Part II. Public Utility Commission
Chapter 23.
Subchapter H. Telephone
(Editor’s note: The text of the following section proposed for repeal
will not be published. The section may be examined in the offices of
the Public Utility Commission of Texas or in the Texas Register office,
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Public Utility Commission of Texas (commission) proposes
the repeal of §23.91, relating to Long Run Incremental Cost
Methodology for Dominant Certificated Telecommunications
Utility (DCTU) Services. Project Number 20102 has been
assigned to this proceeding. The Appropriations Act of 1997,
HB 1, Article IX, Section 167 (Section 167) requires that each
state agency review and consider for readoption each rule
adopted by that agency pursuant to the Government Code,
Chapter 2001 (Administrative Procedure Act). Such reviews
shall include, at a minimum, an assessment by the agency
as to whether the reason for adopting or readopting the rule
continues to exist. The commission held three workshops
to conduct a preliminary review of its rules. As a result of
these workshops, the commission is reorganizing its current
substantive rules located in 16 Texas Administrative Code
(TAC) Chapter 23 to (1) satisfy the requirements of Section
167; (2) repeal rules no longer needed; (3) update existing
rules to reflect changes in the industries regulated by the
commission; (4) do clean-up amendments made necessary by
changes in law and commission organizational structure and
practices; (5) reorganize rules into new chapters to facilitate
future amendments and provide room for expansion; and (6)
reorganize the rules according to the industry to which they
apply. As a result of this reorganization, §23.91 will be
duplicative of proposed new §26.215 of this title (relating to Long
Run Incremental Cost Methodology for Dominant Certificated
Telecommunications Utility (DCTU) Services) in Chapter 26,
Substantive Rules Applicable to Telecommunications Service
Providers.
Martin Wilson, assistant general counsel, Office of Regulatory
Affairs, has determined that for each year of the first fiveyear
period the repeal is in effect there will be no fiscal
implications for state or local government as a result of enforcing
or administering the repeal.
Mr. Wilson has determined that for each year of the first five
years the repeal is in effect, the public benefit anticipated as
a result of the repeal will be the elimination of a duplicative
rule. There will be no effect on small businesses as a result of
repealing this section. There is no anticipated economic cost
to persons as a result of repealing this section.
Mr. Wilson has determined that the proposed new section
should not affect the local economy, and therefore no local
employment impact statement is required under Administrative
Procedure Act §2001.022.
Comments on the proposed repeal (16 copies) may be submitted
to the Filing Clerk, Public Utility Commission of Texas, 1701
N. Congress Avenue, P.O. Box 13326, Austin, Texas 78711-
3326, within 30 days after publication. All comments should
refer to Project Number 20102, repeal of §23.91.
This repeal is proposed under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA),
which provides the Public Utility Commission with the authority
to make and enforce rules reasonably required in the exercise
of its powers and jurisdiction.
Cross Reference to Statutes: Public Utility Regulatory Act
§14.002.
§23.91. Long Run Incremental Cost Methodology for Dominant
Certificated Telecommunications Utility (DCTU) Services.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency’s
legal authority to adopt.
Filed with the Office of the Secretary of State, on January 25,
1999.
TRD-9900519
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: March 7, 1999
For further information, please call: (512) 936–7308
(Editor’s note: The text of the following section proposed for repeal
will not be published. The section may be examined in the offices of
the Public Utility of Texas or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Public Utility Commission of Texas (commission) proposes
the repeal of §23.104, relating to Telecommunications Pricing.
Project Number 18846 has been assigned to this proceeding.
The Appropriations Act of 1997, HB 1, Article IX, Section 167
(Section 167) requires that each state agency review and consider
for readoption each rule adopted by that agency pursuant
to the Government Code, Chapter 2001 (Administrative Procedure
Act). Such reviews shall include, at a minimum, an assessment
by the agency as to whether the reason for adopting
or readopting the rule continues to exist. The commission held
three workshops to conduct a preliminary review of its rules.
As a result of these workshops, the commission is reorganizing
its current substantive rules located in 16 Texas Administrative
Code (TAC) Chapter 23 to (1)satisfy the requirements of Section
167; (2) repeal rules no longer needed; (3) update existing
rules to reflect changes in the industries regulated by the
commission; (4) do clean-up amendments made necessary by
changes in law and commission organizational structure and
practices; (5) reorganize rules into new chapters to facilitate
future amendments and provide room for expansion; and (6)
reorganize the rules according to the industry to which they apply.
As a result of this reorganization, §23.104 will be duplicative
of proposed new §26.213 of this title (relating to Telecommunications
Pricing) in Chapter 26, Substantive Rules Applicable to
Telecommunications Service Providers.
Martin Wilson, assistant general counsel, Office of Regulatory
Affairs, has determined that for each year of the first fiveyear
period the repeal is in effect there will be no fiscal
implications for state or local government as a result of enforcing
or administering the repeal.
Mr. Wilson has determined that for each year of the first five
years the repeal is in effect, the public benefit anticipated as
a result of the repeal will be the elimination of a duplicative
rule. There will be no effect on small businesses as a result of
repealing this section. There is no anticipated economic cost
to persons as a result of repealing this section.
Mr. Wilson has determined that the proposed new section
should not affect the local economy, and therefore no local
employment impact statement is required under Administrative
Procedure Act §2001.022.
Comments on the proposed repeal (16 copies) may be submitted
to the Filing Clerk, Public Utility Commission of Texas, 1701
N. Congress Avenue, P.O. Box 13326, Austin, Texas 78711-
3326, within 30 days after publication. All comments should
refer to Project Number 18846, repeal of §23.104.
This repeal is proposed under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA),
which provides the Public Utility Commission with the authority
to make and enforce rules reasonably required in the exercise
of its powers and jurisdiction.
Cross Reference to Statutes: Public Utility Regulatory Act
§14.002.
§23.104. Telecommunications Pricing.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency’s
legal authority to adopt.
Filed with the Office of the Secretary of State, on January 25,
1999.
TRD-9900482
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: March 7, 1999
For further information, please call: (512) 936–7308
Subchapter J. Costs, Rates and Tariffs
The Public Utility Commission of Texas (commission) proposes
new §26.213, relating to Telecommunications Pricing, as well
as the repeal of §23.104. Project Number 18846 has been assigned
to this proceeding. The new section will replace §23.104
of this title (relating to Telecommunications Pricing) and implements
Public Utility Regulatory Act (PURA) §60.101, which requires
the commission to adopt a pricing rule to ensure that
each price for a monopoly service remains affordable; that each
price for a competitive service is not unreasonably preferential,
prejudicial, or discriminatory, directly or indirectly subsidized by
a noncompetitive service, or predatory or anticompetitive; and
requires that each service recover the appropriate costs, including
joint and common costs, of each facility and function used
to provide the service.
The Appropriation Act of 1997, HB 1, Article IX, Section 167
(Section 167) requires that each state agency review and consider
for readoption each rule adopted by that agency pursuant
to the Government Code, Chapter 2001 (Administrative Procedure
Act). Such reviews shall include, at a minimum, an assessment
by the agency as to whether the reason for adopting
or readopting the rule continues to exist. The commission held
three workshops to conduct a preliminary review of its rules.
