Current through Reg. 50, No. 13; March 28, 2025
(a) Application.
This section shall apply to DCTUs with annual revenues from regulated
telecommunications operations in Texas of $100 million or more for five
consecutive years. An incumbent local exchange carrier that is not a Tier 1
local exchange company as of September 1, 1995, at that company's option, may
adopt the cost studies approved by the commission for a Tier 1 local exchange
company.
(b) Purpose. This section
shall be used to determine the long run incremental costs incurred by DCTUs in
the provision of telecommunications services. The costs determined in this
section shall not be used to determine a company's revenue requirement during a
proceeding pursuant the Public Utility Regulatory Act, Chapter 53, Subchapters
C and D or E.
(c) Definitions. The
following words and terms when used in this section shall have the following
meaning unless the context clearly indicates otherwise.
(1) Ancillary services--The category of basic
network functions (BNFs) (as defined in paragraph (2) of this subsection) that
provide for certain activities that either support or otherwise are adjuncts to
other BNFs or finished services. This category of BNFs consists of three
subcategories of BNFs: Billing and Collection; Measurement; and Operator
Services.
(A) Billing and collection--The
subcategory of BNFs that provide for the function of compiling the information
needed for customer billing, preparing the customer bill statement, disbursing
the bill and collecting the customer payments.
(B) Measurement--The subcategory of BNFs that
provide the functions of assembling, collating and transmitting end office
switch recorded call data (occurrence and duration).
(C) Operator services--The subcategory of
BNFs that provide for the provision of a number of live or mechanized
assistance functions to aid customers in the following ways: obtaining customer
telephone number, street address and ZIP code information (directory
assistance); providing new telephone numbers or explanatory information to
callers who dial numbers which have been changed or disconnected (intercepts);
providing assistance to customers in completing operator handled toll or local
calls (collect, credit card, third party, station-to-station or
person-to-person); checking busy lines to make sure the line is not out of
service (busy line verification); and interrupting busy lines (busy line
interruption). These operator services are provided to end user customers as
well as local exchange and interexchange carriers.
(2) Basic network function (BNF)--A discrete
network function, which is useful either as a stand-alone function or in
combination with other functions, for which costs can be identified.
(3) Capital costs--The recurring costs that
result from expenditures for plant facilities that are capitalized. The annual
capital costs consist of depreciation, cost of money, and income
taxes.
(4) Categories of BNFs--All
BNFs shall fall into one of four categories of BNFs. The categories are network
access (as defined in paragraph (13) of this subsection); switching and switch
functions (as defined in paragraph (16) of this subsection); dedicated and
switched transport (as defined in paragraph (10) of this subsection); and
ancillary services (as defined in paragraph (1) of this subsection).
(5) Common costs--Costs that are not directly
attributable to individual cost objects. For the purposes of this section there
are three types of common costs: general overhead costs; costs common to BNFs;
and costs common to services.
(A) General
overhead costs--Costs incurred in operating and managing the company that are
not directly attributable to BNFs or services.
(B) Costs common to BNFs--Costs incurred in
the provision of BNFs that can not be directly attributed to any one BNF
individually but only to a category or subcategory of BNFs
collectively.
(C) Costs common to
services--Costs incurred in the provision of two or more services that do not
vary with changes in the relative proportions of the outputs of those services.
Common costs are not directly attributable to any one service individually but
only to a group of services collectively. In the event a BNF is used in the
provision of two or more services then the volume insensitive cost of the BNF
is a cost common to the services that use the BNF. However, if the
technological requirements for the provision of one service alter the least
cost technology choice for common BNFs or common facilities, then the increase
in costs caused by the requirements for more advanced technologies is not a
common cost but a cost directly attributable to the service that alters the
least cost technology choice.
(6) Cost causation principle--The principle
that only those costs that are caused by an activity (such as a network
function, service, or group of services) in the long run are directly
attributable to that activity. Costs are caused by an activity, in the long
run, if the costs are brought into existence as a direct result of the
activity.
(7) Cost driver--A
specific condition, under which a BNF is provided, whose change causes
significant and systematic changes in the cost of providing a BNF. For example,
if the cost of providing a network access channel varies with the density and
size of a wire center, then density and size are cost drivers for that
BNF.
