VII. True Up

Joint Applicants request that any interim rates be subject to "true-down." Essentially, they request that if final rates are lower than interim rates, Pacific should provide refunds to purchasers of these UNEs. However, if rates are ultimately higher than any interim rate, purchasers would not owe any additional payment for the interim period.

In the September 28 ruling, the Assigned Commissioner and ALJ rejected this notion of a "true down." The ruling noted that if the Commission set interim rates that were not adjustable both up and down, and the interim rates were later found to be inaccurate, the Commission might potentially violate Section 252(d) of the Federal Telecommunications Act that requires cost-based rates for UNEs.

We affirm the earlier ruling in this proceeding that the rates adopted in this order should be adjusted, either up or down, once final rates are set. Therefore, we require Pacific to establish a balancing account to track the revenues received from these interim UNE rates for unbundled loops and unbundled switching. The balancing account should begin tracking revenues on the same date the interim rates become effective, which is the effective date of this order. Further, the balancing account should accrue interest at the three-month commercial paper rate, as is common practice for accounts of this type. When permanent UNE rates are adopted at the conclusion of this UNE reexamination proceeding, we will determine how to adjust loop and switching rates, either up or down, from the date the interim rates became effective through the date of adoption of a final rate.