As a result of these workshops, the commission is reorganizing
its current substantive rules located in 16 Texas Administrative
Code (TAC) Chapter 23 to (1) satisfy the requirements
of Section 167; (2) repeal rules no longer needed; (3) update
existing rules to reflect changes in the industries regulated by
the commission; (4) do clean-up amendments made necessary
by changes in law and commission organizational structure and
practices; (5) reorganize rules into new chapters to facilitate future
amendments and provide room for expansion; and (6) reorganize
the rules according to the industry to which they apply.
Chapter 26 has been established for all commission substantive
rules applicable to telecommunications service providers.
The duplicative sections of Chapter 23 will be proposed for repeal
as each new section is proposed for publication in the new
chapter.
General changes to rule language:
All but one of the definitions in this section have been deleted
because they have been moved to proposed §26.5 of this title
(relating to definitions). The definition for "service" as defined
in §26.213(b) is specific to this section.
Other changes specific to each section:
Subsection (f)(3), which addresses price ceilings applicable to
a DCTU electing into PURA Chapter 58 incentive regulation,
is revised. The commission proposes to use the initial rate
approved by the commission as the price ceiling for a service
initially offered after September 1, 1995, in place of the
current requirement of stand-alone cost as the price ceiling
for discretionary services. This proposal would establish a
reasonable price ceiling for discretionary services consistent
with the requirement in PURA §58.102, and would expedite
the review process for applications by a DCTU to provide
discretionary telecommunication services.
Bih-Jau Sheu, senior economist, Office of Regulatory Affairs,
and Mr. Martin Wilson, assistant general counsel, have
determined that for each year of the first five-year period the
proposed section is in effect there will be no fiscal implications
for state or local government as a result of enforcing or
administering the section.
Ms. Sheu and Mr. Wilson have also determined that for each
year of the first five years the section is in effect, the public benefit
anticipated as a result of enforcing this section will be (1)
to establish principles for the pricing of telecommunications services
that foster economic efficiency and the public welfare, and
(2) to expedite the review process for applications by DCTU for
provision of discretionary telecommunication services. There
will be no effect on small businesses as a result of enforcing
this section. There is no anticipated economic cost to persons
who are required to comply with the proposed new section.
Ms. Sheu and Mr. Wilson have determined that the proposed
new section should not affect the local economy, and therefore
no local employment impact statement is required under Administrative
Procedure Act §2001.022.
The Texas Register will publish §26.213 as all new text.
Interested persons may obtain a redline comparing proposed
§26.213 to existing §23.104 at the Public Utility Commission of
Texas, Central Records Division, under Project Number 18846.
Comments on the proposed section (16 copies) may be submitted
to Filing Clerk, Public Utility Commission of Texas, 1701 N.
Congress Avenue, P.O. Box 13326, Austin, Texas, 78701-3326,
within 30 days after publication.
The commission invites specific comments regarding whether
this proposed amendment provides the intended pricing flexibility
for the electing DCTU. The commission also solicits comments
on the following two questions:
1. For existing discretionary service offered after September
1, 1995, should the price ceiling be the rate in effect as of the
effective date of the rule in the event that initial price is different
from current price?
2. For discretionary service initially offered after the effective
date of this rule, should the price ceiling be established at a
level that is 10% higher than the initial rate proposed?
If the staff, after reviewing the comments, deems a public
hearing to be appropriate, or if requested by a commenter, a
public hearing will be held and parties who have filed comments
will be notified.
The commission invites specific comments regarding the costs
associated with, and benefits that will be gained by, implementation
of the proposed section. The commission will consider
the costs and benefits in deciding whether to adopt the section.
The commission also invites specific comments regarding the
Section 167 requirement as to whether the reason for adopting
§23.104 continues to exist in adopting the new section. All comments
should refer to Project Number 18846, §26.213 relating
to Telecommunications Pricing.
This new section is proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998)
(PURA), which provides the Public Utility Commission of Texas
with the authority to make and enforce rules reasonably required
in the exercise of its powers and jurisdiction, and specifically
§52.001(b), which provides the Public Utility Commission of
Texas with the authority to formulate and apply rules to protect
the public interest and provide equal opportunity to each
telecommunications utility in a competitive marketplace; and
§60.101 which requires the commission to adopt a rule on
telecommunications pricing.
Cross Index to Statutes: Public Utility Commission of Texas
§§14.002, 52.001(b), 58.102 and 60.101.
§26.213. Telecommunications Pricing.
(a) Purpose. The purpose of this section is to establish
principles to foster economic efficiency and the public welfare in
the pricing of telecommunications services.
(b) Application. Except as otherwise provided herein, the
provisions of this section shall apply to dominant certificated telecommunications
utilities (DCTUs). Unless the DCTU has elected to
be regulated under the terms of the Public Utility Regulatory Act
(PURA) Chapter 58, the provisions of this section may be applied to
a DCTU serving 31,000 or more but fewer than one million access
lines only on a bona fide request by a holder of a certificate of operating
authority or service provider certificate of operating authority.
(c) Definition. As used in this section, a "service" is a
tariffed or contract offering which a customer may purchase to the
exclusion of other offerings. For example: the various mileage bands
for standard toll services are rate elements, not services; individual
optional calling plans that can be purchased individually and which
are offered as alternatives to each other are services, not rate elements.
(d) General principles.
(1) Subsidy-free pricing.
(A) Telecommunications prices should be subsidyfree.
Subsidy-free prices prevent one service or group of services
from subsidizing or being subsidized by another. This language is
not meant to preclude the use of explicit universal service support
mechanisms to maintain affordable rates.
(B) Pricing all services produced by a DCTU above
long run incremental cost (LRIC) will ensure subsidy-free pricing.
(C) In a subsidy-free pricing environment, support
for universal basic telecommunications service must come from an
explicit subsidy, such as a Universal Service Fund.
(D) The transition to subsidy-free pricing should be
undertaken in stages, in coordination with implementation of state
and federal universal service support mechanisms and initiatives to
reform pricing of access services.
(2) Customer-specific pricing. When set above incremental
cost and not used in an anticompetitive manner, customer-specific
pricing can benefit the general body of ratepayers and foster economic
efficiency by encouraging utilization of under- utilized facilities.
(3) Inefficient or uneconomic costs. The commission
has no obligation to ensure that a DCTU recovers inefficient or
uneconomic costs.
(e) Basic network services. Except as provided by paragraph
(2) of this subsection, a DCTU may not exercise pricing flexibility
for a basic network service.
(1) The following services are initially classified as basic
network services:
(A) flat-rate residential and business local exchange
telephone service, including primary directory listings and the receipt
of a directory and any applicable mileage or zone charges;
(B) tone dialing service;
(C) lifeline and tel-assistance services;
(D) service connection for basic services;
(E) direct inward dialing service for basic services;
(F) private pay telephone access service;
(G) call trap and trace service;
(H) access to 911 service, where provided by a local
authority, and access to dual party relay service;
(I) switched access service;
(J) interconnection to competitive providers;
(K) mandatory extended area service arrangements;
(L) mandatory extended metropolitan service or other
mandatory toll-free calling arrangements;
(M) interconnection for commercial mobile service
providers;
(N) directory assistance; and
(O) 1+ intraLATA message toll service.
