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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************************* ******************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 99-896 In the Matter of ) Material to be Filed in Support of ) 1999 Annual Access Tariff Filings ) TARIFF REVIEW PLANS Adopted: May 13, 1999; Released: May 13, 1999 By the Chief, Competitive Pricing Division: I. INTRODUCTION 1. We set forth herein the Tariff Review Plan (TRP) that incumbent local exchange carriers (ILECs) should file to support the annual revisions to the rates in their interstate access service tariffs scheduled to become effective on July 1, 1999. Pursuant to the LEC Streamlined Tariff Filing Report and Order, price cap ILECs are required to file a TRP to revise the price cap indices. The completion of the TRPs appended to this document will partially fulfill the requirements established in Sections 61.38, 61.39, 61.41 through 61.49, and 61.50 of the Commission's Rules. The TRPs display basic data on rate development in a consistent manner, thereby facilitating review of the ILEC rate revisions by the Commission and interested parties. The annual TRPs have served this purpose effectively in past years. 2. Based on the Bureau's experience in reviewing the TRPs in prior years, and the submission by the price cap ILECs of the short form TRP on April 2, together with comments and replies by interested parties, Section II details modifications to the TRP. The rate-of-return TRP contained in Appendix C is discussed in Section III. Guidelines for ILECs filing under Sections 61.39 and 61.50 are also discussed in Section III. Appendix A describes filing procedures applicable to all ILECs that will file a 1999 annual access tariff filing. II. PRICE CAP TARIFF REVIEW PLAN 3. In the LEC Price Cap Order, the Commission adopted price cap regulation for ILECs, effective January 1, 1991. Companies that currently file interstate access tariffs pursuant to the price cap rules include the regional Bell Operating Companies, Aliant Communications Corporation (Aliant), Cincinnati Bell Telephone Company, Citizens Telecommunications Companies (Citizens), GTE Telephone Companies (GTE), Frontier Corporation (Frontier), Southern New England Telephone Company (SNET), and Sprint Local Telephone Companies (Sprint LTCs). Any other company may elect price cap regulation as part of its 1999 annual filing. All companies that file pursuant to price cap regulation in the 1999 annual filing should file the price cap TRPs outlined below and contained in Appendix B. Companies subject to rate of return regulation should file the TRP contained in Appendix C. A. Modifications to the TRP 4. In the July 1, 1999 TRP, we have adopted certain needed adjustments in presentation. In the Exogenous costs worksheet, long term support has been replaced by Sale of Exchanges. The CAP-1 form is now nine pages long with the addition of a new page six. B. TRP Charts and Workpapers 1. Chart IND-1 6. IND-1 displays price cap indices (PCIs), actual price indices (APIs), service band indices (SBIs), and upper SBI limits. It is unchanged from the version in the 1998 TRP. To assist in verifying the historical indices reported in IND-1, ILECs should continue to file a workpaper that identifies transmittals in which the current index levels became effective. 2. Chart CAP-1 7. CAP-1 displays the calculation of the maximum carrier-common-line (CCL) rate according to the formula in the Rules. The July 1999 TRP includes some interim calculations for the Subscriber Line Charge rate and PICC rates. These calculations are to prevent the PICC rate from becoming negative. Specifically, page six of the CAP-1 form is a new addition that is used to test whether target reductions to the MLB are needed. Carriers are urged to follow carefully the calculations in Lines 1945 and 1972-1975. 3. Chart PCI-1 8. PCI-1 displays the calculation of the PCIs for the price cap baskets, and includes the following data: (1) the Gross Domestic Product Price Index (GDP-PI) measuring inflation; (2) the productivity offset (X-Factor); (3) the change in access charge expense (Y) imputed for ILEC toll services, which affects the Interexchange Basket PCI; (4) the exogenous cost change (Z); (5) the base- year (calendar-year 1998) revenue (R) for each basket; (6) the weighting factor (w) used in computing the PCIs; and (7) the growth in minutes per line (g). 4. Chart SUM-1 9. This is a summary chart displaying the revenues in baskets and categories. It displays the base-year (calendar year 1998) service demand multiplied by (1) current rates and (2) proposed rates. SUM-1 is used to calculate the difference in revenues using base-year demand, under current and proposed rates. 