ORDER NO. 98-079

ENTERED MAR 09 1998

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UT 125

DISPOSITION: PETITION FOR RECONSIDERATION DENIED RE ORDER NO. 97-441; PETITION FOR RECONSIDERATION GRANTED RE ORDER NO. 97-480

Background. At its December 12, 1997, public meeting, the Commission decided that the chip-in charge proposed by U S WEST Communications, Inc. (USWC) should be included as an issue in UT 125. The chip-in charge is in effect subject to refund, because the Commission did not order suspension pending investigation. Order No. 97-480 implemented the Commission’s December 2 decision.

Positions of the Parties. Petitioners. On January 9, 1998, Frontier Telemanagement, Inc. (Frontier), American Telephone Technology, Inc. (ATTI), and Shared Communications Services, Inc. (SCS) (collectively, the joint petitioners) filed a petition for reconsideration of Order No. 97-480. That order allowed the chip-in charge proposed by USWC in Transmittal No. 97-037-PL Supplement No. 1 to go into effect subject to refund and ordered the rate to be included as an issue in UT 125 Phase II. The petition alleges that Order No. 97-480 contains errors of fact or law based on the parties’ failure to cite, and the Commission’s failure to consider, a stipulation regarding the chip-in charge approved in Order No. 93-746. The joint petitioners ask the Commission to issue an order denying USWC’s proposal to implement a chip-in charge or, in the alternative, to suspend the chip-in charge pending investigation.

In Order No. 97-480 at 1, the Commission described the chip-in service as allowing "customers not wishing to change their telephone number to the existing Centrex Plus System telephone number range to keep their existing telephone number(s) within the normal serving central office." However, the joint petitioners assert that the Commission erred when it described chip-in as a new option associated with Centrex Plus Service and as a new service. Id. The joint petitioners assert that USWC has provided the chip-in service to ETI and other similarly situated providers since 1993, when the Commission approved an agreement between USWC and ETI implementing the chip-in service at no cost. Consequently, the joint petitioners urge that the Commission should reconsider Order No. 97-480 and disallow the "new" chip-in charge.

In support of their position, the joint petitioners assert the following. Order No. 93-746 culminated a nearly three-year investigation by the Commission into USWC’s Oregon offerings of Centrex-type service. In that order, the Commission approved a stipulation according to which USWC agreed to provide the chip-in service with no recurring charge and with no nonrecurring charge under most circumstances. The stipulation was signed by Staff, the Telephone Ratepayers Association for Cost-Based and Equitable Rates, SCS, ETI, and USWC. The Joint Petitioners argue that USWC’s proposed chip-in charge is contrary to and in violation of the stipulation. USWC’s proposal, according to the joint petitioners, is an unlawful attempt to unilaterally abrogate the terms of a stipulation approved by the Commission. The Commission should order USWC to continue to offer its chip-in service without charge in most circumstances to all Centrex resellers, pursuant to Order No. 93-746. The petitioners argue that the chip-in charge should be rejected without further investigation or, failing that, the Commission should suspend the filing rather than permit it to remain in effect subject to refund.

On January 16, 1998, the joint petitioners filed a supplemental petition for reconsideration of Order No. 97-480 asking the Commission to clarify the status of the chip-in charge proposed by USWC in light of recent indications that UT 125 Phase II may be indefinitely delayed. The petitioners had heard that USWC intended to withdraw the proposed tariffs it submitted in compliance with Order No. 97-171. That would not include the tariff for the chip-in charge. The petitioners urge the Commission to proceed with its investigation of the chip-in charge tariff despite the expected delay in UT 125 Phase II. If consideration of the chip-in tariff is delayed along with the remainder of UT 125, the petitioners argue that resellers of Centrex services will be forced to pay the chip-in charge for a prolonged period without a determination as to its lawfulness. The petitioners request the Commission to schedule a prehearing conference to establish a procedural schedule and an issues list for the investigation of the chip-in tariff.