(2) An electing local exchange company (LEC) may lower
the rate for a basic network service to the service’s price floor.
For an electing LEC that is required by the commission to perform
long run incremental cost studies or elects to perform those studies,
the price floor for switched access service or for any basic local
telecommunications service shall be LRIC. For any other electing
LEC, the price floor for basic local telecommunications service shall
be the appropriate cost of the service. Packaging basic network
services with discretionary or competitive services is not permitted.
(3) In setting the price of a basic network service, the
commission shall pursue the goal of maintaining basic services at
affordable rates for customers.
(f) Discretionary services. Except as provided by paragraph
(5) of this subsection, a DCTU may not exercise pricing flexibility
for a discretionary service.
(1) The following services shall initially be classified as
discretionary services.
(A) 1+ intraLATA message toll services, where intraLATA
equal access is available;
(B) 0+, 0- operator services;
(C) call waiting, call forwarding, and custom calling
features not classified as competitive services;
(D) call return, caller ID, and call control options not
classified as competitive services;
(E) central office-based PBX-type services;
(F) billing and collection services;
(G) integrated services digital network (ISDN) services;
and
(H) new services.
(2) The price for a discretionary service shall not be set
below LRIC or the price floor prescribed by §23.102 of this title
(relating to Imputation), whichever is higher. An electing LEC may
request the establishment of a price floor for a discretionary service
that is above LRIC.
(3) For services initially offered after September 1, 1995,
the price ceiling shall be the initial rate approved by the commission.
(4) The price ceiling for a discretionary service provided
by an electing LEC may not be set below or above the rate in
effect on September 1, 1995, without regard to proceedings pending
under PURA §§12.004, 15.001, 15.002, 53.151 and 53.152 or under
Government Code, Chapter 2001, Subchapter G. The ceiling may be
raised only after the proceedings required under PURA, Chapter 60.
Thereafter, on application by the DCTU or on the commission’s own
motion, the commission may change the price ceiling but may not
increase the ceiling more than 10% annually.
(5) Within the range of the floor and the ceiling established
pursuant to this subsection, an electing LEC may change the
price of a discretionary service but shall notify the commission of
each change. Such price changes may include volume and term discounts,
zone density pricing, packaging of services, customer specific
pricing, and other promotional pricing flexibility. Packaging of services
may include packaging of an installation service or charge with
provision of the corresponding service. An electing LEC lowering
the price of any component of a package of services, including an
installation charge, shall demonstrate that the package of services affected
by the price change recovers its LRIC within one year of the
price change.
(6) Discounts and other forms of pricing flexibility for
discretionary services may not be preferential, prejudicial, or discriminatory.
(g) Competitive services. Except as provided by paragraphs
(2) and (4) of this subsection, a DCTU may not exercise pricing
flexibility for a competitive service.
(1) The following services shall initially be classified as
competitive services:
(A) services described in theWATS tariff as of January
1, 1995;
(B) 800 and foreign exchange services;
(C) private line service;
(D) special access service;
(E) services from public pay telephones;
(F) paging services and mobile services (IMTS);
(G) 911 premises equipment;
(H) speed dialing; and
(I) three-way calling.
(2) The price for a competitive service shall not be set
below LRIC or the price floor prescribed by §23.102 of this title,
whichever is higher. An electing LEC may request the establishment
of a price floor for a competitive service that is above the floor
prescribed by this paragraph.
(3) An electing LEC may set the price for a competitive
service at any level above the floor prescribed in this subsection. Permissible
pricing flexibility includes volume and term discounts, zone
density pricing, packaging of services, customer specific contracts,
and other promotional pricing flexibility, subject to the requirements
of PURA §60.001 and §60.002. However, an electing LEC may not
increase the price of a service in a geographic area in which that service
or a functionally equivalent service is not readily available from
another provider. The pricing flexibility allowed by this subsection
permits the packaging of a competitive service with one or more discretionary
services only if the DCTU demonstrates that the rate for
the package of services is greater than the sum of the LRIC of the
competitive service and the tariffed rates of the discretionary services
included in the package.
(4) Prices for competitive services may not be unreasonably
preferential, prejudicial, or discriminatory.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency’s
legal authority to adopt.
Filed with the Office of the Secretary of State, on January 25,
1999.
TRD-9900481
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: March 7, 1999
For further information, please call: (512) 936–7308
The Public Utility Commission of Texas (commission) proposes
new §26.215, relating to Long Run Incremental Cost
Methodology for Dominant Certificated Telecommunications
Utility (DCTU) Services. The proposed section will replace
§23.91 of this title (relating to Long Run Incremental Cost
Methodology for Dominant Certificated Telecommunications
Utility (DCTU) Services). The proposed section requires DCTUs
to determine and provide to the commission the long run incremental
costs (LRIC) incurred in the provision of telecommunications services. Project Number 20102 has been assigned
to this proceeding.
The Appropriations Act of 1997, HB 1, Article IX, Section 167
(Section 167) requires that each state agency review and consider
for readoption each rule adopted by that agency pursuant
to the Government Code, Chapter 2001 (Administrative Procedure
Act). Such reviews shall include, at a minimum, an assessment
by the agency as to whether the reason for adopting
or readopting the rule continues to exist. The commission held
three workshops to conduct a preliminary review of its rules.
As a result of these workshops, the commission is reorganizing
its current substantive rules located in 16 Texas Administrative
Code (TAC) Chapter 23 to (1) satisfy the requirements
of Section 167; (2) repeal rules no longer needed; (3) update
existing rules to reflect changes in the industries regulated by
the commission; (4) do clean-up amendments made necessary
by changes in law and commission organizational structure and
practices; (5) reorganize rules into new chapters to facilitate future
amendments and provide room for expansion; and (6) reorganize
the rules according to the industry to which they apply.
Chapter 26 has been established for all commission substantive
rules applicable to telecommunications service providers.
The duplicative sections of Chapter 23 will be proposed for repeal
as each new section is proposed for publication in the new
chapter.
General changes to rule language:
The proposed new section reflects different section, subsection,
and paragraph designations due to the reorganization of the
rules. Citations to the Public Utility Regulatory Act have been
updated to conform to the Texas Utilities Code throughout the
sections and citations to other sections of the commission’s
rules have been updated to reflect the new section designations.
Some text has been proposed for deletion as unnecessary in
the new section because the dates and requirements in the text
no longer apply due to the passage of time and/or fulfillment of
the requirements. The Texas Register will publish this section
as all new text. Persons who desire a copy of the proposed new
section as it reflects changes to the existing section in Chapter
23 may obtain a redlined version from the commission’s Central
Records under Project Number 20102.
Other changes specific to each section:
The following terms from §23.91(c) of this title have not been
included in proposed §26.215, as they were moved to §26.5
of this title (relating to Definitions): "depreciation expenses";
"expenses"; "least cost technology"; "long run"; "long run
incremental cost (LRIC)"; "unit cost"; "volume insensitive costs";
and "volume sensitive costs". In reviewing §23.91(c)(10) it was
found that subparagraph (B) was inadvertently left out of the
copy of the rule distributed by the commission’s print shop. This
subparagraph has been added back in, but does not constitute a
change in the rule. Subparagraph (B) was included in the rule
as adopted and published in the Texas Register (18 TexReg
5723).