(8) Cost of debt--The rate of
interest paid on borrowed money.
(9) Cost of money--The weighted annual cost
to the DCTU of the debt and equity capital invested in the company.
(10) Dedicated and switched transport--The
category of BNFs that provide for dedicated or shared transmission transport
between two or more DCTU switching offices or wire centers. This BNF category
consists of two subcategories of BNFs: Dedicated Transport and Switched
Transport.
(A) Dedicated transport--The
subcategory of BNFs that provide for full period, bandwidth specific (e.g.,
DS-0, DS-1, DS-3) interoffice transmission paths between the originating and
terminating points of channel connection.
(B) Switched transport--The subcategory of
BNFs that provide for shared interoffice transmission paths between originating
and terminating points of switching.
(11) Group of services--A number of
separately tariffed services that share significant common costs (as defined in
paragraph (5) of this subsection) that are necessary and unique to the
provision of those services and are not directly attributable to any one
service individually. This term also refers to a situation in which two or more
groups of services are part of a larger group of services because of
significant common costs that are necessary and unique to the provision of all
the services in the group but are not directly attributable to any one group or
service individually.
(12) Measure
of unit cost--The measure of usage used to calculate unit cost for a particular
BNF (for example, a minute of use of a switching function, or a quarter mile of
a DS-1 network access channel). The measure of unit costs may be
multidimensional; for example, it may have both time and distance components.
The measure of unit cost chosen for a BNF shall correspond to the basis upon
which the costs of that BNF are incurred.
(13) Network access--The category of BNFs
that accommodate access to other network functions provided by DCTUs. Access is
accomplished by transmission paths between customers and DCTU wire centers.
This category consists of three subcategories of BNFs: network access channel;
network access channel connection; and channel performance and other features
and functions.
(A) Network access (NA)
channel--The subcategory of BNFs that provide the transmission path between the
point of interface at the customer location and the main distribution frame, or
equivalent (e.g., DSX-1, DSX-3), of a DCTU wire center.
(B) Network access (NA) channel
connection--The subcategory of BNFs that provide the interface between the
network access channel and the DCTU wire center switching equipment, subsequent
dedicated transport equipment (dedicated interoffice circuits), or subsequent
channel equipment (dedicated intraoffice circuits).
(C) Channel performance and other features
and functions--The subcategory of BNFs that provide the channel functions
associated with transmission or service type (e.g., analog, digital, coin,
ISDN), bandwidth conversion, signaling, multiplexing, amplification, and
channel performance.
(14)
Significant--For the purposes of this section, the qualifying term significant
is used to refer to instances in which costs or changes affect total study
results by at least five percent. This general guideline for when costs or
changes are significant may be relaxed by considering the cumulative effect of
either including or excluding costs or changes from a study.
(15) Subcategories of BNFs--Groupings of
closely related BNFs in a category of BNFs.
(16) Switching and switch functions--The
category of BNFs that provide for switched access between two or more network
access channels or between network access channels and other BNFs, such as
interoffice transport. This function is accomplished through the establishment
of a temporary transmission path between network access channels in the same
switching office; between a network access channel and the interoffice
facilities that interconnect switching offices; or between a network access
channel and other BNFs. This BNF category shall cover the first point of
switching for a customer. This BNF category consists of three subcategories of
BNFs: interoffice switching; intraoffice switching; and switching features.
(A) Interoffice switching--The subcategory of
BNFs that provide for: switching between network access channels and switched
transport facilities which are connected to different wire centers; and
switching between network access channels and switched transport facilities
when a tandem switch is used as the first point of interface to the DCTU
switched network (e.g., connection of facilities from an interexchange
carrier's point of network interface).
(B) Intraoffice switching--The subcategory of
BNFs that provide for switching between two or more network access channels
within the same wire center.
(d) General principles.
(1) Underlying the construction and
application of this section is the recognition that the DCTU network consists
of a finite number of BNFs that, when bundled in various combinations, can be
used to deliver and market a vast variety of telecommunications services.
Therefore, the determination of the cost of a service and the costs of a group
of services under this section shall involve the identification and costing of
BNFs.
(2) The LRIC studies that the
DCTU is required to file under this section shall assume that the company is
operating in the long run and employs least cost technologies, as those terms
are defined in subsection (c) of this section.
