DAR File No. 40299

Public Service Commission, Administration

Section R746-360-6

Eligibility for Fund Distributions

Change in Proposed Rule

DAR File No.: 40299
Filed: 06/08/2016 05:05:23 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Upon consideration of comments filed with the Public Service Commission of Utah (Commission) and provided at the 05/31/2016 public hearing, the Commission has determined to modify the amendments proposed to Section R746-360-6 in Filing No. 40299 published in the May 1, 2016, Bulletin.

Summary of the rule or change:

The affordable base rate for a business line is established at $26. The rule is clarified to state that it is permissible to impute income in calculating the Utah Universal Service Fund subsidy of a telecommunications provider that does not wish to charge one or both of the Commission's affordable base rates. (DAR NOTE: The original proposed amendment upon which this change in proposed rule (CPR) was based was published in the May 1, 2016, issue of the Utah State Bulletin, on page 121. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the CPR and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

• Section 54-4-1
• Subsection 54-8b-15(8)
• Section 54-3-1

Anticipated cost or savings to:

the state budget:

The affected companies are subsidized through a state-funded program. As the companies adjust their rates, the subsidy for which they qualify might change, resulting in a change to the balance of the fund. Any adjustment to the fund cannot be estimated at this time as the Commission will be required to conduct a formal adjudication before changing a company's subsidy.

local governments:

Local governments are not required to comply with or enforce the rules governing subsidized telecommunication service providers. No impact to local government is anticipated.

small businesses:

Small businesses that operate as telecommunication service providers and that are subsidized by the state will see revenues change as they adjust their rates to comply with the Commission's affordable base rates. Consequently, the monthly subsidies currently being disbursed might have to be adjusted. The Commission intends to require the Division of Public Utilities to review the finances of each affected utility in order to determine the amount of any required adjustment. If the Division recommends a change, the affected utility will have a full opportunity to litigate the issues before the Commission.

persons other than small businesses, businesses, or local governmental entities:

The subsidy at issue is funded through a surcharge that all telecommunications customers in Utah pay. If the total amount of required funding changes, the surcharge may be increased or decreased as needed. Until each affected company's subsidy is adjusted through a formal adjudication, the total amount of required funding cannot be determined. Until the total amount of required funding is determined, the subsidy cannot be adjusted. Therefore, it is not possible at this time to estimate any cost or savings to Utah's telecommunications customers.

Compliance costs for affected persons:

To comply, affected telecommunication utilities must update the rates that they have on file with the Commission. As long as those rates align with the Commission's affordable base rates, the costs associated with the filing will be minimal and are anticipated to be within with each utility's budgeted overhead for regulatory compliance. Such costs will vary depending, for example, on whether a utility opts to involve legal counsel in the process. As those decisions lie with the utilities, the Commission is unable to estimate the compliance costs, either generally or specifically.

Comments by the department head on the fiscal impact the rule may have on businesses:

As stated in the rule analysis, businesses that provide subsidized telecommunication services might see an adjustment in their monthly subsidies as their monthly revenues change. The Commission will rely on the Division of Public Utilities to recommend any such adjustment, which will then be subject to a full adjudication.

Thad LeVar, Public Service Commission Chair

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Public Service Commission
Administration
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Sheri Bintz at the above address, by phone at 801-530-6714, by FAX at 801-530-6796, or by Internet E-mail at [email protected]
• Jennie Jonsson at the above address, by phone at 801-530-6763, by FAX at , or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/01/2016

This rule may become effective on:

08/08/2016

Authorized by:

Jennie Jonsson, Administrative Law Judge

R746. Public Service Commission, Administration.

R746-360. Universal Public Telecommunications Service Support Fund.

R746-360-6. Eligibility for Fund Distributions.

A. Qualification --

1. To qualify to receive USF support funds, a telecommunications corporation shall be designated an "eligible telecommunications carrier," pursuant to 47 U.S.C. Section 214(e), and shall be in compliance with Commission orders and rules. Each telecommunications corporation receiving support shall use that support only to provide basic telecommunications service and any other services or purposes approved by the Commission.

2. Additional qualification criteria for Incumbent telephone corporations - In addition to the qualification criteria of R746-360-6A.1.,

a. Non-rate-of-return Incumbent telephone corporations, except Incumbent telephone corporations subject to pricing flexibility pursuant to 54-8b-2.3 shall make Commission approved, aggregate rate reductions for public telecommunications services, provided in the State of Utah, equal to each incremental increase in USF distribution amounts received after December 1, 1999.

b. Rate-of-return Incumbent telephone corporations shall complete a Commission review of their revenue requirement and public telecommunications services' rate structure prior to any change in their USF distribution which differs from a prior USF distribution, beginning with the USF distribution for December, 1999.

B. Rate Floor.

1. Unless a petition brought pursuant to Subsection (B)(2) is granted after adjudication, to be eligible for USF subsidization, a telecommunications corporation shall charge, at a minimum, the following Affordable Base Rate[s] for basic telecommunications service:

a. As of July 1, 2016:

i. $18 per residential line; and

ii. $[27.50]26.00 per business line.

b. As of July 1, 2017:

i. $20 per residential line; and

ii. $[29.50]26.00 per business line.

2.a. A telecommunications corporation may petition the Commission to deviate from the Affordable Base Rate[s] set forth in this Subsection (B)(1).

b. A telecommunications corporation that files a petition under this Subsection (B)(2)(a) [has the burden to]shall:

i. demonstrate that the Affordable Base Rate is not reasonable in the particular geographic area served ; or

ii. impute income up to the Affordable Base Rate in calculating the telecommunications corporation's state USF subsidization.

C. Lifeline Requirement -- A telecommunications corporation may qualify to receive distributions from the fund only if it offers Lifeline service on terms and conditions prescribed by the Commission.

D. Exclusion of Resale Providers -- Only facilities-based providers, will be eligible to receive support from the fund. Where service is provided through one telecommunications corporation's resale of another telecommunications corporation's service, support may be received by the latter only.

 

KEY: public utilities, telecommunications, universal service fund, affordable base rate

Date of Enactment or Last Substantive Amendment: 2016

Notice of Continuation: November 13, 2013

Authorizing, and Implemented or Interpreted Law: 54-3-1; 54-4-1; 54-8b-15(8)