Subsections (j), (k), (m) and (p) of §23.91 have not been
included in proposed §26.215, as the requirements of these
sections have already been fulfilled.
Subsections (f)(5), (g)(8), (h)(7), (i)(5) relating to cost of money
are revised to set a forward looking cost of capital for the
companies. The revisions state that when the company
uses the most recent commission-approved rate of return for
the company, determined either in a rate proceedings as
described in §23.21(d) of this title (relating to Cost of Service)
or a commission arbitration proceeding defined under §251 of
the federal Telecommunication Act of 1996, there will be a
rebuttable presumption of reasonableness. The company shall
justify the use of any other forward-looking-looking rate. Nothing
in this revision shall, by itself, cause an updated cost study to
be performed. The introduction of the reasonableness of the
rate of return (or equivalently, cost of capital) determined in the
above mentioned commission arbitration proceeding is to avoid
the use of embedded cost data, and therefore to be consistent
with subsection (d)(3) of this section.
Subsection (l)(1) is also changed. Instead of requiring the
DCTUs to update its cost studies every six months, a DCTU
may be required to update the filings only for those studies
where significant changes have occurred.
Bih-Jau Sheu, senior economist, Office of Regulatory Affairs,
has determined that for each year of the first five-year period the
proposed section is in effect there will be no fiscal implications
for state or local government as a result of enforcing or
administering the section.
Ms. Sheu has determined that for each year of the first
five years the proposed section is in effect the public benefit
anticipated as a result of enforcing the section will be: (1) the
ability of the commission to prevent cross-subsidization and to
eliminate predatory pricing behaviors; and (2) the ability of the
commission to adopt the most recent commission approved
rate of return for the companies, whether it is determined in
a rate proceeding or in an arbitration proceeding. There will
be no effect on small businesses as a result of enforcing this
section. There is no anticipated economic cost to persons who
are required to comply with the section as proposed.
Ms. Sheu has determined that the proposed new section should
not affect the local economy, and therefore no local employment
impact statement is required under Administrative Procedure
Act §2001.022.
Comments on the proposed new section (16 copies) may be
submitted to the Filing Clerk, Public Utility Commission of Texas,
1701 N. Congress Avenue, P.O. Box 13326, Austin, Texas
78711-3326, within 30 days after publication. The commission
invites specific comments regarding the costs associated with,
and benefits that will be gained by, implementation of the proposed
section. The commission will consider the costs and
benefits in deciding whether to adopt the section. The commission
also invites specific comments regarding the Section 167
requirement as to whether the reason for adopting or readopting
the rule continues to exist. All comments should refer to
Project Number 20102.
This new section is proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998)
(PURA), which provides the Public Utility Commission with the
authority to make and enforce rules reasonably required in
the exercise of its powers and jurisdiction; and specifically,
PURA §52.059 which grants the commission authority to adopt
standards necessary to ensure that a rate established under
this subchapter covers appropriate costs as determined by
the commission. PURA §52.053 requires the commission to
ensure that a rate established under this subchapter may not be
(1) unreasonably preferential, prejudicial, or discriminatory; (2)
subsidized either directly or indirectly by a regulated monopoly
service; or (3) predatory of anticompetitive. PURA §52.053
hence calls forth the commission to review and approve LRIC
cost studies.
Cross Index to Statutes: Public Utility Regulatory Act §§14.002,
52.053, 52.059.
§26.215. Long Run Incremental Cost Methodology for Dominant
Certificated Telecommunications Utility (DCTU) Services.
(a) Application. This section shall apply to DCTUs with
annual revenues from regulated telecommunications operations in
Texas of $100 million or more for five consecutive years. An
incumbent local exchange carrier that is not a Tier 1 local exchange
company as of September 1, 1995, at that company’s option, may
adopt the cost studies approved by the commission for a Tier 1 local
exchange company.
(b) Purpose. This section shall be used to determine the
long run incremental costs incurred by DCTUs in the provision of
telecommunications services. The costs determined in this section
shall not be used to determine a company’s revenue requirement
during a proceeding pursuant the Public Utility Regulatory Act,
Chapter 53, Subchapters C and D or E.
(c) Definitions. The following words and terms when used
in this section shall have the following meaning unless the context
clearly indicates otherwise.
(1) Ancillary services - The category of basic network
functions (BNFs) (as defined in paragraph (2) of this subsection)
that provide for certain activities that either support or otherwise are
adjuncts to other BNFs or finished services. This category of BNFs
consists of three subcategories of BNFs: Billing and Collection;
Measurement; and Operator Services.
(A) Billing and collection - The subcategory of BNFs
that provide for the function of compiling the information needed for
customer billing, preparing the customer bill statement, disbursing
the bill and collecting the customer payments.
(B) Measurement - The subcategory of BNFs that
provide the functions of assembling, collating and transmitting end
office switch recorded call data (occurrence and duration).
(C) Operator services - The subcategory of BNFs that
provide for the provision of a number of live or mechanized assistance
functions to aid customers in the following ways: obtaining customer
telephone number, street address and ZIP code information (directory
assistance); providing new telephone numbers or explanatory information
to callers who dial numbers which have been changed or
disconnected (intercepts); providing assistance to customers in completing
operator handled toll or local calls (collect, credit card, third
party, station-to-station or person-to- person); checking busy lines to
make sure the line is not out of service (busy line verification); and
interrupting busy lines (busy line interruption). These operator services
are provided to end user customers as well as local exchange
and interexchange carriers.
(2) Basic network function (BNF) - A discrete network
function, which is useful either as a stand-alone function or in
combination with other functions, for which costs can be identified.
(3) Capital costs - The recurring costs that result from
expenditures for plant facilities that are capitalized. The annual
capital costs consist of depreciation, cost of money, and income taxes.
(4) Categories of BNFs - All BNFs shall fall into one
of four categories of BNFs. The categories are: network access
(as defined in paragraph (13) of this subsection); switching and
switch functions (as defined in paragraph (16) of this subsection);
dedicated and switched transport (as defined in paragraph (10) of this
subsection); and ancillary services (as defined in paragraph (1) of this
subsection).
(5) Common costs - Costs that are not directly attributable
to individual cost objects. For the purposes of this section there are
three types of common costs: general overhead costs; costs common
to BNFs; and costs common to services.
(A) General overhead costs - Costs incurred in operating
and managing the company that are not directly attributable to
BNFs or services.
(B) Costs common to BNFs - Costs incurred in the
provision of BNFs that can not be directly attributed to any one
BNF individually but only to a category or subcategory of BNFs
collectively.
(C) Costs common to services - Costs incurred in the
provision of two or more services that do not vary with changes in the
relative proportions of the outputs of those services. Common costs
are not directly attributable to any one service individually but only
to a group of services collectively. In the event a BNF is used in the
provision of two or more services then the volume insensitive cost of
the BNF is a cost common to the services that use the BNF. However,
if the technological requirements for the provision of one service
alter the least cost technology choice for common BNFs or common
facilities, then the increase in costs caused by the requirements for
more advanced technologies is not a common cost but a cost directly
attributable to the service that alters the least cost technology choice.
