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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Division of Economic Regulation (Hewitt) Division of Regulatory Compliance (Mailhot) Office of the General Counsel (Miller) |
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RE: |
Docket No. 090323-TP – Proposed repeal of telecommunications rate-of-return Rules 25-4.017, 25-4.0171, 25-4.0174, 25-4.0175, 25-4.0178, 25-4.0405, 25-4.135, 25-4.140, 25-4.141, 25-4.214, and 25-4.215, F.A.C. |
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AGENDA: |
07/14/09 – Regular Agenda – Interested Persons May Participate |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
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FILE NAME AND LOCATION: |
S:\PSC\ECR\WP\090323.RCM.DOC |
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The last rate-of-return regulated local exchange company elected to become price-cap regulated, effective January 1, 2009. Thus, there are no remaining rate-of-return regulated local exchange companies. On May 1, 2009, the Commission published a Notice of Rule Development in the Florida Administrative Weekly, indicating consideration of repeal of Rules 25-4.017, 25-4.0171, 25-4.0174, 25-4.0175, 25-4.0178, 25-4.0405, 25-4.135, 25-4.140, 25-4.141, 25-4.214, and 25-4.215, Florida Administrative Code, (F.A.C.) These rules (Attachment A) may be generally characterized as telecommunications rate-of-return rules. No comments or requests for workshop were received.
This recommendation addresses whether the Commission should propose the repeal of the rules listed above. The Commission has jurisdiction pursuant to Section 120.54, Florida Statutes.
Issue 1:
Should the Commission propose the repeal of Rules 25-4.017, 25-4.0171, 25-4.0174, 25-4.0175, 25-4.0178, 25-4.0405, 25-4.135, 25-4.140, 25-4.141, 25-4.214, and 25-4.215?
Recommendation:
Yes. The Commission should propose the repeal of the rules, as set forth in Attachment A. (Miller, Mailhot, Hewitt).
Staff Analysis:
There are no longer any rate-of-return (ROR) regulated local exchange companies. Therefore, the following rules would apply to no one and should be repealed.
Rule 25-4.017 Uniform System of Accounts for Rate-of-Return Regulated Local Exchange Companies requires that ROR regulated ILECs follow certain accounting rules and procedures.
Rule 25-4.0171 Allowance for Funds Used During Construction requires that ROR regulated ILECs accrue AFUDC only with Commission approval.
Rule 25-4.0174 Depreciation Accounts for Rate-of-Return Regulated Local Exchange Companies prescribes plant depreciation accounts for ROR regulated ILECs.
Rule 25-4.0175 Depreciation for Rate-of-Return Regulated Local Exchange Companies prescribes depreciation rates and methods for ROR regulated ILECs.
Rule 25-4.0178 Retirement Units for Rate-of-Return Regulated Local Exchange Companies establishes uniform retirement units for ROR regulated ILECs.
Rule 25-4.0405 Telephone Directory Advertising Revenues prescribes the ratemaking treatment of directory advertising revenues for ROR regulated ILECs.
Rule 25-4.135 Annual Reports requires that a ROR regulated ILEC file an annual report concerning its financial activities during the year.
Rule 25-4.140 Test Year Notification requires that ROR regulated ILECs file notification at least 60 days prior to filing for a general rate increase with the Commission.
Rule 25-4.141 Minimum Filing Requirements for Rate-of-Return Regulated Local Exchange Companies; Commission Designee prescribes the financial, rate and operational data to be filed by a ROR regulated ILEC for a general rate increase.
Rule 25-4.214 Tariff Filings allows tariff changes by small ROR regulated ILECs to go into effect 30 days from filing.
Rule 25-4.215 Limited Scope Proceedings allows a small ROR regulated ILEC to request a change in rate relationships upon filing certain information.
Statement of Estimated Regulatory Costs (SERC)
The SERC is attached (Attachment B). It indicates there are no costs to repealing the rules. There would be some benefit from eliminating obselete rules by decreasing the number of rules on the books.
Issue 2:
Should this docket be closed?
Recommendation:
If no comments or requests for hearing are filed, the rule repeals as proposed by the Commission may be filed with the Department of State and the docket may then be closed. (Miller)
Staff Analysis:
If no comments are received within 21 days after the proposed rules are published in the Florida Administrative Weekly, the rules as proposed by the Commission may be filed with the Department of State and the docket may be closed.
25-4.017 Uniform System of Accounts for Rate-of-Return Regulated Local Exchange Companies.
(1) Each rate-of-return regulated local exchange
telecommunications company shall maintain its accounts and records in
conformity with the Uniform System of Accounts for Telecommunications Companies
(USOA) as prescribed by the Federal Communications Commission in Title 47, Code
of Federal Regulations, Part 32 Class A, revised as of October 1, 2002, and as
modified below. Inquiries relating to interpretation of the USOA shall be
submitted in writing to the Commission’s Division of Economic Regulation.