5. Chart EXG-1 10. This chart displays the exogenous cost changes to the PCIs attributable to any changes in (1) Sale of Exchanges (2) FCC regulatory fees; (3) excess deferred taxes; (4) amortization of investment tax credits; (5) a sharing or low-end adjustment that was reported in the 1997 annual filing and is now being removed in the 1998 annual filing; (6) any revision to that sharing or low-end adjustment; (7) any new sharing or low-end adjustment; (8) fees associated with Telecommunications Relay Service; (9) Universal Service Fund; and (10) other exogenous cost changes the ILECs may file. 11. As noted above, EXG-1 reports any low-end adjustment that was reported in the 1998 annual filing and is now being removed, and any revision to that low-end adjustment. EXG-1 also reports any current low-end adjustment, and this amount must reflect earnings in calendar year 1998. ILECs are required to provide workpapers showing the full calculation of the low-end adjustment, and cite the transmittals that reported low-end adjustments in previous annual filings. 12. Price Cap ILECs are required to submit their Form 492A for calendar years 1997 and 1998 as part of their TRP support material, and use the footnote page provided on Form 492A to explain the development of composite tax rates. As in the 1998 annual filing, the earnings of services excluded from price cap treatment should be removed based on the assumption the excluded services earned the same interstate rate of return as price cap services. 6. Chart RTE-1 13. This chart displays information used to compute the APIs, SBIs, and upper SBI limits. It displays calendar year 1998 demand, current rates, proposed rates, and revenues computed by multiplying the 1998 demand by current and proposed rates. Chart RTE-1 enables us to verify the accuracy of "R," the revenue variable in the PCI formula that equals base period (1998) demand multiplied by rates. Demand and price data are reported in the aggregate under the primary rate elements of each category. The level of aggregation in RTE-1 allows rapid, consistent verification of index calculations across all companies. 14. In their 1998 annual filings, ILECs provided a chart that gave complete rate element detail, i.e., demand, existing rates, proposed rates. ILECs should again file this chart on a 3.5- inch computer disk with their 1999 annual access tariff filing We leave unspecified the exact format of the rate detail charts because each price cap ILEC has a different number of rate elements. For each rate element, however, ILECs should display the rate element name, base period demand, current rates, and proposed rates. ILECs may also include a rate identifying code. The revenue amounts for baskets and categories should be totaled, to assist in verifying the agreement between this chart and the revenue amounts in RTE-1. The variation in the number of rate elements among ILECs prevents us from specifying the row numbers, but each row of this chart should correspond to only one rate element. The rows should reflect the basket and service category sequence used in RTE-1. Price cap ILECs should also include with their support materials a separate list of new services that are being incorporated into the APIs in this annual filing for the first time. This list should contain all services introduced as new services under the price cap rules during calendar year 1998, and the basket and service category to which the new service is assigned. C. Miscellaneous 15. In addition to the above specifications, price cap ILECs should include with their support materials a list of all currently applicable Part 69 waivers. The list should include the following information: (1) a citation to the Commission or Bureau Order granting the waiver; (2) a brief description of the waiver, including whether any new rate elements were authorized; and (3) the basket and, if applicable, service category of each rate element authorized by the waiver. 16. If ILECs file to revise their TRP after April 2, the TRP should be refiled in its entirety, rather than just the parts of the TRP that are changed. The latest TRP filed becomes the TRP of record. Other parts of the original filing, e.g., portions of the explanations, description and justification, and workpapers, may be omitted if unchanged by the revision. III. TARIFF REVIEW PLAN FOR NON-PRICE CAP COMPANIES 17. ILECs not electing price caps must file pursuant to either (1) Section 61.38 (rate- of-return); 2) Section 61.39 (small telephone rules); or 3) Section 61.50 (optional incentive regulation). ILECs that file under Section 61.38 should complete the TRP contained in Appendix C. As in the past, there is no TRP for companies filing pursuant to either Section 61.39, the small company rules, or Section 61.50, optional incentive regulation. Requirements for carriers electing to file under the small company rules are described below in Subsection B, as are the requirements for optional incentive regulation ILECs. A. Rate-of-Return Regulation 18. Companies filing under rate-of-return regulation are subject in part to the filing requirements adopted in the Regulatory Reform Order, which established a biennial filing cycle. The Rules require that rates be targeted to earn the authorized rate of return. 