(6) Cost causation principle - The principle that only those
costs that are caused by an activity (such as a network function,
service, or group of services) in the long run are directly attributable
to that activity. Costs are caused by an activity, in the long run, if
the costs are brought into existence as a direct result of the activity.
(7) Cost driver - A specific condition, under which a BNF
is provided, whose change causes significant and systematic changes
in the cost of providing a BNF. For example, if the cost of providing
a network access channel varies with the density and size of a wire
center, then density and size are cost drivers for that BNF.
(8) Cost of debt - The rate of interest paid on borrowed
money.
(9) Cost of money - The weighted annual cost to the
DCTU of the debt and equity capital invested in the company.
(10) Dedicated and switched transport - The category of
BNFs that provide for dedicated or shared transmission transport
between two or more DCTU switching offices or wire centers. This
BNF category consists of two subcategories of BNFs: Dedicated
Transport and Switched Transport.
(A) Dedicated transport - The subcategory of BNFs
that provide for full period, bandwidth specific (e.g., DS-0, DS-
1, DS-3) interoffice transmission paths between the originating and
terminating points of channel connection.
(B) Switched transport - The subcategory of BNFs that
provide for shared interoffice transmission paths between originating
and terminating points of switching.
(11) Group of services - A number of separately tariffed
services that share significant common costs (as defined in paragraph
(5) of this subsection) that are necessary and unique to the provision
of those services and are not directly attributable to any one service
individually. This term also refers to a situation in which two
or more groups of services are part of a larger group of services
because of significant common costs that are necessary and unique
to the provision of all the services in the group but are not directly
attributable to any one group or service individually.
(12) Measure of unit cost - The measure of usage used
to calculate unit cost for a particular BNF (for example, a minute
of use of a switching function, or a quarter mile of a DS-1 network
access channel). The measure of unit costs may be multidimensional;
for example, it may have both time and distance components. The
measure of unit cost chosen for a BNF shall correspond to the basis
upon which the costs of that BNF are incurred.
(13) Network access - The category of BNFs that accommodate
access to other network functions provided by DCTUs. Access
is accomplished by transmission paths between customers and
DCTU wire centers. This category consists of three subcategories of
BNFs: network access channel; network access channel connection;
and channel performance and other features and functions.
(A) Network access (NA) channel - The subcategory
of BNFs that provide the transmission path between the point of
interface at the customer location and the main distribution frame, or
equivalent (e.g., DSX-1, DSX-3), of a DCTU wire center.
(B) Network access (NA) channel connection - The
subcategory of BNFs that provide the interface between the network
access channel and the DCTU wire center switching equipment, subsequent
dedicated transport equipment (dedicated interoffice circuits),
or subsequent channel equipment (dedicated intraoffice circuits).
(C) Channel performance and other features and functions
- The subcategory of BNFs that provide the channel functions
associated with transmission or service type (e.g., analog, digital,
coin, ISDN), bandwidth conversion, signaling, multiplexing, amplification, and channel performance.
(14) Significant - For the purposes of this section, the
qualifying term significant is used to refer to instances in which costs
or changes affect total study results by at least five percent. This
general guideline for when costs or changes are significant may be
relaxed by considering the cumulative effect of either including or
excluding costs or changes from a study.
(15) Subcategories of BNFs - Groupings of closely related
BNFs in a category of BNFs.
(16) Switching and switch functions - The category of
BNFs that provide for switched access between two or more network
access channels or between network access channels and other
BNFs, such as interoffice transport. This function is accomplished
through the establishment of a temporary transmission path between
network access channels in the same switching office; between a
network access channel and the interoffice facilities that interconnect
switching offices; or between a network access channel and other
BNFs. This BNF category shall cover the first point of switching
for a customer. This BNF category consists of three subcategories
of BNFs: interoffice switching; intraoffice switching; and switching
features.
(A) Interoffice switching - The subcategory of BNFs
that provide for: switching between network access channels and
switched transport facilities which are connected to different wire
centers; and switching between network access channels and switched
transport facilities when a tandem switch is used as the first point of
interface to the DCTU switched network (e.g., connection of facilities
from an interexchange carrier’s point of network interface).
(B) Intraoffice switching - The subcategory of BNFs
that provide for switching between two or more network access
channels within the same wire center.
(d) General principles.
(1) Underlying the construction and application of this
section is the recognition that the DCTU network consists of a finite
number of BNFs that, when bundled in various combinations, can
be used to deliver and market a vast variety of telecommunications
services. Therefore, the determination of the cost of a service and
the costs of a group of services under this section shall involve the
identification and costing of BNFs.
(2) The LRIC studies that the DCTU is required to file
under this section shall assume that the company is operating in the
long run and employs least cost technologies, as those terms are
defined in subsection (c) of this section.
(3) In order to obtain accurate LRIC study results, the
DCTU shall avoid the use of embedded cost data; expense items
and capital costs shall reflect long run incremental costs and the
DCTU shall justify any instance in which embedded cost data are
used. Further, the fact that the costs determined under this section
may differ from the company’s embedded costs as determined during
proceedings under the Public Utility Regulatory Act, Chapter 53,
Subchapters C and D or E, should in no way cause the company
to attribute any of this cost discrepancy to LRIC studies for BNFs,
services, or groups of services.
(4) When a BNF is used in the provision of two or more
services then the volume insensitive cost of the BNF is a cost common
to the services (as defined in subsection (c)(5)(C) of this section) that
use the BNF.
(5) When services share significant common costs (as de-
fined in subsection (c)(5)(C) of this section), none of the common
costs shall be included in the LRIC studies for the services individually;
instead, the company shall identify which services share the
common costs and attribute the cost recovery responsibility of these
costs to the group of services collectively. Specifically, the individual
LRIC studies for residential and business basic local exchange
service, as these services are tariffed on the effective date of this section,
shall exclude any volume insensitive costs associated with the
use of the network access channel basic level (as defined in subsection
(e)(1)(A) of this section) and network access channel connection
basic level (as defined in subsection (e)(2)(A) of this section).
(6) When two or more groups of services share common
costs, none of the common costs shall be included in the LRIC studies
for groups individually; instead, the company shall identify which
groups share the common costs and assign the common cost recovery
responsibility of these costs to these groups collectively.
(7) Nothing in this section is intended to either endorse
or reject the DCTU’s current rate and tariff structures.
(e) Identification of basic network functions. The DCTU
shall identify for each subcategory of BNFs the relevant and separately
identifiable BNFs. The determination of the appropriate degree
of aggregation of network components, functions, or activities
into separately identifiable BNFs shall be consistent with the principles
described in subsection (d) of this section. Furthermore, in
choosing BNFs, the DCTU shall seek to minimize the number of
network components, functions, or activities that are not included in
BNFs. In addition to BNFs the company identifies under this subsection,
the company shall identify for each subcategory of BNFs the
following prescribed BNFs:
(1) Required BNFs for subcategory network access (NA)
channel:
(A) NA channel basic level: A transmission path
which provides less than 1.544 Mbps digital capability. This includes
300 to 3,000 Hz analog voice service.
(B) NA channel DS-1 level: A transmission path
which has 1.544 MBPS digital capability.
(C) NA channel DS-3 level: A transmission path
which has 45 MBPS digital capability.