(2) Each company shall establish separate depreciation reserve
subaccounts for each corresponding subaccount established in the USOA or by
rules of this Commission.
(3) A telecommunications company may use a different account
numbering system but shall use the same account descriptions as prescribed in
the USOA or by this Commission. If a different account numbering system is
used, a cross reference of the company’s system to the Commission’s numbering
system shall be shown in the company’s chart of accounts.
(4) Each company shall file, within 60 days of a final order
involving accounting matters, a description of all resultant entries and
adjustments to the accounting records.
Specific Authority 350.127(2) FS. Law Implemented 350.115, 364.17 FS. History–Revised 12-1-68, Amended 3-31-76, 8-21-79, 1-2-80, 12-13-82, 12-13-83, 9-30-85, Formerly 25-4.17, Amended 11-30-86, 4-25-88, 2-10-92, 8-11-92, 3-10-96, 9-15-03.
25-4.0171 Allowance for Funds Used During Construction.
No rate-of-return regulated local exchange telecommunications
company shall accrue allowance for funds used during construction, also known
as Interest During Construction, without prior Commission approval.
Specific Authority 350.127(2) FS. Law Implemented 350.115, 364.035, 364.17 FS. History–New 8-11-86, Formerly 25-4.171, Amended 11-13-86, 12-7-87, 3-10-96.
25-4.0174 Depreciation Accounts for Rate-of-Return Regulated Local Exchange Companies.
(1) Depreciation rates are to be designed in accordance with
the Uniform System and Classification of Accounts (USOA) and this rule. The
primary accounts listed below are identical to those prescribed in the USOA.
New accounts and subaccounts, as listed below, are established under these accounts.
They are intended to group together items which are relatively homogeneous in
their expected life and salvage characteristics, and are for the purpose of
establishing uniformity among the companies in depreciation studies.
(2) A company may further develop depreciation subaccounts
within a listed account as appropriate for its plant. No company shall,
however, establish a new subaccount that would represent less than ten percent
of the original primary account.
(3) Notwithstanding subsection (2), a new subaccount must be
established for the introduction of a new technology, or for the treatment of
an obsolescent component of a current viable technology.
(4) Depreciation reserve, plant activity data, salvage cost,
and costs of removal, respectively, shall be maintained for each depreciation
category for which a depreciation rate is to be developed. This shall be done
on the books of the company.
(5) The following accounts and subaccounts, where applicable,
shall be used in the design of depreciation rates.
(a) Support assets, Account 2110. The following accounts shall
be used:
1. Motor vehicles, Account 2112. The following subaccounts
shall be used,
a. Passenger cars and light trucks. This account shall include
passenger cars and trucks of one ton in capacity or less.
b. Heavy trucks and special purpose vehicles. This subaccount
shall include trucks of greater than one ton capacity.
c. Tractors and trailers.
2. Garage work equipment, Account 2115. This account shall
include tools and equipment used to maintain vehicles.
3. Other work equipment, Account 2116. This account shall
include power operated equipment, general purpose tools, and other such work
equipment items.
4. Buildings, Account 2121.
5. Furniture, Account 2122.
6. Office equipment, Account 2123. The following subaccounts
shall be used:
a. Office support equipment. This subaccount shall include
office devices such as typewriters, cash registers, check writers, calculating,
reproducing, addressing, billing, blueprinting, and other office machines.
b. Company communications equipment. This subaccount shall
include CPE and PBX equipment installed for official company use.
7. General purpose computers, Account 2124.
(b) Central office switching, Account 2211. The following
accounts shall be used:
1. Analog electronic switching, Account 2211. This account
shall be established for analog switching equipment and peripheral gear. It
shall include equipment serving analog switchers that is used solely for
recording calling telephone numbers in connection with customer dialed charged
traffic dial tandem switchboards and special service switchboards used in
conjunction with private line service. It shall not include switchboards, and
integral equipment thereof, which perform an operator assistance function.
2. Digital electronic switching, Account 2212. This account
includes investments in digital switches. This switching account shall include
equipment serving digital electronic switchers that is used solely for the
recording of calling telephone numbers in connection with customer dialed
charged traffic dial tandem switchboards and special service switchboards used
in conjunction with private line service. It shall not include switchboards,
and integral equipment thereof, which perform an operator assistance function.
Major components such as hardware, processors, and cards that are expected to
live substantially different from the remaining switch investment should be
considered as subcomponents in developing the rate for the account.