19. The rate-of-return TRP contained in Appendix C has been framed to place the smallest possible regulatory burden on ILECs while allowing us to evaluate the proposed rates. The 1999 TRP is the same as the 1998 TRP except for needed adjustments in presentation. We require rate-of- return ILECs to file their computer file containing the TRP in a LOTUS Version-3 file. A 3.5-inch disk containing the TRP file will be sent directly to all ILECs. This TRP file is similar to the format of the price cap TRP file that has proven successful. 20. Rate-of-return ILECs are required to file one year of historical data and one year of forecast data. All proposed rates must be based upon the forecast data. The time frame of the historical data, termed the past year cost-of-service (PYCOS) period, and of the forecast data, termed the test year, are determined pursuant to Section 61.38 of the Rules. The PYCOS period is calendar year 1998 and the test year runs from July 1, 1999 through June 30, 2000 for the 1999 annual filings. B. Small Telephone Companies 21. ILECs that qualify as small telephone companies may elect to file pursuant to the small telephone company rules under Section 61.39, for either their traffic sensitive rates, common line rates, or both. Companies filing under the small company rules must file access tariffs for their traffic sensitive and common line rates in odd-numbered years, and are thus required to make a 1999 annual filing. 22. ILECs filing under the small company rules need not submit supporting material at the time of the access tariff filing. Companies, however, should be prepared to submit the data promptly upon reasonable request by the Commission or interested parties. 23. In contrast to rate-of-return regulation, the small company rules rely on historical costs. For its first annual filing, an ILEC is required to propose rates based on the cost of service and demand for the most recent twelve months. For subsequent annual filings, an ILEC bases rates on the cost and demand for the two years since the last annual filing. C. Optional Incentive Regulation 24. Any non-price cap company may elect optional incentive regulation for either its traffic sensitive rates only, or for both its traffic sensitive and common line rates. In contrast to rate-of- return regulation, optional incentive regulation relies more heavily on historical costs, establishes broader earnings bands, and affords the ILECs greater pricing flexibility. 25. We have not adopted a TRP for companies filing under optional incentive regulation. For any carrier planning to file in 1999 under optional incentive regulation, the Competitive Pricing Division will provide guidance regarding specific support material. 26. For its first annual filing, an ILEC must base its rates on the cost of service and related demand for the most recent twelve months. For subsequent annual filings, an ILEC is required to base its rates on the cost of service and demand for the two-year period since the last annual filing. IV. GUIDELINES APPLICABLE TO NECA 27. We have not adopted a TRP for NECA, although NECA should refer to the rate- of-return TRP for guidance on the level of Section 61.38 support material to provide in its annual filing. As in the past, NECA should provide: (1) earnings data using the Chart ERN-1 format; and (2) average schedule company settlements using the Chart COS-1 format. V. GENERAL INSTRUCTIONS 28. The following general instructions apply to all ILECs except as noted. Except for Section V.B., infra, the following general instructions also apply to NECA. These instructions pertain to the TRPs and other documentation filed in support of access charges. A. Certification 29. The filing of inaccurate or incomplete data may seriously detract from the ability of the Commission and interested parties to evaluate the revised rates. The ILECs and NECA must certify that their historical and forecast data are accurate by including a signed statement that the support data are true, correct, and complete to the best of the carrier's knowledge. This certification will apply to all data submitted in support of revised rates, including the data that are filed in the TRP. The text of the certification is the same as that adopted in the 1987 Waiver Order. The certification should be displayed as the last page in the binder containing each company's TRP. ILECs are also under a legal obligation to correct any inaccurate or incomplete data discovered in the TRP or other support data. B. Geographic Aggregation 30. Except for the RTE and ERN charts, all TRP information should be displayed at the same level of geographic aggregation as the ILEC's proposed rates. RTE and ERN carriers should be consistent with the current level of geographic aggregation. In addition, if the tariff rates are based on data from a number of study areas or operating companies, levels of aggregation associated with each study area (state) and operating