(3) In order to obtain accurate LRIC study
results, the DCTU shall avoid the use of embedded cost data; expense items and
capital costs shall reflect long run incremental costs and the DCTU shall
justify any instance in which embedded cost data are used. Further, the fact
that the costs determined under this section may differ from the company's
embedded costs as determined during proceedings under the Public Utility
Regulatory Act, Chapter 53, Subchapters C and D or E, should in no way cause
the company to attribute any of this cost discrepancy to LRIC studies for BNFs,
services, or groups of services.
(4) When a BNF is used in the provision of
two or more services then the volume insensitive cost of the BNF is a cost
common to the services (as defined in subsection (c)(5)(C) of this section)
that use the BNF.
(5) When services
share significant common costs (as defined in subsection (c)(5)(C) of this
section), none of the common costs shall be included in the LRIC studies for
the services individually; instead, the company shall identify which services
share the common costs and attribute the cost recovery responsibility of these
costs to the group of services collectively. Specifically, the individual LRIC
studies for residential and business basic local exchange service, as these
services are tariffed on the effective date of this section, shall exclude any
volume insensitive costs associated with the use of the network access channel
basic level (as defined in subsection (e)(1)(A) of this section) and network
access channel connection basic level (as defined in subsection (e)(2)(A) of
this section).
(6) When two or more
groups of services share common costs, none of the common costs shall be
included in the LRIC studies for groups individually; instead, the company
shall identify which groups share the common costs and assign the common cost
recovery responsibility of these costs to these groups collectively.
(7) Nothing in this section is intended to
either endorse or reject the DCTU's current rate and tariff
structures.
(e)
Identification of basic network functions. The DCTU shall identify for each
subcategory of BNFs the relevant and separately identifiable BNFs. The
determination of the appropriate degree of aggregation of network components,
functions, or activities into separately identifiable BNFs shall be consistent
with the principles described in subsection (d) of this section. Furthermore,
in choosing BNFs, the DCTU shall seek to minimize the number of network
components, functions, or activities that are not included in BNFs. In addition
to BNFs the company identifies under this subsection, the company shall
identify for each subcategory of BNFs the following prescribed BNFs:
(1) Required BNFs for subcategory network
access (NA) channel:
(A) NA channel basic
level: A transmission path which provides less than 1.544 MBPS digital
capability. This includes 300 to 3,000 Hz analog voice service.
(B) NA channel DS-1 level: A transmission
path which has 1.544 MBPS digital capability.
(C) NA channel DS-3 level: A transmission
path which has 45 MBPS digital capability.
(2) Required BNFs for subcategory NA Channel
Connection:
(A) NA channel connection basic
level: An interface for channels which provide less than 1.544 MBPS digital
capability. This includes the interface for 300-3,000 Hz analog voice service
which is the basic interface for most voice grade services such as: basic local
residential and local business service, PBX trunks, centrex-type access lines
and voice grade dedicated transport service. In addition, this category
includes the interface for four frequency bandwidths provided for audio
channels such as: 200 to 3,500 Hz, 100 to 5,000 Hz, 50 to 8,000 Hz and 50 to
15,000 Hz. Also included in this BNF are the interfaces for low speed data
transmission at speeds of 2.4, 4.8, 9.6, 56 KBPS and all other speeds below the
T-1 rate of 1.544 MBPS. This interface is for narrowband service.
(B) NA channel connection DS-1 level: An
interface for 1.544 MBPS digital transmission channels. This interface connects
high capacity wideband transmission channels which operate in a full duplex,
time division (digital) multiplexing mode.
(C) NA channel connection DS-3 level: An
interface for 45 MBPS digital transmission channels. This interface connects
broadband transmission channels which operate in full duplex, time division
(digital) multiplexing mode.
(3) Required BNFs for subcategory Channel
Performance and Other Features and Functions:
(A) Standard signaling and transmission level
capabilities. Signaling and transmission level capabilities suitable for a wide
variety of network services and applications associated with the BNF NA channel
basic level, as defined in paragraph (1)(A) of this subsection.