3. Electromechanical switching, Account 2215. This switching
account includes investments in step-by-step or crossbar switchers. It does not
include digital compatible equipment that is expected to live beyond the
calculated life of electromechanical switching. Such investment shall be in a
separate subaccount or included as a subcomponent used to develop the rate for
the account or subaccount. This account also does not include switchboards
which perform an operator assistance function and equipment which is an
integral part thereof. It shall include, however, equipment serving
electromechanical switchers that is used solely for the recording of calling
telephone numbers in connection with customer dialed charged traffic dial
tandem switchboards and special service switchboards used in conjunction with
private line service.
(c) Operator systems, Account 2220. This account shall include
such charges as directory assistance, call intercept, and other operator
assisted call completion activities.
(d) Central office – transmission, Account 2230. The following
accounts shall be used:
1. Radio systems, Account 2231.
2. Circuit equipment, Account 2232. This investment shall be
subcategorized in accord with the planning of the company, to be separated
between the following:
a. Analog;
b. Digital; and
c. That portion associated with optic technology.
(e) Information organization or termination, Account 2310. The
following accounts shall be used:
1. Public telephone equipment. This account shall include
coinless, coin-operated (including public and semi-public), credit card, and
pay telephones.
2. Other regulated station equipment. This account shall
include private line equipment, telecommunication devices for the deaf, E-911
equipment, and network carrier equipment physically located on the customer’s
premises.
(f) Cable and wire facilities, Account 2410. The following
accounts shall be used:
1. Poles, Account 2411.
2. Aerial cable, Account 2421. The following subaccounts shall
be used:
a. Metallic. This investment shall be further subcategorized
in accord with company planning; and
b. Fiber.
3. Underground cable, Account 2422. The following subaccounts
shall be used:
a. Metallic. This investment shall be further subcategorized
in accord with company planning; and
b. Fiber.
4. Buried cable, Account 2423. The following subaccounts shall
be used:
a. Metallic. This subaccount shall be further subcategorized
in accord with company planning; and
b. Fiber.
5. Submarine cable, Account 2424. The following subaccount
shall be used:
a. Metallic. This investment shall be further subcategorized
in accord with company planning; and
b. Fiber.
6. Intrabuilding network cable, Account 2426. The following
subaccounts shall be used:
a. Metallic. This investment shall be further subcategorized
in accord with company planning; and
b. Fiber.
7. Aerial wire, Account 2431.
8. Conduit systems, Account 2441.
(6) Depreciation rates used after July 1, 1996, shall be based
on the account classifications in the USOA and this rule. In implementing these
rates the following procedures shall be followed:
(a) Reserve activity data, plant activity data, salvage costs,
and costs of removal are to be recorded to the new accounts for activity
subsequent to July 1, 1996.
(b) The separation of investments and reserves under prior
accounts into balances relating to new accounts and subaccounts under this rule
may require estimation. Where vintaged distributions are maintained, separation
into accounts and subaccounts may require synthesization.
(c) If an existing account, in the opinion of the Commission,
is essentially compatible with an account listed in this rule, that account
shall be deemed to be in compliance with this rule.
Specific Authority 350.127(2) FS. Law Implemented 350.115, 364.17 FS. History–New 4-25-88, Amended 9-11-96.
25-4.0175 Depreciation for Rate-of-Return Regulated Local Exchange Companies.
(1) For the purposes of Part II, the following definitions
shall apply to small local exchange companies remaining under rate of return
regulation:
(a) Category or Category of Depreciable Plant – A grouping of
plant for which a depreciation rate is prescribed. At a minimum it should
include each plant account prescribed in Rule 25-4.017, F.A.C.
(b) Average Service Life – The period of time that the given
type of equipment, on average, can be expected to prudently and economically
serve the public.
(c) Embedded Vintage – A vintage of plant in service as of the
date of study or implementation of proposed rates.
(d) Mortality Data – Historical data by study category showing
plant balances, additions, adjustments and retirements, used in analyses for
life indications or for calculations of realized life. Preferably, this is aged
data in accord with the following:
1. The number of plant items or equivalent units (usually
expressed in dollars) added each calendar year.
2. The number of plant items retired (usually expressed in
dollars) each year and the distribution by years of placing of such
retirements.
3. The net increase or decrease resulting from purchases,
sales, or adjustments, and the distribution by years of placing of such
amounts.
4. The number that remains in service (usually expressed in
dollars) at the end of each year and the distribution by years of placing of
such amounts.
(e) Remaining Life Method – The method of calculating a depreciation
rate based on the unrecovered plant balance, less average future net salvage
and the average remaining life. The formula for calculating a Remaining Life
Rate (RLR) is:
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(f) Reserve Data – Historical data by study category showing
reserve balances, debits and credits such as booked depreciation expense,
salvage and cost of removal, and adjustments to the reserve utilized in
monitoring reserve activity and position.
