III. Discussion

In compliance with D.02-09-049, Pacific has calculated the net effect of the two cost methodology changes ordered therein for many of its UNEs. While there is still a dispute among the parties over whether Pacific has adequately updated all of its UNE prices, Pacific's December 18, 2002 and March 21, 2003 filings have removed 13% from the expense portion of its UNE recurring costs and recalculated Pacific's UNE prices by substituting a new shared and common cost markup of 21% for the previously adopted 19% markup. There were no protests to Pacific's calculations in either of these filings. Therefore, the Commission should approve the rates shown in Pacific's two compliance filings so that the adjustment to Pacific's recurring and nonrecurring UNE prices can be implemented and any billing adjustments can be made for UNEs purchased as of the September 19, 2002 effective date of the rate changes. Pacific's revised monthly recurring UNE rates are shown in Appendix A of this order. Pacific's revised nonrecurring UNE rates are shown in Appendix B, which merely adjusts Appendix B of D.99-11-050 to reflect the revised 21% markup.

Because the rates in Appendices A and B actually took effect on September 19, 2002, Pacific must now calculate any adjustments that it may owe to interconnecting carriers for UNEs purchased on or after that date if the rates in Appendices A and B are lower than the amount Pacific had previously billed. Likewise, Pacific should calculate whether it is owed money by interconnecting carriers for UNEs purchased on or after September 19, 2003, if the rates in Appendices A and B are higher than the amount Pacific had previously billed. Within 60 days of this order, Pacific should calculate any such adjustments and reflect the adjustments in its bills to interconnecting carriers for their monthly UNE recurring and nonrecurring charges.

The only remaining issue with regard to D.02-09-049 is whether Pacific's compliance filings are complete and whether additional UNE rates, other than those listed in Appendices A and B, should be adjusted. The dispute involves whether rates set through negotiated interconnection agreements were based on the same methodology that was corrected in D.02-09-049. Pacific argues that negotiated rates should not be changed. Joint Applicants and other competitive local carriers contend that Pacific should identify which negotiated rates may have been derived from the original OANAD methodology. In the interests of putting the undisputed rate changes into effect as quickly as possible, this order does not attempt to identify further UNE rates that may need revisions at this time. Rather, the assigned ALJ shall continue to review that matter and if she identifies further UNE rate changes that appear necessary, the Commission may consider them in a further order.

According to Rule 77.7(f)(2) of the Commission's Rules of Practice and Procedure, this decision is an uncontested matter where the decision grants the relief requested. The decision adopts the undisputed rates set forth in Pacific's two compliance filings to D.02-09-049. Although comments are not required on the draft, parties were allowed to file comments on the draft decision within seven days of the mailing of the draft. Pacific and Joint Applicants filed comments in support of the order. Pacific suggested minor edits which have been incorporated into the order. In addition, Pacific noted that the decision failed to address adoption of new nonrecurring rates as approved in D.02-09-049. The decision has been revised to include Appendix B listing the new nonrecurring rates reflecting a 21% shared and common cost markup.