(B) Nonstandard signaling and transmission
level capabilities and other features. Signaling and transmission level
capabilities and other features and functions, other than those defined in
subparagraph (A) of this paragraph, such as high voltage protection,
multiplexing, and bridging. The company is encouraged to disaggregate this BNF
into smaller BNFs that capture the variety of features and functions available
to customers.
(4)
Required BNFs for subcategory interoffice switching: interoffice switching. The
type of switching that provides for: switching between network access channels
and switched transport facilities which are connected to different wire
centers; and switching between network access channels and switched transport
facilities when a tandem switch is used as the first point of interface to the
switched network (e.g., connection of facilities from an interexchange
carrier's point of network interface).
(5) Required BNFs for subcategory intraoffice
switching: intraoffice switching. Switching between two or more network access
channels served from the same wire center.
(6) Required BNFs for subcategory switching
features:
(A) Hunting arrangements. An
optional function available to customers with multiple local exchange access
lines in service.
(B) Custom
calling features. Various optional features which provide added calling
convenience.
(C) Central office
automatic call distribution. The provision of call distribution as an
integrated function of certain electronic central offices equipped to provide
this capability. This function permits an equal distribution of a large volume
of incoming calls to predesignated groups of answering positions, referred to
as agent positions.
(D) Central
office based PBX-type functions. A business communications system furnished
from stored program control central offices that provides the equivalent of
customer premises PBX services through the use of central office hardware and
software as well as through network access facilities from the central office
to the customer premises. Included in this BNF shall be only hardware specific
to this type of service, processor or memory usage involved in special features
for this type of service, and any software or software right to use fees
associated with this type of service. This BNF should exclude any network
functions that are already identified as other BNFs.
(7) Required BNFs for subcategory dedicated
transport:
(A) Dedicated transport
termination. An interface which provides for the transmission conversions
(e.g., multiplexing) required between channel connection and dedicated
transport facilities.
(B) Dedicated
transport facility. The full period, bandwidth specific (e.g., DS-0, DS-1, and
DS-3), interoffice transmission paths established between two points of
dedicated transport termination.
(8) Required BNFs for subcategory switched
transport:
(A) Switched transport
termination. An interface which provides for the transmission conversion (e.g.,
multiplexing) required between the switching function and switched transport
facilities.
(B) Switched transport
facility. The temporary interoffice transmission paths established between two
points of switched transport termination.
(C) Switched transport tandem switching. The
intermediate points of switching used as an economic surrogate to direct
routing of interoffice facilities in the provision of switched
transport.
(9) Required
BNFs for subcategory billing and collection: billing and collection. The
function of compiling the information needed for customer billing, preparing
the customer bill statement, disbursing the bill and collecting the customer
payments (this includes any collection activities required for late payment or
non-payment of billing amount due).
(10) Required BNFs for subcategory
measurement: measurement. The function of assembling, collating and
transmitting end office switch recorded call data (occurrence and
duration).
(11) Required BNFs for
subcategory operator services: operator services. The role of providing a
number of live or mechanized assistance functions to aid customers in the
following ways: obtaining customer telephone number, street address and ZIP
code information (directory assistance); providing new telephone numbers or
explanatory information to callers who dial numbers which have been changed or
disconnected (intercepts); providing assistance to customers in completing
operator handled toll or local calls (collect, credit card, third party,
station-to-station or person-to-person); checking busy lines to make sure the
line is not out of service (busy line verification); and interrupting busy
lines (busy line interruption). These operator services are provided to end
user customers as well as local exchange and interexchange carriers.
(f) LRIC studies for individual
BNFs. The DCTU shall perform a LRIC study for each of the BNFs identified under
subsection (e) of this section. The company shall perform the LRIC studies
consistent with the principles described in subsection (d) of this section.
Additionally, the company shall use the following instructions in determining
the LRIC for individual BNFs.
(1) Relevant
increment of output. For the purposes of this subsection, the relevant
increment of output, as that term is used in the definition of LRIC in §
26.5 of this title (relating to
Definitions), shall be the level of output necessary to satisfy total current
demand levels for all services using the BNF in question. Adjustments to total
service output may be made to reflect the presence of new services for which
demand levels can demonstrably be anticipated to increase significantly over
the course of six months.
(2)
Relating expenses to BNFs. The company shall avoid the use of embedded cost
data and shall determine expenses consistent with the principles of long run
incremental costing.
