Total Estimated TSLRIC $4,770

(Source: Pacific Bell Comments, 8/28/02, Addendum p. 8, "1997 Cost Study, Tab D-5, pg. 8.")

Step 2:

Transformation of TSLRIC to TELRIC

Total Estimated TSLRIC $4,770.

(From Step 1 above)²⁸

Add spare capacity 383.2

Add COPT Coin/Public 102.7

Other additions 100.2

Other removals 525.9²⁹

Total Estimated TELRIC $4,830.7

(Source: Pacific Bell Comments, 8/28/02, Addendum p. 2, "1997 Cost Study, Tab D-5, pg. 2.")

Step 3:

Adjustments to Pacific's $4.830 billion Total Direct Cost of UNEs³⁰

Total Estimated TELRIC $4,830.7

Plus Loop Repair trending 29.9

Minus Loop repair trending 42.5

Minus Shared Family Fiber Ring Spare 59.9

Adjusted TELRIC $4,758.2

Plus PIM Reassignment 55.5

Adjusted TELRIC $4,813.7

(Source: Pacific Bell Comments, 8/28/02, Addendum p. 24, "Compliance Filing for Advice Letter 19306, March 6, 1998," and Addendum p. 28, "Compliance Filing for Advice Letter 19306B, October 29, 1998.")

(END OF APPENDIX A)

A.01-02-024 et al.

D.02-09-049

Commissioner Henry M. Duque dissenting in part:

The analysis concerning the proposed 13% adjustment to Pacific's recurring costs is as unconvincing as the case made by both sides of the argument in this limited and truncated process. The question regarding whether or not non-recurring costs have are present in the recurring costs has not been adequately addressed in this order. I will support the order in so far as the adjustments relate to what the court found for non-recurring costs, but I will dissent in part with respect to recurring costs adjustments. I believe a legal error may have been committed in this order, which I hope the Commission will correct before the orders goes into effect.

For the above reason I will respectfully dissent in part.

/s/ HENRY M. DUQUE

Henry M. Duque

Commissioner

September 19, 2002

San Francisco, California

A.01-02-024 et al.

D.02-09-049

Commissioner Peevey, concurring opinion and partial dissent:

I concur with part of today's decision. The U.S. District Court for the Northern District of California vacated and remanded back to us the issue of the UNE shared and common allocator because the court found that this Commission had double-counted non-recurring costs. The decision does a thorough job of remedying the double-counting by changing the shared and common cost allocator from 19% to 21%. Many parties filed technical workpapers that had to be reviewed and analyzed. The decision performs the appropriate analysis and makes the proper adjustment to the shared and common allocator. I wished the decision had stopped here; if it had, I would fully support it.

I dissent, in part, because the decision goes on to order a 13% decrease to be applied to expenses. This was not the intent of the court order. Page 38 of the court's order states "The [Commission's] determination of Pacific's direct cost of providing UNEs (the denominator of the common cost markup), and any decision which relies on this determination, must be vacated and remanded, so that the double-counting can be remedied." (emphasis added) From the plain words of the court order, the intent clearly is to correct the double-counting. Therefore, any action beyond the correction of double-counting was not required, is unnecessary, unwarranted and gratuitous.

Hypothetically, if the root of the double-counting leads to other errors, we can and should correct them. However, the court did not order such an undertaking, nor should such a task be rushed. The proper procedure (should there be a belief that this hypothetical may exist) would be simply to correct the double-counting and then continue the proceeding to investigate if there are other errors.

/s/ MICHAEL R. PEEVEY

MICHAEL R. PEEVEY

Commissioner

San Francisco, California

September 19, 2002