company should be provided by carriers (except for Charts RTE, ERN, and REV). C. Assistance from United States Telephone Association (USTA) 31. As in past years, to assist the Commission and interested parties in evaluating the national impact of revised rates, we request that USTA provide us with aggregated TRP data for all price cap ILECs, except for those charts or portions of charts for which aggregation is inappropriate. D. Waivers 32. If carriers find that they are unable to provide data in the TRP, they may file applications for waiver. These waiver applications should demonstrate good cause for reporting a different or lower level of detail than specified and should indicate how the carrier intends to report complete TRP data in the future. Each carrier requesting any waiver of Commission Rules should include all such requests in a single application. Carriers should not delay undertaking development of data for the 1999 TRP in anticipation that waiver requests will be granted. E. Technical Instructions 33. Consistent with TRP filings in previous years, all companies that file a TRP should provide the data in a computer disk file, as detailed in the Attachments. F. Compliance with the Paperwork Reduction Act 34. The TRPs are subject to approval by the Office of Management and Budget (OMB) in accordance with the provisions of the Paperwork Reduction Act, 44 U.S.C.,  3506 et seq. On September 23, 1996, OMB approved the TRPs through September 30, 1999 (OMB Control No. 3060-0400). In compliance with the Paperwork Reduction Act, we estimate burden-hours and place the Office of Management and Budget form number and date on the formats included in the Appendices. We note that these TRPs were developed after informal discussions with ILECs and other industry representatives and after evaluation of comments filed in response to our 1999 TRP Public Notice. We minimize the regulatory burden on the ILECs by deleting obsolete sections of the TRP that have not proved useful, and carriers need not file historical data that have been filed in previous years. Overall, the burden this year is unchanged from that imposed by the 1998 annual access tariff charge filings, and smaller ILECs continue to report significantly fewer data than larger companies. G. Procedural Matters 35. This document will be sent directly to all carriers that will file their own annual access tariffs. A copy of the document and all attachments will be available for inspection at the Public Reference Room, Federal Communications Commission, CY-C404. The Commission will publish the text of this document in the FCC Record. Copies of Appendices can be obtained through International Transcription Service, Inc. (ITS), the Commission's contractor for public records duplication. Further details regarding the procedures applicable to the 1999 annual access tariff filings are provided in the Appendices. FEDERAL COMMUNICATIONS COMMISSION Richard D. Lerner Deputy Chief, Competitive Pricing Division Common Carrier Bureau Appendix A Filing Procedures for Companies filing TRPs on June 16, 1999 1. The TRPs--for ILECs with any rate increases--contained in Appendix B for price cap carriers, and Appendix C for rate of return companies should be filed on June 16, 1999. If an ILEC has all rate decreases, TRPs should be filed on June 24, 1999. All correspondence and comments in connection with these filings should be designated "1999 PRICE CAP REVISIONS." A. TRP Filing Requirements 2. In addition to filing their TRPs electronically through the Electronic Tariff Filing System, (ETFS) ILECs should also file their TRPs on diskette. ILECs should consult the distribution table at the end of this Appendix A, as to where to distribute their TRP copies. ILECs that maintain a Washington, D.C. office should have their Washington, D.C. office file their diskettes. ILECs that do not have a Washington, D.C. office are to send their diskettes via Overnight Courier, addressed to Raj Kannan, Competitive Pricing Division, Common Carrier Bureau 5 th floor, 445 12 th Street S.W., Washington, D.C. 20554. 3. To facilitate identification and cataloging of the price cap index revisions filing, carriers should note that: a. A 3.5-inch high-density disk containing a Lotus Release-3 TRP file will be sent directly to ILECs. ILECs using more recent versions of Lotus should nevertheless save the TRP in a Lotus Release-3 file; i.e. a WK3 file. A computer virus check will be conducted before the disk is sent, and the Division urges the ILECs to re-check the disk before filing. The computer file on the disk should be named COSAAN99 where "COSA" is the 4-character company study area code. b. ILECs should also file their TRPs using the Electronic Tariff Filing System on June 16 or 24, 1999 depending on the nature of the filing. Carriers experiencing any difficulty using ETFS can contact Todd Mitchell of the Competitive Pricing Division at 202-418-1555. B. Comments and Replies C 4. Comments on the annual access TRPs may be filed