(A) Common expenses.
Common expenses that are not directly attributable, using the cost causation
principle, to the BNF shall be excluded.
(B) Nonrecurring expenses. The expenses of
nonrecurring activities shall be separately identified.
(C) Taxes. Any tax expenses not directly
attributable, using the cost causation principle, shall be excluded from the
LRIC study for individual BNFs. Specifically, taxes associated with the
provision of services that use more than one BNF shall not be included in the
BNF LRICs.
(3) Least cost
technology. LRIC studies shall assume the use of least cost technology. The
choice of least cost technologies, however, shall:
(A) be restricted to technologies that are
currently available on the market and for which vendor prices can be
obtained;
(B) be consistent with
the level of output necessary to satisfy current demand levels for all services
using the BNF in question; and
(C)
be consistent with overall network design and topology
requirements.
(4) Network
topology. LRIC studies shall use the existing or planned network
topology.
(5) Cost of money. When
the company uses the most recent commission approved rate of return for the
company, determined either in a rate proceeding as described in §
26.201(d)(1) of
this title (relating to Cost of Service) or a commission arbitration
proceeding, there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its use. The
DCTU is not required to update its filing only to reflect the most recently
approved cost of money.
(6) Rate of
depreciation. When the company uses the most recent commission approved rate of
depreciation for the company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(7) Measure of unit cost. LRIC studies shall
identify the appropriate measure of unit cost for a BNF (e.g., minutes of use,
access line). The measure of unit cost chosen for a BNF shall correspond to the
basis upon which the costs of the BNF are incurred. The measure of unit cost
may be multidimensional; for example, it may have both time and distance
components. In identifying the appropriate measure of unit cost, the company
shall ignore the current rate structure for tariffed services using the
BNF.
(8) Determination of unit
cost. Using the measure of unit cost identified under paragraph (7) of this
subsection, the company shall calculate unit cost for the BNF based on the
assumption of full capacity utilization of the BNF, which should allow for any
spare capacity due to lumpy investments or technical requirements, such as
spare capacity needed for testing. The unit cost shall be calculated based on
the volume sensitive costs of the BNF and exclude all costs that are volume
insensitive (as those terms are defined in §
26.5 of this title).
(9) Determination of volume insensitive
costs. The company shall calculate the volume insensitive costs (as defined in
§
26.5 of this title) for the
BNF.
(10) Cost drivers. LRIC
studies shall identify and account for all relevant cost drivers. LRIC studies
for certain BNFs shall at a minimum account for the cost drivers specified
below.
(A) Cost drivers for NA channel basic
level, NA channel DS-1 level, and NA channel DS-3 level. The LRICs for these
BNFs shall systematically account for variations in costs caused by variations
in:
(i) the density of a wire
center;
(ii) the size of a wire
center; and
(B) Cost
drivers for NA connection basic level, NA connection DS-1 level, and NA
connection DS-3 level. The LRICs for these BNFs shall systematically account
for variations in costs caused by variations in:
(i) the density of a wire center;
and
(ii) the size of a wire
center.
(C) Cost drivers
for intraoffice switching and interoffice switching. The LRICs for these BNFs
shall systematically account for variations in costs caused by variations in:
(i) the density of a wire center;
(ii) the size of a wire center; and
(D) Cost drivers for dedicated transport
facilities and termination. The LRICs for these BNFs shall systematically
account for variations in costs caused by variations in:
(i) the size of a wire center; and
(E) Cost drivers for switched transport
facilities, termination and tandem switching. The LRICs for these BNFs shall
systematically account for variations in costs caused by variations in:
(i) the size of a wire center;
(F) Cost drivers for measurement. The LRIC
for this BNF shall systematically account for variations in costs caused by
variations in:
(i) the density of a wire
center;
(ii) the size of a wire
center;
(iii) the time of day;
and
(iv) the duration of a
call.
(G) Cost drivers
for operator services. The LRIC for this BNF shall systematically account for
variations in costs caused by variations in the type of operator services
calls.