(g) Reserve Deficiency – An inadequacy in the reserve of a
category as evidenced by a comparison of that reserve indicated as necessary
under current projections of life and salvage with that reserve historically
accrued. The latter figure may be available from the company’s records or may
require retrospective calculation.
(h) Reserve Surplus – An excess in the reserve of a category
as evidenced by a comparison of that reserve indicated as necessary under
current projections of life and salvage with that reserve historically accrued.
The latter figure may be available from the company’s records or may require
retrospective calculation.
(i) Salvage Data – Historical data by study category showing
bookings of retirements, gross salvage and cost of removal used in analysis of
trends in gross salvage and cost of removal, or for calculations of realized
salvage.
(j) Theoretical Reserve or Prospective Theoretical Reserve – A
calculated reserve based on components of the proposed rate, using the formula:
Theoretical Reserve = Book Investment - Future Accruals -
Future Net Salvage
(k) Vintage – The year of placement of a group of plant items
or investment under study.
(l) Whole Life Method – The method of calculating a
depreciation rate based on the Whole Life (Average Service Life) and the
Average Net Salvage. Both life and salvage components are the estimated or
calculated composite of realized experience and expected activity. The formula
is:
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(2)(a) Ranges for basic life and salvage values, established
by the Commission, may be used by small LECs regardless of the depreciation
methodology utilized. The ranges for basic life and salvage values for small
LECs are as follows:
Ranges of Basic Life and Salvage Values for Small Local
Exchange Companies
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(b) A company shall not petition the Commission to change any
existing depreciation rate more than once a year.
(c) A company may not reallocate accumulated depreciation
reserves among any primary accounts and subaccounts without prior Commission
approval.
(3)(a) Each company shall maintain depreciation rates and
accumulated depreciation reserves in accounts or subaccounts as prescribed by
Rule 25-4.0174, F.A.C., and as set forth in paragraph (2)(a) of this rule.
Companies may maintain further sub-categorization.
(b) Upon establishing a new account or subaccount
classification, each company shall request Commission approval of a
depreciation rate for the new plant category.
(c) A company’s current average service life is that which has
been approved by the Commission and in effect as of the effective date of this
rule. To determine if a company’s current average service life is within an
established range, current average service lives not reflected as a whole
number shall be rounded using traditional rounding methodology. (For example,
1.1-1.4 rounds to 1.0; 1.5-1.9 rounds to 2.0.)
(4) If the company’s proposed and current average service
lives for a given account are within the ranges established in paragraph
(2)(a), no additional support for those values shall be required. If the
company’s proposed and current net salvage values for a given account are
within the ranges established in paragraph (2)(a), no additional support for
those values shall be required. The company shall submit to the Office of
Commission Clerk the original, five hard copies, and a diskette of the
information required by subsection (8) of this rule.
(5) A company proposing basic life or salvage values outside
of the ranges established in paragraph (2)(a) of this rule shall submit to the
Office of Commission Clerk the original and five hard copies, and a diskette of
the information required by subsection (10) of this rule.
(6) After filing a petition for a change in depreciation
rates, the company may reflect on its books and records the preliminary
implementation of the proposed rates as of the proposed effective date. These
rates are subject to Commission approval.
(7) Any party protesting a Commission approved depreciation
life or salvage value, shall carry the burden of proof in demonstrating that
each protested value is unsupported by the operations and planning of each
company.
(8) A depreciation filing shall include:
(a) A comparison of current and proposed depreciation rates
and components for each category of depreciable plant. Current rates shall be
identified as to the effective date and proposed rates as to the proposed
effective date.
(b) A comparison of annual depreciation expense, as of the
proposed effective date, resulting from current rates with the expense produced
by the proposed rates for each category of depreciable plant. The plant
balances may involve estimates. Submitted data including plant and reserve
balances or company planning involving estimates shall be brought to the
effective date of the proposed rates.
(c) Each recovery and amortization schedule currently in
effect should be included with any new filing showing total amount amortized,
effective date, length of schedule, annual amount amortized, and reason for the
schedule.
(d) A general narrative describing the service environment of
the applicant company and the factors, e.g., growth, technology, and physical
conditions necessitating a revision in rates.
(9) If a company’s current average service life or salvage
value for any given category of depreciable plant is not within the established
range, the company must file the information in subsection (10) to justify its
move into the range.
(10) For each account that the Company proposed life or
salvage value is not within the established range, the depreciation filing
shall include the information in subsection (8) as well as the following:
(a) An explanation and justification for each study category
of depreciable plant defining the specific factors that justify the life or
salvage components and rates being proposed. Each explanation and justification
shall include substantiating factors utilized by the company in the design of
the depreciation rates for the specific category, e.g., company planning,
growth, technology, physical conditions, and trends. The explanation and
justification shall state any statistical or mathematical methods of analysis
or calculation used in the design of the category rate.