on or before June 23, 1999--for filings made on June 16, 1999--and June 28, 1999 for filings made on June 24, 1999. Parties should reference the general designation shown in paragraph 1 and specific ILECs if applicable. These comments should specify that they concern the 1999 PCI revisions in general or those of specific ILECs. Comments filed in paper format should be filed with the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 -12th Street S.W. TW - A325, Washington D.C. 20054. Another copy should be submitted to the Chief, Competitive Pricing Division, 5th Floor, Federal Communications Commission, 445 - 12th Street S.W., Washington D.C. 20054. A copy should also be submitted to Raj Kannan, Competitive Pricing Division, Common Carrier Bureau, Federal Communications Commission, Fifth Floor, 445 - 12th Street S.W., Washington D.C. 20554. Finally, a copy should also be provided to the International Transcription Service (ITS), the Commission's duplicating contractor. 5. Petitioners may also file their comments electronically using the Electronic Tariff Filing System (ETFS). Comments and reply comments filed electronically do not have to be filed with the Secretary's Office and distributed in the same manner as those filed in paper format. 6. Reply comments should be submitted to the parties listed above; in addition, each petitioner should be served with a copy on, or before June 28, 1999, for petitions filed on June 23, 1999, and June 29, 1999 for petitions filed on June 28, 1999. 7. Parties are instructed to provide contact persons and fax numbers in their filings. ILECs are directed to serve their complete tariff filings, including accompanying cost studies, upon all persons who filed comments in the January 1, 1999 access tariff filing proceedings. Parties filing comments and replies electronically are reminded that they are still required to serve copies in accordance with Sections 47-1.773(a)(4) and (b)(3) of the Commission's rules, and as stated herein. C. Public Information 8. Copies of these filings and related correspondence will be available for inspection in the Public Reference Room, located at Room CY-C404, Federal Communications Commission, 445 12 th Street S.W. Copies may also be obtained from ITS, 1231 20th Street N.W. Washington D.C. 20036, (202/857-3800). For more information, contact Raj Kannan at 202/418-1540, Common Carrier Bureau, Competitive Pricing Division. Filing Distribution List For 1999 Annual Access Tariff Charges Number of Copies Trans. TRP Location Letter Disk Public Reference Copy 445- 12 th Street S.W. Room TW A325 1 1 ITS 445-12 th Street S.W. Room TW A325 1 1 Raj Kannan Competitive Pricing Div. 445- 12 th Street S.W. Room TW A325 1 2 Note: Please attach a copy of the transmittal letter to your TRP diskette so that we may identify the carrier submitting the TRP easily. Please label each packet with the name of the person or organization that will be receiving the TRP before filing in Room TW A325. Since carriers are no longer able to deliver these packages directly to each recipient, it is extremely important that they be properly labeled. Appendix B Price Cap Tariff Review Plan Approved by OMB 3060-0400 Expires September 30, 1999 See below for information regarding public burden estimate. NOTICE: These Tariff Review Plans (TRPs) contain summary support material that certain local exchange carriers (LECs) should file to support their annual access charge tariff filings in partial fulfillment of Sections 61.38 and 61.44 through 61.49 of the Commission's Rules. The TRPs specify basic information in a consistent format and are essential components of the Commission's access tariff review process. The information in the TRPs is used by the FCC to evaluate rates. Public reporting burden for this collection of information is estimated to average 61 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to the Federal Communications Commission, Office of Managing Director, Washington, DC 20554, and to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503. Appendix C Rate-of-Return Tariff Review Plan to Accompany Tariff Filings Approved by OMB 3060-0400 Expires September 30, 1999 See below for information regarding public burden estimate. NOTICE: These Tariff Review Plans (TRPs) contain summary support material that certain local exchange carriers (LECs) should file to support their annual access charge tariff filings in partial fulfillment of Sections 61.38 and 61.44 through 61.49 of the Commission's Rules. The TRPs specify basic information in a consistent format and are essential components of the Commission's access tariff review process. The information in the TRPs is used by the FCC to evaluate rates. Public reporting burden for this collection of information is estimated to average 61 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to the Federal Communications Commission, Office of Managing Director, Washington, DC 20554, and to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503.