(g) LRIC
studies for tariffed services. The DCTU shall perform a LRIC study for each
tariffed service, except those services for which a waiver has been granted
under the workplan approved by the commission. Each LRIC study for a tariffed
service shall be calculated as the sum of the costs caused by that service's
use of BNFs and any other service specific costs associated with functions not
identified as separate BNFs, such as expenses of billing, service specific
advertising and marketing, and service specific taxes. Each LRIC study for a
tariffed service shall be consistent with the principles described in
subsection (d) of this section. Additionally, the company shall use the
following instructions in determining the LRIC for individual tariffed
services:
(1) Mapping of BNFs and costs to
tariffed services. The LRIC study shall identify the BNFs that are used in the
provision of the tariffed service; the long run incremental costs for the
tariffed service shall include the costs associated with this usage. The costs
associated with the service's use of a BNF shall be calculated as the product
of the unit cost for the BNF (as determined under subsection (f)(8) of this
section) and the demand of the service for that BNF.
(2) Identification of other costs. The LRIC
study for an individual tariffed service shall include all service specific
costs (e.g., expenses of billing, marketing, customer service or service
specific taxes) related to the provision of the service that are not included
in the costs for the BNFs.
(3)
Exclusion of common costs. The LRIC study for an individual tariffed service
shall exclude any costs that are common costs (as defined in subsection (c)(5)
of this section). Specifically, the individual LRIC studies for residential and
business basic local exchange service, as these services are tariffed on the
effective date of this section, shall exclude any volume insensitive costs
associated with the use of the network access channel basic level (as defined
in subsection (e)(1)(A) of this section) and network access channel connection
basic level (as defined in subsection (e)(2)(A) of this section).
(4) Relevant increment of output. For the
purposes of this subsection, the relevant increment of output, as that term is
used in the definition of LRIC in §
26.5 of this title (relating to
Definitions), shall be the level of output necessary to satisfy current demand
levels for the service. Adjustments to total service output may be made to
reflect the presence of new services for which demand levels can demonstrably
be anticipated to increase significantly over the course of six
months.
(5) Relating expenses to
services. The company shall avoid the use of embedded cost data and shall
determine expenses consistent with the principles of long run incremental
costing.
(A) Common expenses. Common expenses
that are not directly attributable, using the cost causation principle, to the
service shall be excluded.
(B)
Nonrecurring expenses. The expenses of nonrecurring activities shall be
separately identified.
(C) Taxes.
Any tax expenses not directly attributable, using the cost causation principle,
shall be excluded from the LRIC study for individual services.
(6) Least cost technology. LRIC
studies shall assume the use of least cost technology. The choice of least cost
technologies, however, shall:
(A) be
restricted to technologies that are currently available on the market and for
which vendor prices can be obtained;
(B) be consistent with the level of output
necessary to satisfy current demand levels for all services using the BNF in
question; and
(C) be consistent
with overall network design and topology requirements.
(7) Network topology. LRIC studies shall use
the existing or planned network topology.
(8) Cost of money. When the company uses the
most recent commission approved rate of return for the company, determined
either in a rate proceeding as described in §
26.201(d)(1) of
this title (relating to Cost of Service) or a commission arbitration
proceeding, there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its use. The
DCTU is not required to update its filing only to reflect the most recently
approved cost of money.
(9) Rate of
depreciation. When the company uses the most recent commission approved rate of
depreciation for the company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(h) Identification of BNFs and groups of
services that share significant common costs and calculation of such common
costs. The company shall identify all instances in which BNFs and groups of
services share significant common costs and calculate such common costs.
(1) Costs common to BNFs. The company shall
identify and calculate for each subcategory of BNFs and category of BNFs
significant costs that are common to BNFs (as defined in subsection (c)(5)(B)
of this section). Costs common to BNFs shall only be identified and calculated
at the level of subcategories of BNFs and/or categories of BNFs.
(2) Costs common to groups of services. The
company shall identify and calculate all significant common costs and the
groups of services that share those common costs (as defined in subsection
(c)(5)(C) of this section). The calculation of common costs required under
paragraphs (1)-(2) of this subsection shall be consistent with the principles
described in subsection (d) of this section and the instructions listed
below.
(3) Relevant increment of
output. When common costs are computed for BNFs or services, the relevant
increment of output, as that term is used in the definition of LRIC in §
26.5 of this title (relating to
Definitions), shall be the level of output necessary to satisfy current demand
levels for the BNFs or the services. Adjustments to total service output may be
made to reflect the presence of new services for which demand levels can
demonstrably be anticipated to increase significantly over the course of six
months.