(2) Required BNFs for subcategory NA Channel Connection:
(A) NA channel connection basic level: An interface
for channels which provide less then 1.544 Mbps digital capability.
This includes the interface for 300 - 3,000 Hz analog voice service
which is the basic interface for most voice grade services such
as: basic local residential and local business service, PBX trunks,
centrex-type access lines and voice grade dedicated transport service.
In addition, this category includes the interface for four frequency
bandwidths provided for audio channels such as: 200 to 3,500 Hz,
100 to 5,000 Hz, 50 to 8,000 Hz and 50 to 15,000 Hz. Also included
in this BNF are the interfaces for low speed data transmission at
speeds of 2.4, 4.8, 9.6, 56 Kbps and all other speeds below the T-1
rate of 1.544 Mbps. This interface is for narrowband service.
(B) NA channel connection DS-1 level: An interface
for 1.544 MBPS digital transmission channels. This interface
connects high capacity wideband transmission channels which operate
in a full duplex, time division (digital) multiplexing mode.
(C) NA channel connection DS-3 level: An interface
for 45 MBPS digital transmission channels. This interface connects
broadband transmission channels which operate in full duplex, time
division (digital) multiplexing mode.
(3) Required BNFs for subcategory Channel Performance
and Other Features and Functions:
(A) Standard signaling and transmission level capabilities.
Signaling and transmission level capabilities suitable for a wide
variety of network services and applications associated with the BNF
NA channel basic level, as defined in paragraph (1)(A) of this subsection.
(B) Nonstandard signaling and transmission level capabilities
and other features. Signaling and transmission level capabilities
and other features and functions, other than those defined in
subparagraph (A) of this paragraph, such as high voltage protection,
multiplexing, and bridging. The company is encouraged to disaggregate
this BNF into smaller BNFs that capture the variety of features
and functions available to customers.
(4) Required BNFs for subcategory interoffice switching:
interoffice switching. The type of switching that provides for:
switching between network access channels and switched transport
facilities which are connected to different wire centers; and switching
between network access channels and switched transport facilities
when a tandem switch is used as the first point of interface to the
switched network (e.g., connection of facilities from an interexchange
carrier’s point of network interface).
(5) Required BNFs for subcategory intraoffice switching:
intraoffice switching. Switching between two or more network access
channels served from the same wire center.
(6) Required BNFs for subcategory switching features:
(A) Hunting arrangements. An optional function
available to customers with multiple local exchange access lines in
service.
(B) Custom calling features. Various optional features
which provide added calling convenience.
(C) Central office automatic call distribution. The
provision of call distribution as an integrated function of certain
electronic central offices equipped to provide this capability. This
function permits an equal distribution of a large volume of incoming
calls to predesignated groups of answering positions, referred to as
agent positions.
(D) Central office based PBX-type functions. A
business communications system furnished from stored program
control central offices that provides the equivalent of customer
premises PBX services through the use of central office hardware
and software as well as through network access facilities from the
central office to the customer premises. Included in this BNF shall
be only hardware specific to this type of service, processor or memory
usage involved in special features for this type of service, and any
software or software right to use fees associated with this type of
service. This BNF should exclude any network functions that are
already identified as other BNFs.
(7) Required BNFs for subcategory dedicated transport:
(A) Dedicated transport termination. An interface
which provides for the transmission conversions (e.g., multiplexing)
required between channel connection and dedicated transport facilities.
(B) Dedicated transport facility. The full period, bandwidth
specific (e.g., DS-0, DS-1, and DS-3), interoffice transmission
paths established between two points of dedicated transport termination.
(8) Required BNFs for subcategory switched transport:
(A) Switched transport termination. An interface
which provides for the transmission conversion (e.g., multiplexing)
required between the switching function and switched transport
facilities.
(B) Switched transport facility. The temporary interoffice transmission
paths established between two points of switched
transport termination.
(C) Switched transport tandem switching. The intermediate
points of switching used as an economic surrogate to direct
routing of interoffice facilities in the provision of switched transport.
(9) Required BNFs for subcategory billing and collection:
billing and collection. The function of compiling the information
needed for customer billing, preparing the customer bill statement,
disbursing the bill and collecting the customer payments (this includes
any collection activities required for late payment or non-payment of
billing amount due).
(10) Required BNFs for subcategory measurement: measurement.
The function of assembling, collating and transmitting end
office switch recorded call data (occurrence and duration).
(11) Required BNFs for subcategory operator services:
operator services. The role of providing a number of live or
mechanized assistance functions to aid customers in the following
ways: obtaining customer telephone number, street address and
ZIP code information (directory assistance); providing new telephone
numbers or explanatory information to callers who dial numbers
which have been changed or disconnected (intercepts); providing
assistance to customers in completing operator handled toll or local
calls (collect, credit card, third party, station-to-station or person-to-person); checking busy lines to make sure the line is not out
of service (busy line verification); and interrupting busy lines (busy
line interruption). These operator services are provided to end user
customers as well as local exchange and interexchange carriers.
(f) LRIC studies for individual BNFs. The DCTU shall
perform a LRIC study for each of the BNFs identified under
subsection (e) of this section. The company shall perform the LRIC
studies consistent with the principles described in subsection (d)
of this section. Additionally, the company shall use the following
instructions in determining the LRIC for individual BNFs.
(1) Relevant increment of output. For the purposes of this
subsection, the relevant increment of output, as that term is used in
the definition of LRIC in §26.5 of this title (relating to Definitions),
shall be the level of output necessary to satisfy total current demand
levels for all services using the BNF in question. Adjustments to total
service output may be made to reflect the presence of new services
for which demand levels can demonstrably be anticipated to increase
significantly over the course of six months.
(2) Relating expenses to BNFs. The company shall avoid
the use of embedded cost data and shall determine expenses consistent
with the principles of long run incremental costing.
(A) Common expenses. Common expenses that are
not directly attributable, using the cost causation principle, to the
BNF shall be excluded.
(B) Nonrecurring expenses. The expenses of nonrecurring
activities shall be separately identified.
(C) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, shall be excluded from the LRIC
study for individual BNFs. Specifically, taxes associated with the
provision of services that use more than one BNF shall not be
included in the BNF LRICs.
(3) Least cost technology. LRIC studies shall assume the
use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary
to satisfy current demand levels for all services using the BNF in
question; and
(C) be consistent with overall network design and
topology requirements.
(4) Network topology. LRIC studies shall use the existing
or planned network topology.
(5) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined
either in a rate proceeding as described in §23.21(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its
use. The DCTU is not required to update its filing only to reflect the
most recently approved cost of money.
(6) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the
company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(7) Measure of unit cost. LRIC studies shall identify the
appropriate measure of unit cost for a BNF (e.g., minutes of use,
access line). The measure of unit cost chosen for a BNF shall
correspond to the basis upon which the costs of the BNF are incurred.
The measure of unit cost may be multidimensional; for example, it
may have both time and distance components. In identifying the
appropriate measure of unit cost, the company shall ignore the current
rate structure for tariffed services using the BNF.
