No. 40723 (Amendment): Section R746-360-6. Eligibility for Fund Distributions

(Amendment)

DAR File No.: 40723
Filed: 08/31/2016 08:19:04 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

On 08/30/2016, the Public Service Commission of Utah (Commission) held a technical conference to determine whether business customers of rural telecommunications providers should be required to pay more for a landline than residential customers. Seeing no data to support a price difference, the Commission determined to repeal the base rate that affected providers have been required to charge their business customers.

Summary of the rule or change:

The business affordable base rate of $26 is repealed. The affordable base rate for all landline connections is $18.

Statutory or constitutional authorization for this rule:

• Section 54-3-1
• Section 54-4-1
• Subsection 54-8b-14(8)

Anticipated cost or savings to:

the state budget:

This rule change will allow rural telecommunications providers that receive support from the Utah Universal Service Fund (UUSF) to charge business customers up to $8 less per line monthly than they have historically been required to charge. These providers will, therefore, see a decline in revenues, which might qualify them for additional UUSF support. The Commission roughly estimates that the upward pressure on the UUSF could be as high as $1,920,000 annually. However, the dollar amount cannot be determined with specificity until the circumstances of each provider are reviewed. The Commission will rely on the Division of Public Utilities to conduct that review and recommend the changes, if any, that should be made to each provider's UUSF disbursement. Any such recommendation will be subject to adjudication before the Commission. Alternatively, a provider may petition the Commission for an adjustment to its UUSF disbursement. In either case, the reasonable costs incurred by the provider in obtaining an adjustment may be reimbursed from the UUSF. Although the reimbursable costs will vary and, therefore, cannot be estimated, they represent additional pressure on the UUSF.

local governments:

Local governments are not required to comply with or enforce the rules governing administration of the UUSF. No fiscal impact to local government is anticipated.

small businesses:

A small business that is served by a UUSF-supported telecommunications provider might see its monthly bill for landline telephone service reduced by as much as $8 per month. UUSF-supported telecommunications providers will see decreased monthly revenues as a result. The total dollar amount of decreased revenues will vary, depending on the rate the provider has been charging and the number of business customers served. Therefore, the dollar amount of decreased revenues cannot be estimated. In order to recover the lost revenues, an affected provider will need to participate in an administrative proceeding to adjust its UUSF disbursement. The costs of participation will vary, depending on whether there are contested issues. Therefore, such costs cannot be estimated. However, to the extent the costs are found to be reasonable, they are eligible for reimbursement from the UUSF.

persons other than small businesses, businesses, or local governmental entities:

This rule change is anticipated to increase pressure on the UUSF, which is funded through a surcharge that telecommunications customers pay. As of 10/01/2016, the surcharge is 1.65% of billed intrastate retail rates. If additional funding is needed to replace lost revenue resulting from the repeal of the business rate, it is possible that the surcharge will have to be increased. Such increase will affect telecommunications customers in Utah. As an example, a customer who currently is billed $100 each month for intrastate service also pays $1.65 into the UUSF. If the surcharge were increased to 2% of intrastate retail rates, that customer would pay an additional 35 cents per month into the UUSF.

Compliance costs for affected persons:

UUSF-supported telecommunications providers are permitted, but not required, to reduce the rates they charge business customers. If they choose to reduce their rates, they might also be entitled to receive additional UUSF support. The costs of establishing the appropriate support level are likely to be reimbursed. Therefore, it is not anticipated that affected telecommunications providers will see a fiscal impact due to compliance costs.

Comments by the department head on the fiscal impact the rule may have on businesses:

As explained in the rule analysis, a business that purchases landline service from a UUSF-supported telecommunications provider might see its monthly bill go down by as much as $8. UUSF-supported telecommunications providers that choose to reduce their business rates will have reduced revenues, which may be recovered from the UUSF.

Thad LeVar, Chair

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Public Service Commission
Administration
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Sheri Bintz at the above address, by phone at 801-530-6714, by FAX at 801-530-6796, or by Internet E-mail at [e-mail]
• Jennie Jonsson at the above address, by phone at 801-530-6763, by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/17/2016

This rule may become effective on:

10/24/2016

Authorized by:

Jennie Jonsson, Administrative Law Judge

RULE TEXT

R746. Public Service Commission, Administration.

R746-360. Universal Public Telecommunications Service Support Fund.

R746-360-6. Eligibility for Fund Distributions.

A. Qualification --

1. To qualify to receive USF support funds, a telecommunications corporation shall be designated an "eligible telecommunications carrier," pursuant to 47 U.S.C. Section 214(e), and shall be in compliance with Commission orders and rules. Each telecommunications corporation receiving support shall use that support only to provide basic telecommunications service and any other services or purposes approved by the Commission.

2. Additional qualification criteria for Incumbent telephone corporations - In addition to the qualification criteria of R746-360-6A.1.,

a. Non-rate-of-return Incumbent telephone corporations, except Incumbent telephone corporations subject to pricing flexibility pursuant to 54-8b-2.3 shall make Commission approved, aggregate rate reductions for public telecommunications services, provided in the State of Utah, equal to each incremental increase in USF distribution amounts received after December 1, 1999.

b. Rate-of-return Incumbent telephone corporations shall complete a Commission review of their revenue requirement and public telecommunications services' rate structure prior to any change in their USF distribution which differs from a prior USF distribution, beginning with the USF distribution for December, 1999.

B. Rate Floor.

1. Unless a petition brought pursuant to Subsection (B)(2) is granted after adjudication, to be eligible for USF subsidization, a telecommunications corporation shall charge, at a minimum, the following Affordable Base Rate for basic telecommunications service:

a. As of July 1, 2016[:

i. ], $18 per [residential ]line; and

[ii. $26.00 per business line.]

b. As of July 1, 2017[:

i. ], $20 per [residential ]line[; and

ii. $26.00 per business line].

2.a. A telecommunications corporation may petition the Commission to deviate from the Affordable Base Rate set forth in this Subsection (B)(1).

b. A telecommunications corporation that files a petition under this Subsection (B)(2)(a) shall:

i. demonstrate that the Affordable Base Rate is not reasonable in the particular geographic area served; or

ii. impute income up to the Affordable Base Rate in calculating the telecommunications corporation's state USF subsidization.

C. Lifeline Requirement -- A telecommunications corporation may qualify to receive distributions from the fund only if it offers Lifeline service on terms and conditions prescribed by the Commission.

D. Exclusion of Resale Providers -- Only facilities-based providers, will be eligible to receive support from the fund. Where service is provided through one telecommunications corporation's resale of another telecommunications corporation's service, support may be received by the latter only.

 

KEY: public utilities, telecommunications, universal service fund, affordable base rate

Date of Enactment or Last Substantive Amendment: 2016

Notice of Continuation: November 13, 2013

Authorizing, and Implemented or Interpreted Law: 54-3-1; 54-4-1; 54-8b-15(8)

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