(b) The mortality and salvage data used by the company in the
depreciation rate design must agree with activity booked by the utility.
Unusual transactions not included in life or salvage studies, e.g., sales or
extraordinary retirements must be specifically enumerated and explained.
(c) The filing shall contain all calculations, analysis and
numerical basic data used in the design of the depreciation rate for each
category of depreciable plant. To the degree possible, data involving
retirements should be aged.
(11)(a) Companies shall provide calculations of depreciation
rates using either the whole life method or the remaining life method. The use
of one of these methods is required for all depreciable categories.
(b) Companies shall file an election to remain with the
remaining life methodology or move to whole life methodology within 90 days of
the effective date of this rule. Failure to file an election shall result in
the company’s use of remaining life methodology. Only one election regarding
depreciation methodology will be permitted.
(12) When a company elects whole life methodology, no recovery
of reserve imbalances will be considered for depreciation purposes. This
methodology is not reserve sensitive.
(13) When a company elects remaining life methodology, the
following apply:
(a) A company requiring the Commission staff’s assistance in
determining a remaining life based on its average service life selection, shall
notify the Director of the Division of Economic Regulation, by letter, three
months prior to the company’s filing date.
(b) The possibility of corrective reserve transfers shall be
investigated by the Commission prior to changing depreciation rates.
(c) It shall be a rebuttable presumption that in determining
the average remaining life, the mortality curve shapes shall be those used by
the Commission the last time it prescribed rates.
(14)(a) A company proposing an effective date of the beginning
of its fiscal year shall submit its petition for a change in depreciation rates
no later than the mid-point of that fiscal year.
(b) A company proposing an effective date coinciding with the
expected date of additional revenues initiated through a rate case proceeding
shall submit its petition for a change in depreciation rates no later than the
filing date of its Minimum Filing Requirements.
(15) Included as part of the annual report filed pursuant to
Rule 25-4.135, F.A.C., each company shall provide Schedule B-3, Analysis of
Plant In Service, and Schedule B-4, Analysis of Accumulated Depreciation.
Schedule B-3 shall include booked plant activity (plant balance at the
beginning of the year, additions, adjustments, transfers, reclassifications,
retirements, and plant balance at year end). Schedule B-4 shall include reserve
activity (reserve balance at the beginning of the year, retirements, accruals,
salvage, cost of removal, adjustments, transfers, reclassifications, and
reserve balance at year end) for each category of investment for which a
depreciation rate, amortization schedule, or capital recovery schedule has been
approved.
(16)(a) Prior to the date of retirement, the Commission may
approve capital recovery schedules to correct calculated deficiencies where a
utility demonstrates that replacement of an installation or group of
installations is prudent, and the associated investment will not be recovered
by the time of retirement through the existing depreciation rate.
(b) The Commission may approve a special capital recovery
schedule when an installation is designed for a specific purpose or for a
limited duration.
(c) Associated plant and reserve activity, balances, and the
annual capital recovery schedule expense must be maintained as subsidiary
records.
Specific Authority 350.127(2) FS. Law Implemented 350.115, 364.03 FS. History–New 9-8-81, Amended 4-28-83, 1-6-85, Formerly 25-4.175, Amended 4-27-88, 12-12-91, 9-11-96.
25-4.0178 Retirement Units for Rate-of-Return Regulated Local Exchange Companies.
(1) This rule is intended to establish uniform retirement
units for telephone companies and does not relieve any company from maintaining
its accounts and records in conformity with the Uniform System and
Classification of Accounts (USOA) as prescribed by the Federal Communications
Commission (FCC) in Title 47, Code of Federal Regulations, Part 32, as adopted
on December 2, 1986 and revised as of December 1, 1987, except to the extent
that this rule requires different treatment as stated below.
(2) For the purposes of this rule the following definitions
apply:
(a) “Book Cost” means the amount at which a retirement unit is
included in a telephone plant account, including the costs of all labor and
installation. This cost is to be determined from the company’s records, but if
it cannot be, it is to be estimated.
(b) “Cost or in-plant cost” means original purchase price plus
all labor and installation costs.
(c) “Cost of Removal” means the cost of demolishing,
dismantling, removing, tearing down or otherwise disposing of a retirement
unit, including the cost of transportation and handling.
(d) “Cradle-To-Grave Accounting” means an accounting method
which treats a unit of plant as being in service from the time it is first
purchased until it is finally junked or is otherwise finally disposed. Periods
of in shop for refurbishing or in stock/inventory awaiting reinstallation are
treated as being in service.
