NEWSReport No.  DC-2659                   ACTION IN DOCKET CASEOctober 11, 1994

     FURTHER COMMENTS SOUGHT ON SIMPLIFICATION OF DEPRECIATION RATES
                            (CC DOCKET 92-296)

     The Commission is asking for comments on proposed ranges for eight of the telephone
plant categories for which depreciation rate factors  have not yet been established in CC Docket
No. 92-296, Simplification of the Depreciation Prescription Process.  By proposing the new
ranges, the Commission intends to simplify the depreciation process for these plant categories,
achieve administrative savings, and allow price cap local exchange carriers (LECs) greater
flexibility in the depreciation process, while continuing an appropriate oversight of the LECs'
depreciation rates. If these proposals are implemented, the Commission will have established
ranges of projection life and future net salvage factors for 30 of the 34 plant categories,
representing 85 percent of total plant investment.  In addition, the Commission is proposing
alternate simplified procedures for four other plant categories.

     In the Depreciation Simplification Order (released October 20, 1993), the Commission
adopted streamlined depreciation procedures for LECs regulated under the price cap incentive
plan.  These procedures require the FCC to establish ranges for the future net salvage and
projection life estimates that are used to compute depreciation rates.  The new procedures
generally permit price cap LECs to make streamlined filings for changes in depreciation rates for
these categories, as long as these estimates fall within the prescribed ranges.  The Commission
determined that the new, streamlined procedures should be implemented in two phases, beginning
with the accounts most readily adaptable to the range approach.  It completed phase one in June
of this year when it adopted ranges for 22 plant categories.   This Order Inviting Comments
commences phase two of the process by requesting comments on proposed ranges and proposed
alternate simplified procedures for the remaining 12 plant categories.

     Prior to adoption of the Depreciation Simplification Order, the depreciation prescription
process required carriers to submit extensive data to support the underlying basic factors (i.e., 
the future net salvage, projection life, and survivor curve estimates) used to compute proposed
depreciation rates.  These data requirements often resulted in voluminous submissions, consisting
of up to 25 pages of analysis for each of 34 plant categories.  In recognition of the regulatory,
technological and market changes that price cap LECs face, the Commission decided to simplify
the process by establishing ranges that specify maximum and minimum amounts for two of the
basic depreciation factors, the future net salvage and projection life estimates.  Under the new
process, if a price cap LEC meeting the requisite criteria selects future net salvage and projection
life estimates that are within the established ranges, it need not submit the detailed supporting
data otherwise required.  In addition, under the new procedures, price cap LECs can change these
basic factors annually, as opposed to the current triennial represcription cycle.  
                                  (over)
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     Comments are due November 14, replies December 14.

     Action by the Commission October 7, 1994, by Further Order Inviting Comments (FCC
94-256).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.  

                                  - FCC -    

     News Media contact: Rosemary Kimball at (202) 418-0500.
     Common Carrier Bureau contacts:  Fatina Franklin at (202) 418-0840; Bryan Clopton at
(202) 418-0867; and John Hays at (202) 418-0875.