(8) Determination of unit cost. Using the measure of unit
cost identified under paragraph (7) of this subsection, the company
shall calculate unit cost for the BNF based on the assumption of full
capacity utilization of the BNF, which should allow for any spare
capacity due to lumpy investments or technical requirements, such as
spare capacity needed for testing. The unit cost shall be calculated
based on the volume sensitive costs of the BNF and exclude all costs
that are volume insensitive (as those terms are defined in §26.5 of
this title).
(9) Determination of volume insensitive costs. The
company shall calculate the volume insensitive costs (as defined in
§26.5 of this title) for the BNF.
(10) Cost drivers. LRIC studies shall identify and account
for all relevant cost drivers. LRIC studies for certain BNFs shall at
a minimum account for the cost drivers specified below.
(A) Cost drivers for NA channel basic level, NA
channel DS-1 level, and NA channel DS-3 level. The LRICs for these
BNFs shall systematically account for variations in costs caused by
variations in:
(i) the density of a wire center;
(ii) the size of a wire center; and
(iii) the distance.
(B) Cost drivers for NA connection basic level, NA
connection DS-1 level, and NA connection DS-3 level. The LRICs
for these BNFs shall systematically account for variations in costs
caused by variations in:
(i) the density of a wire center; and
(ii) the size of a wire center.
(C) Cost drivers for intraoffice switching and interoffice switching. The LRICs for these BNFs shall systematically account
for variations in costs caused by variations in:
(i) the density of a wire center;
(ii) the size of a wire center; and
(iii) the time of day.
(D) Cost drivers for dedicated transport facilities and
termination. The LRICs for these BNFs shall systematically account
for variations in costs caused by variations in:
(i) the size of a wire center; and
(ii) the distance.
(E) Cost drivers for switched transport facilities, termination
and tandem switching. The LRICs for these BNFs shall
systematically account for variations in costs caused by variations in:
(i) the size of a wire center;
(ii) the distance; and
(iii) time of day.
(F) Cost drivers for measurement. The LRIC for this
BNF shall systematically account for variations in costs caused by
variations in:
(i) the density of a wire center;
(ii) the size of a wire center;
(iii) the time of day; and
(iv) the duration of a call.
(G) Cost drivers for operator services. The LRIC for
this BNF shall systematically account for variations in costs caused
by variations in the type of operator services calls.
(g) LRIC studies for tariffed services. The DCTU shall
perform a LRIC study for each tariffed service, except those services
for which a waiver has been granted under the workplan approved
by the commission. Each LRIC study for a tariffed service shall
be calculated as the sum of the costs caused by that a service’s
use of BNFs and any other service specific costs associated with
functions not identified as separate BNFs, such as expenses of billing,
service specific advertising and marketing, and service specific taxes.
Each LRIC study for a tariffed service shall be consistent with the
principles described in subsection (d) of this section. Additionally,
the company shall use the following instructions in determining the
LRIC for individual tariffed services:
(1) Mapping of BNFs and costs to tariffed services. The
LRIC study shall identify the BNFs that are used in the provision
of the tariffed service; the long run incremental costs for the tariffed
service shall include the costs associated with this usage. The costs
associated with the service’s use of a BNF shall be calculated as the
product of the unit cost for the BNF (as determined under subsection
(f)(8) of this section) and the demand of the service for that BNF.
(2) Identification of other costs. The LRIC study for an
individual tariffed service shall include all service specific costs (e.g.,
expenses of billing, marketing, customer service or service specific
taxes) related to the provision of the service that are not included in
the costs for the BNFs.
(3) Exclusion of common costs. The LRIC study for an
individual tariffed service shall exclude any costs that are common
costs (as defined in subsection (c)(5) of this section). Specifically,
the individual LRIC studies for residential and business basic local
exchange service, as these services are tariffed on the effective date
of this section, shall exclude any volume insensitive costs associated
with the use of the network access channel basic level (as defined
in subsection (e)(1)(A) of this section) and network access channel
connection basic level (as defined in subsection (e)(2)(A) of this
section).
(4) Relevant increment of output. For the purposes of this
subsection, the relevant increment of output, as that term is used in
the definition of LRIC in §26.5 of this title (relating to Definitions),
shall be the level of output necessary to satisfy current demand levels
for the service. Adjustments to total service output may be made
to reflect the presence of new services for which demand levels can
demonstrably be anticipated to increase significantly over the course
of six months.
(5) Relating expenses to services. The company shall
avoid the use of embedded cost data and shall determine expenses
consistent with the principles of long run incremental costing.
(A) Common expenses. Common expenses that are
not directly attributable, using the cost causation principle, to the
service shall be excluded.
(B) Nonrecurring expenses. The expenses of nonrecurring
activities shall be separately identified.
(C) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, shall be excluded from the LRIC
study for individual services.
(6) Least cost technology. LRIC studies shall assume the
use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary
to satisfy current demand levels for all services using the BNF in
question; and
(C) be consistent with overall network design and
topology requirements.
(7) Network topology. LRIC studies shall use the existing
or planned network topology.
(8) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined
either in a rate proceeding as described in §23.21(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its
use. The DCTU is not required to update its filing only to reflect the
most recently approved cost of money.
(9) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the
company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(h) Identification of BNFs and groups of services that share
significant common costs and calculation of such common costs. The
company shall identify all instances in which BNFs and groups of
services share significant common costs and calculate such common
costs.
(1) Costs common to BNFs. The company shall identify
and calculate for each subcategory of BNFs and category of BNFs
significant costs that are common to BNFs (as defined in subsection
(c)(5)(B) of this section). Costs common to BNFs shall only be
identified and calculated at the level of subcategories of BNFs and/
or categories of BNFs.
(2) Costs common to groups of services. The company
shall identify and calculate all significant common costs and the
groups of services that share those common costs (as defined in
subsection (c)(5)(C) of this section). The calculation of common
costs required under paragraphs (1)- (2) of this subsection shall be
consistent with the principles described in subsection (d) of this
section and the instructions listed below.
(3) Relevant increment of output. When common costs
are computed for BNFs or services, the relevant increment of output,
as that term is used in the definition of LRIC in §26.5 of this
title (relating to Definitions), shall be the level of output necessary
to satisfy current demand levels for the BNFs or the services.
Adjustments to total service output may be made to reflect the
presence of new services for which demand levels can demonstrably
be anticipated to increase significantly over the course of six months.
(4) Expenses. The company shall avoid the use of
embedded cost data and shall determine expenses consistent with the
principles of long run incremental costing.
(A) Nonrecurring expenses. The expenses of nonrecurring
activities shall be separately identified.
(B) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, shall be excluded from the cost
studies for common costs.
(5) Least cost technology. The studies shall assume the
use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary to
satisfy current demand levels for the BNFs or services in question;
and
(C) be consistent with overall network design and
topology requirements.
(6) Network topology. Cost studies shall use the existing
or planned network topology.
(7) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined
either in a rate proceeding as described in §23.21(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its
use. The DCTU is not required to update its filing only to reflect the
most recently approved cost of money.
(8) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the
company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(i) LRIC studies for groups of tariffed services that share
significant common costs. The DCTU shall perform a LRIC study
for each group of services identified under subsection (h)(2) of this
section. Each group LRIC shall be calculated as the sum of the
LRICs (as determined under subsection (g) of this section) for the
services in the group and the common costs for those services (as
identified under subsection (h)(2) of this section). Each LRIC study
shall be consistent with the principles described in subsection (d)
of this section. Additionally, the company shall use the following
instructions in determining the LRIC for groups of services.