(e) “Gross Salvage” means the amount received from selling or
trading-in a retirement unit; or, if retained for reuse, the original, or
estimated if not known, material cost of the unit.
(f) “Item” means a single identifiable unit of plant. Where a
dollar threshold is imposed, that threshold applies to the single item and not
to the total of a group of such items purchased in one order.
(g) “Minor Item” means any part or element of plant which is
not designated as a retirement unit, but may be a component of or adjunct to a
retirement unit.
(h) “Plant Retired” means a retirement unit not subject to
cradle to grave accounting, or an unreplaced minor item which has been removed,
sold, abandoned, destroyed or otherwise removed from service.
(i) “Retirement Unit” means an item of telephone plant
designated as a retirement unit which when placed in service is to be
capitalized if the cost of the unit meets the criteria in the “List of
Retirement Units”, and when removed from service, without a replacement or with
a replacement that meets the criteria in the “List of Retirement Units”, is to
be credited to the plant account in which it is included and debited to the
associated account reserve.
(3) All depreciable plant is considered as consisting of
retirement units or minor items of plant. Each company is to use this list of
retirement units on a prospective basis. A company may add retirement units to
this list. In the case of such addition, the company shall notify the Director
of the Division of Economic Regulation within thirty days as to the nature and
justification of the addition. However, the combination of any retirement units
or the increase in size of any unit will not be permitted without Commission
prior approval. Additions to or revisions to this list will be issued, when
necessary, by this Commission.
(4) The addition and retirement of retirement units are to be
accounted for as follows:
(a) When a retirement unit other than one designated for
Company Communications Equipment, Account 2132.2, or Public Telephone
Equipment, Account 2351, is placed in service for the first time at a location,
the cost of the unit, if it meets the criteria in the “Lists of Retirement
Units”, should be added to the appropriate plant account along with associated
labor and installation costs.
(b) When a retirement unit for Company Communications
Equipment, Account 2123.2, or Public Telephone Equipment, Account 2351, is
placed in service for the first time at a location, only the materials cost of
the unit, if it meets the criteria in the “List of Retirement Units”, shall be
added to the appropriate plant account. Associated labor and minor materials
costs of installing such equipment shall be charged to the appropriate expense
account.
(c) When a retirement unit is replaced, the cost of the
replacement should be accounted for in the same manner as in subsection (a) if
the cost meets the criteria set forth in the “List of Retirement Units”
referred to in subsection (6). Otherwise, the charge should be made to the
appropriate expense account.
(d) When a retirement unit is retired, with a replacement that
meets the criteria in the “List of Retirement Units” referred to in subsection
(6), or is retired without replacement, the book cost of the retiring unit is
to be credited to the plant account in which it is included and likewise
debited to the associated account reserve. Any cost of removal and gross
salvage associated with the retirement should be debited and credited,
respectively, to the account reserve. Cost of the retiring unit, removal and
gross salvage are to be recorded within one month of the retirement date. Such
costs may be estimated with corrective adjustment entries made when the
transactions are finalized.
(5) The addition and retirement of minor items of depreciable
property other than Company Communications Equipment, Account 2123.2, and
Public Telephone Equipment Account 2351, are to be accounted for as follows:
(a) When a minor item which did not previously exist as a part
of a retirement unit at a given location is added, the cost is to be accounted
for in the same manner as the addition of a retirement unit.
(b) When a minor item is retired and not replaced, the book
cost along with any associated cost of removal and gross salvage is to be
accounted for in the same manner as the retirement of a retirement unit. If,
however, the book cost of such a minor item has been accounted for by its
inclusion in the retirement unit of which it is a part, no separate credit to
the property account or debit to the associated account reserve is to be made.
(c) When a minor item is replaced independently of the
retirement unit of which it is a part, the cost of replacement is to be charged
to the appropriate maintenance account for that item. If, however, the
replacement causes a substantial betterment, the primary aim of which is to
make the property affected more useful, more efficient, of greater durability,
or of greater capacity, the excess cost of the replacement over the estimated
cost at current prices of the replacement without betterment should be charged
to the appropriate plant account.
(6) The Florida Public Service Commission document “List of
Retirement Units (Telephone Utilities)” dated January 1, 1988, is hereby
incorporated by reference. A copy of this document may be obtained from the
Director, Division of Economic Regulation, Florida Public Service Commission.
(7) The capitalization and expensing of depreciable plant for
1988 and subsequent years shall be governed by this rule.
Specific Authority 350.127(2) FS. Law Implemented 350.115, 364.17 FS. History–New 4-25-88.
25-4.0405 Telephone Directory Advertising Revenues.
