6. Limited Exogenous (LE) Factor Treatment

In their comments on the DD, Pacific and Verizon both assert that the administrative costs associated with any HFPL refund meet the criteria for LE Factor recovery under our NRF framework. Pacific states that in D.98-10-026, the Commission established rules for carriers seeking recovery of costs incurred as a result of Commission mandates. Pursuant to that decision, those costs would be recovered through an LE factor mechanism, under which carriers must demonstrate that the requested costs meet certain specified criteria. As a prerequisite to seeking LE factor treatment, a carrier must show that an LE factor adjustment is authorized in the underlying Commission decision.

Pacific indicates that if the Commission orders it to implement the HFPL surcredit currently described in the DD, it will incur significant administrative costs. Pacific requests that the DD be modified to include language authorizing Pacific to seek LE factor recovery for costs incurred in implementing the processes ordered in the Commission's final HFPL decision.

In this decision, we do not order Pacific and Verizon to set up a process to return HFPL revenues to ratepayers. Instead, we order that the revenues be returned to the handful of CLECs that purchased the HFPL over the past several months. Since we initially ordered the ILECs to establish memorandum accounts for the HFPL revenues in the Interim phase of this proceeding, this should not be an arduous task to return the revenues to the CLECs and does not warrant LE factor treatment.