(1) Relevant increment of output. When the LRIC is
computed for a group of services, the relevant increment of output,
as that term is used in the definition of LRIC in §26.5 of this
title (relating to Definitions), shall be the level of output necessary
to satisfy current demand levels for the services in the group.
Adjustments to total service output may be made to reflect the
presence of new services for which demand levels can demonstrably
be anticipated to increase significantly over the course of six months.
(2) Relating expenses to groups of services. The company
shall avoid the use of embedded cost data and shall determine
expenses consistent with the principles of long run incremental
costing.
(A) Common expenses. Common expenses that are
not directly attributable, using the cost causation principle, to the
group of services shall be excluded.
(B) Nonrecurring expenses. The expenses of nonrecurring
activities shall be separately identified.
(C) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, shall be excluded from the LRIC
study for the group of services.
(3) Least cost technology. LRIC studies shall assume the
use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary
to satisfy current demand levels for all services using the BNF in
question; and
(C) be consistent with overall network design and
topology requirements.
(4) Network topology. LRIC studies shall use the existing
or planned network topology.
(5) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined
either in a rate proceeding as described in §23.21(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its
use. The DCTU is not required to update its filing only to reflect the
most recently approved cost of money.
(6) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the
company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(j) Requirements for subsequent filings of LRIC studies. The
LRIC studies required by this subsection shall be consistent with the
principles, instructions and requirements set forth in this section and
the workplan approved by the commission and shall be reviewed in
accordance with the procedures established in subsection (k) of this
section.
(1) Updated studies. A DCTU may be required to update
the filings required by this section, other than the workplan, for those
studies where no significant changes have occurred.
(2) Provisions for new BNFs. When significant technological
or other changes occur that necessitate a change in the definition of current BNFs or the
identification of new BNFs, the DCTU
shall file with the commission and the Office of Public Utility Counsel
(OPUC) updated versions for all affected LRIC studies or new
studies as appropriate.
(3) Provisions for new services. For each application for
a service filed pursuant to this title, the DCTU shall file with the
commission and OPUC a LRIC study for the service consistent with
the principles described in subsection (d) of this section and the
specific requirements set forth in subsection (g) of this section.
(4) Unbundling of existing tariffed services. When an application
filed pursuant to this title proposes a service that previously
had been bundled with other BNFs into a tariffed service, the DCTU
shall carefully reexamine the identification of groups of services that
share significant common costs (as required under subsection (h) of this section). If the new service significantly changes the identification
of groups of services and the identification of common costs, the
DCTU should update all studies required under this section that are
affected by these changes.
(k) Review process for LRIC studies. A LRIC study
considered under this section shall be reviewed administratively to
determine whether the DCTU’s LRIC study is consistent with the
principles, instructions and requirements set forth in this section.
(1) Sufficiency. The LRIC study shall be examined for
sufficiency. To be sufficient, the LRIC study shall conform to
the prototype studies developed under the workplan approved by
the commission. If the presiding officer or the commission staff
concludes that material deficiencies exist in the LRIC study, the
DCTU shall be notified within 15 days of the filing date of the specific
deficiency in its LRIC study. The DCTU shall have 15 days from the
date it is notified of the deficiency to file a corrected LRIC study.
(2) Time schedule.
(A) No later than 45 days after the filing date of
the sufficient LRIC study, any party that demonstrates a justiciable
interest may file with the presiding officer written comments or
recommendations concerning the LRIC study.
(B) No later than 55 days after the filing date of the
sufficient LRIC study, OPUC may file with the presiding officer
written comments or recommendations concerning the LRIC study.
(C) No later than 65 days after the filing date of
the sufficient LRIC study, the commission staff shall file with the
presiding officer written comments or recommendations concerning
the LRIC study.
(D) No later than 75 days after the filing date of
the sufficient LRIC study, any party that demonstrates a justiciable
interest, OPUC, or the DCTU may file with the presiding officer a
written response to the commission staff’s recommendation.
(E) No later than 85 days after the filing date of
the sufficient LRIC study, the presiding officer shall complete an
administrative review to determine whether the DCTU’s LRIC study
is consistent with the principles, instructions and requirements set
forth in this section. The presiding officer shall approve the LRIC
study or order the DCTU to refile the LRIC study incorporating all
modifications recommended by the presiding officer.
(F) Any party may appeal to the commission an
administrative determination by a presiding officer within five days
after the date of notification of the determination. The commission
shall rule on the appeal within 30 days after the date it receives
the appeal. If the commission or a presiding officer orders a cost
study to be changed, the dominant certificated telecommunications
utility shall be ordered to make those changes within a period that is
commensurate with the complexity of the LRIC study.
(3) Requests for information. While the LRIC study is
being administratively reviewed, the commission staff, OPUC, and
any party that demonstrates a justiciable interest may submit requests
for information to the DCTU. Three copies of all answers to such
requests for information shall be provided within ten days after receipt
of the request by the DCTU to the commission staff, OPUC and any
party that demonstrates a justiciable interest.
(4) Suspension. At any point within the first 45 days
of the review process, the presiding officer, the commission staff,
OPUC, the DCTU, or any party that demonstrates a justiciable interest
may request that the review process be suspended for 30 days. The
presiding officer may grant a request for suspension only if he or she
has determined that the party has demonstrated that good cause exists
for such suspension.
(5) Effective date of the LRIC study. The effective date
of the LRIC study shall be the date it is approved by the presiding
officer.
(l) Notice requirements. At least ten days before a DCTU
files any workplan or LRIC study pursuant to this section, the DCTU
shall file with the commission and OPUC a notice of its intent to
file such workplan or LRIC study and the expected filing date. The
DCTU’s notice shall indicate that the filing is being made pursuant to
this section. The commission shall then publish notice of the DCTU’s
intent to file the workplan or LRIC study in the Texas Register.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency’s
legal authority to adopt.
Filed with the Office of the Secretary of State, on January 25,
1999.
TRD-9900518
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: March 7, 1999
For further information, please call: (512) 936–7308
16 TAC §23.104
Chapter 26. Substantive Rules Applicable to
Telecommunications Service Providers
16 TAC §26.215
Part VI. Texas Motor Vehicle Board
Filed with the Office of the Secretary of State, on January 25, 1999.
Proposed date of adoption: April 22, 1999
For further information, please call: (512) 416–4899
Chapter 309. Operation of Racetracks
Subchapter C. Greyhound Racetracks
The proposed amendment implements Texas Civil Statutes, Article 179e. Sec.
§309.353. Dismissal of Kennel.
Filed with the Office of the Secretary of State, on January 25, 1999.
Proposed date of adoption: March 26, 1999
For further information, please call: (512) 833–6699
Subchapter A. Regulation and Totalisator Operations
The proposed amendment implements Texas Civil Statutes, Article 179e.
§321.38. Cancellation of Win Wagers [Tickets].
(2) the stewards or racing judges order the wager to be canceled because of a scratch in the race.
Filed with the Office of the Secretary of State, on January 25, 1999.
Proposed date of adoption: March 26, 1999
For further information, please call: (512) 833–6699