On January 20, 1998, the same petitioners filed a request for reconsideration of Order No. 97-441, asking the Commission to clarify the status of the Line Identification Data Base (LIDB) charge proposed by USWC in Transmittal No. 97-037-PL Supplement No. 1, in light of recent indications that UT 125 Phase II may be indefinitely delayed.

Order No. 97-441 allowed the proposed LIDB to go into effect subject to refund and ordered that rate to be included as an issue in UT 125 Phase II. As they argued with respect to the chip-in charge, and for the same reasons, the joint petitioners urge that the Commission should set a schedule for considering the LIDB independently of the UT 125 Phase II schedule.

Staff. Commission Staff responded to the petitions for reconsideration on January 27, 1998 (re Order No. 97-480) and February 2, 1998 (re Order No. 97-441). Staff opposes the joint petitioners’ request to process the LIDB and chip-in charge independently of UT 125 Phase II. Staff recommends that the Commission conduct a comprehensive review of costs and rates for Centrex-type services, including the LIDB and chip-in charge, as part of UT 125.

Staff agrees with the joint petitioners’ original petition with respect to the chip-in charge. Staff points out that the Commission has authority to modify and terminate parties’ contracts and agreements as part of its ongoing regulation of utility services and rates. However, Staff believes that such action should not be taken at this time. Staff points out that the stipulation embodies a number of compromises by various parties and the parties to the agreement contemplated that the costs and rates for the services covered by the stipulation would be reviewed after completion of UM 351. Staff therefore recommends that the stipulation remain in effect until the Commission conducts a comprehensive review of costs and rates for Centrex-type services, including the chip-in service.

Frontier. Frontier replied to Staff’s response, again urging that final disposition of the LIDB and chip-in tariffs should not be delayed pending resurrection of UT 125, for four reasons:

The LIDB and chip-in charges impose discrete charges for specific activities. USWC has prepared separate cost studies for each tariff, which can be investigated separately. But for the fact that UT 125 was extant when the USWC proposed these changes, they would have been investigated separately.

The LIDB and chip-in charges were not included in any filing by USWC in UT 125. The withdrawal of the advice letters filed in UT 125 will not affect the LIDB and chip-in charges. The administrative efficiencies that were anticipated by consolidation with the rate design phase of UT 125 are no longer present.

The LIDB and chip-in tariffs impose new costs on Centrex resellers. There is an immediate impact on resellers, despite the fact that the charges are in effect subject to refund. If these charges are allowed to remain in effect for an extended period, Centrex resellers will continue to be adversely affected by the new charges despite lack of a Commission determination that these charges are appropriate. A future refund may not be enough to maintain the viability of Centrex resale if the LIDB and chip-in charges are in effect for an extended period.

There is no disadvantage to proceeding with the investigations of the LIDB and chip-in tariffs. The Commission could address Centrex issues again at a later date.

Commission Disposition. Order No. 97-480. The Commission agrees with the joint petitioners and Staff that the proposed chip-in charge contravenes the existing stipulation adopted by Order No. 93-746 and that the stipulation should remain in effect pending a complete investigation of the costs associated with the chip-in service. We shall therefore reject USWC’s proposed chip-in charge at this time.

Order No. 97-441. The petition for reconsideration of this order is denied. We do not believe it is reasonable to pursue piecemeal cost investigations when we have an open rate case docket in which USWC’s overall costs will be investigated. The petitioners allege that they will be harmed if the LIDB charge continues to be imposed without a determination that it is justified. We are not persuaded by this argument. The charge is in effect subject to refund, and we have not imposed the chip-in charge. Both the LIDB and the chip-in cost will be investigated as part of the rate design phase of UT 125.

ORDER

IT IS ORDERED that:

1. The chip-in charge imposed in Order No. 97-480 will not be imposed.

2. The petition for reconsideration of Order No. 97-441 is denied.

Made, entered, and effective ________________________.

A party may appeal this order to a court pursuant to ORS 756.580.