, 
6725, 6726, 6727, and 6728) – a 10.4% factor is applied to the sum of all costs

Carrier-to-Carrier Uncollectibles - a company specific ratio of ARMIS 4304 
Uncollectibles to ARMIS access revenues – model costs are grossed up by the 
uncollectible rate