(1) The provisions of this rule, in conjunction with the
provisions of Section 364.037, F.S. (2002), shall govern the ratemaking
treatment for telephone directory advertising revenues and expenses of
rate-of-return regulated local exchange telecommunication companies.
(2) Adjustments under Section 364.037(1), F.S. (2002), for
customer growth and Consumer Price Index shall be calculated in accordance with
paragraph (2)(a), producing a Test Year Regulated Gross Profit. Except as
provided in paragraph (2)(e), the Test Year Regulated Gross Profit shall be
used to establish the test year gross profit from directory advertising in the
local franchise area to be considered in setting rates for telecommunications
service.
(a) The Test Year Regulated Gross Profit is determined as
follows:
Test Year Regulated Gross Profit = 1982 Gross Profit Base ×
Customer Growth Factor × CPI factor.
(b) The Customer Growth Factor is determined as follows:
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(c) The CPI Factor reflects CPI adjustments made using the
annual average Consumer Price Index – All Urban (CPI-U) as follows:
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(d) An access line is any exchange line that provides
residential or business service as follows:
1. Residential lines;
2. Business lines;
3. Centrex lines;
4. PBX trunks; or
5. Key system lines.
(e) When the Test Year Regulated Gross Profit is less than two
thirds of the actual test year gross profit from directory advertising, two
thirds of the actual test year gross profit shall be used. When the Test Year
Regulated Gross Profit is greater than the actual test year gross profit from
directory advertising, the actual test year gross profit shall be used.
(f) Each local exchange company shall record its directory
advertising revenues in revenue account 5230 (Directory Revenues) and shall
record its directory advertising expenses in expense account 6622 (Number
Services). Only those expenses formerly recorded in expense account 649
(Directory Expense) shall be recorded in expense subaccount 6622.1. The actual
test year gross profit from telephone directory advertising shall be determined
by subtracting the amount recorded in expense subaccount 6622.1 from the amount
recorded in revenue account 5230, with such adjustments as the Commission deems
appropriate.
(g) Directory advertising revenues, as used in this rule,
shall include revenue from both yellow page advertising, including national
advertising, and any boldface or other highlighted white page listings for
directories within the franchised area of the exchange telephone company.
Directory advertising expenses, as used in this rule, shall include expenses
incurred in furnishing directories.
(3) The dollar amount of the 1982 Gross Profit Base for each
local exchange telephone company is established pursuant to Section 364.037(3),
F.S., as follows:
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(4) The Average 1982 Access Lines for each local exchange
telephone company is as follows:
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Specific Authority 350.127(2) FS. Law Implemented 364.037 FS. History–New 4-20-86, Formerly 25-4.405, Amended 4-25-88, 3-10-96, 9-15-03.
25-4.135 Annual Reports.
Each rate-of-return regulated local exchange telephone company
shall file annual reports with the Commission on Commission Form PSC/ECR 018-T
(9/03) which is incorporated by reference into this rule. Form PSC/ECR 018-T,
entitled “Annual Report of Local Exchange Telephone Companies”, may be obtained
from the Commission’s Division of Economic Regulation. These reports shall be
verified by a responsible accounting officer of the company making the report
and shall be due on or before April 30 for the preceding calendar year. A
company may file a written request for an extension of time with the Division
of Economic Regulation no later than April 30. One extension of 31 days will be
granted upon request. A request for Commission approval of a longer extension
must be accompanied by a statement of good cause and shall specify the date by
which the report will be filed. Good cause means a demonstration that the
company has worked diligently to prepare the report and that the additional
time period requested to complete and submit the report is both reasonable and
necessary given the company's particular circumstances.
Specific Authority 350.127(2) FS. Law Implemented 364.17 FS. History–New 12-27-94, Amended 3-10-96, 9-15-03.
25-4.140 Test Year Notification.
(1) At least 60 days prior to filing a petition for a general
rate increase, a company shall notify the Commission in writing of its selected
test year and filing date. This notification shall include:
(a) An explanation for requesting the particular test period.
If an historical test year is selected, there shall be an explanation of why
the historical period is more representative of the company’s operations than a
projected period. If a projected test year is selected, there shall be an
explanation of why the projected period is more representative than an
historical period.
(b) An explanation, including an estimate of the impact on
revenue requirements, of the major factors which necessitate a rate increase.
(c) A statement describing the actions and measures
implemented by the Company for the specific purpose of avoiding a rate
increase.
(2) In the event that a test year other than one based on a
calendar year or the company’s normal fiscal year is selected, the notification
shall include an explanation of why the chosen test year period is more
appropriate.
(3) If the company cannot meet its filing date, it shall
notify the Commission in writing before the due date and include an explanation
of why it will not meet the filing date. The company shall include a revised
filing date.
