Decision 00-03-043 March 16, 2000

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of Alternative Regulatory Frameworks for Local Exchange Carriers.	Investigation 87-11-033 (Filed November 25, 1987)
And Related Matters.	Application 85-01-034 (Filed January 22, 1985) Application 87-01-002 (Filed January 5, 1987) Investigation 85-03-078 (Filed March 20, 1985) Case 86-11-028 (Filed November 17, 1986) Investigation 87-02-025 (Filed February 11, 1987) Case 87-07-024 (Filed July 16, 1987)

OPINION

This decision grants The Utility Reform Network (TURN) an award of $9,048.00 in compensation for its contribution to Decision (D.) 97-02-049, but denies TURN's request for a 50% enhancement.

1. Background

In D.97-02-049, the Commission denied the joint Petition to Modify D.94-09-065 (Petition) filed by Pacific Bell (Pacific) and GTE California Incorporated (GTEC). In their petition, Pacific and GTEC alleged that in D.94-09-065 (the Commission's Implementation Rate Design or "IRD" decision), the Commission overestimated the increase in toll and switched access use to result from lower prices, yielding revenue losses for Pacific and GTEC.

Pacific and GTEC contended that the toll elasticity estimate of -.5 which the Commission adopted for both utilities in the IRD decision was without any record support and significantly greater than the estimates determined by the Pacific and GTEC studies. They alleged that for Pacific the elasticity estimate used in the IRD decision resulted in the forecast of $234 million more in toll calling revenue for Pacific than has materialized, resulting in $234 million less in price increases that Pacific needed to be revenue-neutral. For GTEC the forecast and corresponding undercollection was alleged to be $103 million. They contended that to the extent the forecasted revenue was not produced, the IRD decision was not revenue neutral, which violates one of its basic precepts.

The parties cited a similar issue with respect to the elasticity estimate the Commission used to calculate the volume stimulation due to price reductions for switched access. The switched access revenue shortfall alleged for Pacific was approximately $53 million and for GTEC, $32 million.

In order to correct this undercollection for toll and switched access, Pacific and GTEC requested price increases to recover an additional $214 million for Pacific and $107 million for GTEC.¹

Pacific and GTEC's Petition was opposed by the Office of Ratepayer Advocates (ORA), the California Telecommunications Coalition (Coalition), of which TURN was a member, and the California Committee for Large Telecommunications Consumers. The decision denying the Petition summarizes ORA's major arguments as follows: (1) during the course of the IRD proceeding parties other than Pacific and GTEC advocated a "true-up" mechanism to deal with the potential for forecasting errors in toll elasticity estimates, but Pacific and GTEC opposed the true-up proposal; (2) it is impossible to segregate the toll stimulation effects from other market effects; and (3) Pacific only provides data on the lack of growth in intraLATA toll volumes, not on factors such as the growth in access lines which would also impact revenues. The Coalition's response provides analysis which is similar to that provided by the other parties.

In addition to its participation in the Coalition, TURN submitted two ex parte letters and engaged in ex parte meetings.