BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION



In the Matter of the

Proposed Settlement Agreement to the Commission’s Rulemaking Proceeding to 
Redefine Local Calling Areas and replace WAC 480-120-400 through 435 with WAC 
480-120-045.	
	 DOCKET NO. UT-970545
	
	
	 COMMENTS OF PUBLIC COUNSEL
	 RE PROPOSED SETTLEMENT
	 AGREEMENT
	


 Public Counsel offers the following comments on the proposed settlement 
agreement of August 7, 1998 to the Commission’s rulemaking proceeding to 
redefine minimum local calling areas.  Public Counsel is generally supportive 
of the elements of the settlement agreement, as the agreement appears to meet 
the needs of consumers who most immediately require relief from inadequate 
local calling.  We commend the parties for reaching a settlement that allows 
for targeted remedies in a reasonable time frame, and look forward to the 
timely implementation of the expanded calling areas consumers desire.
 Although we favor the agreement generally, Public Counsel does have three 
areas of some concern with the language of the settlement agreement we ask the 
Commission to consider in its deliberations.  Two involve the nature of cost 
recovery, and the third relates to the ability to meet consumers’ needs for 
adequate calling areas in the future.  Our concerns are expressed below.
 Revenue Neutral Cost Recovery  Public Counsel supports the use of 
revenue-neutral cost recovery in the affected exchanges (and from toll rates in 
the case of US West) as the language in the settlement agreement and Exhibit A 
suggest.  Given that this is the preferred method to recover costs, Public 
Counsel recommends that the Commission amend the proposed rule to preserve the 
current method of cost recovery laid out in existing WAC 480-120-420.  That 
rule provides, in summary, that costs are first recovered from subscribers who 
benefit from new EAS service, next from earnings, if appropriate, and only 
then, if necessary from all of the company’s local exchange rates.  WAC 
480-120-420(2).
 Recovery of ‘Extraordinary Expenses’  Public Counsel is concerned about the 
provision of the agreement that allows for the recovery of ‘extraordinary 
expenses’ related to possible increases in data traffic.  We find an open-ended 
commitment to allow cost-recovery troubling without any language to adequately 
constrain what expenses will be recovered and under what circumstances.  In 
particular, we are concerned with the possibility that carriers could claim an 
‘extraordinary expense’ which would in fact be the result of the deployment of 
their own data-related services (such as DSL).  Furthermore, in the absence of 
an accurate and effective mechanism to track investment, we are uncertain how 
the companies and staff intend to distinguish among investments to meet 
increased data traffic and other investments in the network.
 We understand the spirit of the agreement to limit the costs eligible for 
recovery both in scope and in magnitude, and believe that parties to the 
agreement may well have a clear understanding of what the language is intended 
to allow.  More crafted language describing those expenses should pose no 
barrier to the agreement as a whole.  We therefore urge the Commission to seek 
clarification from the parties as to the limited scope of this recovery and 
include appropriate language in the final settlement.
 
 
 Providing Consumer Access to Adequate Local Calling Areas  Finally, Public 
Counsel continues to advocate for consumer access to decision-making in 
establishing expanded local calling areas.  Notwithstanding the stated desire 
in Section (1) of the proposed rule to rely upon competitive pressures to 
provide adequate calling areas and options, it remains unclear to Public 
Counsel exactly when competition, particularly local competition, will be 
robust enough to meet consumers’ needs.
 Therefore, Public Counsel reiterates the recommendation contained in our June 
26, 1998 and May 11, 1998, comments that the rule include a provision allowing 
customers to petition for expanded local calling.  The sole purpose of the 
local calling area rule is to meet customers’ calling needs.  Customers and 
communities are at least as well situated as local exchange companies to 
determine the level of need for local calling.  The proposed Section (2) 
appears to allow for requests for expanded local calling to come from either 
the public or the local exchange company.  Language explicitly affirming this 
ability could be added to the proposed rule to satisfy this concern.
 
 Thank you for your consideration of these comments.
 Respectfully submitted, 
 DATED:  September 4, 1998.

       CHRISTINE O. GREGOIRE
       Attorney General


       Matt Steuerwalt
       Analyst
       Public Counsel