Specific Authority 350.127(2) FS. Law Implemented 364.05(3) FS. History–New 5-4-81, Amended 10-15-84, 9-21-92.
25-4.141 Minimum Filing Requirements for Rate-of-Return Regulated Local Exchange Companies; Commission Designee.
(1) General Filing Instructions.
(a) Each petition under Section 364.05 or 364.055, F.S., for
adjustment of rates must include or be accompanied by:
1. The information required by Commission Form PSC/ECR20-T
(3/96), which is incorporated into this rule by reference. Form PSC/ECR20-T,
entitled “Minimum Filing Requirements,” may be obtained from the Commission’s
Division of Economic Regulation;
2. The exact name of the applicant and the address of the
applicant’s principal place of business;
3. Copies of prepared direct testimony and exhibits for each
witness testifying on behalf of the company; and
4. Proposed tariff sheets.
(b) In compiling the required schedules, a company shall
follow the policies, procedures, and guidelines prescribed by the Commission in
relevant rules and in the company’s last rate case or in a more recent rate
case involving a comparable utility. A company may also provide separate,
comparable information on a different basis of its own choice, such as year-end
versus average rate base, as long as it reconciles for each schedule the
differences in the required basis and the company basis. Such added filing
shall be made on the same date as the required filing. These additional
schedules shall be identified appropriately; for example, Schedule B-1 would be
designated Company Schedule B-1 – company basis.
(c) Each schedule shall be cross-referenced to identify
related schedules as either supporting schedules or recap schedules.
(d) Each page of the filing shall be numbered and on 8 1/2'' ×
11'' inch paper. Each witness’ prefiled testimony shall be double-spaced with
25 numbered lines on numbered pages. Exhibits shall be on numbered pages and
all exhibits shall be attached to the proponent’s testimony. Each set of the
filing, consisting of the petition and its supporting attachments, testimony,
and exhibits, shall be bound in order of appearance in this rule in standard
three ring binders, with each schedule indexed and tabbed.
(e) Except for handwritten official company records, all data
in the petition, testimony, exhibits, and minimum filing requirements shall be
typed.
(f) Each schedule shall indicate the name of the witness
responsible for its presentation.
(g) All schedules involving investment data shall be completed
on an average investment basis. Unless a specific schedule requests otherwise,
average is defined as the average of 12 monthly average balances.
(h) Whenever the company proposes any corrections, updates or
other changes to the originally filed data, 20 copies shall be filed with the
Office of Commission Clerk with copies also served on all parties at the same
time.
(i) The company shall file 20 copies of the entire filing with
the Office of Commission Clerk.
(2) Projected Test Year. When a partially or fully projected
test year is used, the company shall provide on Form PSC/ECR 20, in addition to
the other requirements of this rule:
(a) The most currently available historical data (for a time
period equal to the period requested in the schedule) immediately preceding the
test year, in addition to test year data. The historical data schedules shall
be indexed and tabbed separately from the test year schedules.
(b) A full description of supporting forecast information and
methodology including detailed input data requirements, sources of input, and
equations employed.
(3) Commission Designee. The Director of the Division of
Economic Regulation shall be the designee of the Commission for purposes of
determining whether the company has met the minimum filing requirements imposed
by this rule.
Specific Authority 350.127(2) FS. Law Implemented 364.05(4) FS. History–New 5-4-81, Amended 7-29-85, 6-12-86, 2-3-88, 3-10-96, 1-31-00.
25-4.214 Tariff Filings.
Tariff filings for new services and changes to an existing
service that are submitted by small local exchange companies subject to the
Commission’s rate base and rate of return regulation shall go into effect on
the 30th day following the day of filing unless:
(1) The company requests a later effective date; or
(2) The Commission suspends or denies the filing prior to the
30th day.
Specific Authority 350.127(2) FS. Law Implemented 364.04, 364.052 FS. History–New 3-10-96.
25-4.215 Limited Scope Proceedings.
A rate-of-return regulated small local exchange company may
seek to change its existing overall rate relationships without affecting its
total revenues by filing a petition for a limited scope proceeding pursuant to
Sections 364.05 and 364.058, F.S., and submitting Schedule E-2 (the priceout
schedule) in Form PSC/ECR 20-T (3/96), entitled “Minimum Filing Requirements,”
which is incorporated herein by reference in Rule 25-4.141, F.A.C., and may be
obtained from the Commission’s Division of Economic Regulation. The required
MFR Schedule E-2 must show that the revenues generated under the proposed rate
relationships shall not exceed the revenues generated under the small local
exchange company’s existing rate relationships, based on data for units and
revenues for the last full calendar year available.
Specific Authority 350.127(2) FS. Law Implemented 364.05, 364.052, 364.058 FS. History–New 3-10-96, Amended 11-20-08.