(4) Expenses. The company
shall avoid the use of embedded cost data and shall determine expenses
consistent with the principles of long run incremental costing.
(A) Nonrecurring expenses. The expenses of
nonrecurring activities shall be separately identified.
(B) Taxes. Any tax expenses not directly
attributable, using the cost causation principle, shall be excluded from the
cost studies for common costs.
(5) Least cost technology. The studies shall
assume the use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to
technologies that are currently available on the market and for which vendor
prices can be obtained;
(B) be
consistent with the level of output necessary to satisfy current demand levels
for the BNFs or services in question; and
(C) be consistent with overall network design
and topology requirements.
(6) Network topology. Cost studies shall use
the existing or planned network topology.
(7) Cost of money. When the company uses the
most recent commission approved rate of return for the company, determined
either in a rate proceeding as described in §
26.201(d)(1) of
this title (relating to Cost of Service) or a commission arbitration
proceeding, there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its use. The
DCTU is not required to update its filing only to reflect the most recently
approved cost of money.
(8) Rate of
depreciation. When the company uses the most recent commission approved rate of
depreciation for the company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(i) LRIC studies for groups of tariffed
services that share significant common costs. The DCTU shall perform a LRIC
study for each group of services identified under subsection (h)(2) of this
section. Each group LRIC shall be calculated as the sum of the LRICs (as
determined under subsection (g) of this section) for the services in the group
and the common costs for those services (as identified under subsection (h)(2)
of this section). Each LRIC study shall be consistent with the principles
described in subsection (d) of this section. Additionally, the company shall
use the following instructions in determining the LRIC for groups of services.
(1) Relevant increment of output. When the
LRIC is computed for a group of services, the relevant increment of output, as
that term is used in the definition of LRIC in §
26.5 of this title (relating to
Definitions), shall be the level of output necessary to satisfy current demand
levels for the services in the group. Adjustments to total service output may
be made to reflect the presence of new services for which demand levels can
demonstrably be anticipated to increase significantly over the course of six
months.
(2) Relating expenses to
groups of services. The company shall avoid the use of embedded cost data and
shall determine expenses consistent with the principles of long run incremental
costing.
(A) Common expenses. Common expenses
that are not directly attributable, using the cost causation principle, to the
group of services shall be excluded.
(B) Nonrecurring expenses. The expenses of
nonrecurring activities shall be separately identified.
(C) Taxes. Any tax expenses not directly
attributable, using the cost causation principle, shall be excluded from the
LRIC study for the group of services.
(3) Least cost technology. LRIC studies shall
assume the use of least cost technology. The choice of least cost technologies,
however, shall:
(A) be restricted to
technologies that are currently available on the market and for which vendor
prices can be obtained;
(B) be
consistent with the level of output necessary to satisfy current demand levels
for all services using the BNF in question; and
(C) be consistent with overall network design
and topology requirements.
(4) Network topology. LRIC studies shall use
the existing or planned network topology.
(5) Cost of money. When the company uses the
most recent commission approved rate of return for the company, determined
either in a rate proceeding as described in §
26.201(d)(1) of
this title (relating to Cost of Service) or a commission arbitration
proceeding, there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but shall justify its use. The
DCTU is not required to update its filing only to reflect the most recently
approved cost of money.
(6) Rate of
depreciation. When the company uses the most recent commission approved rate of
depreciation for the company there will be a presumption of reasonableness. The
company shall justify the use of any other rate.
(j) Requirements for subsequent filings of
LRIC studies. The LRIC studies required by this subsection shall be consistent
with the principles, instructions and requirements set forth in this section
and the workplan approved by the commission and shall be reviewed in accordance
with the procedures established in subsection (k) of this section.
(1) Updated studies. A DCTU may be required
to update the filings required by this section, other than the workplan, for
those studies where significant changes have occurred.
(2) Provisions for new BNFs. When significant
technological or other changes occur that necessitate a change in the
definition of current BNFs or the identification of new BNFs, the DCTU shall
file with the commission and the Office of Public Utility Counsel (OPUC)
updated versions for all affected LRIC studies or new studies as
appropriate.
(3) Provisions for new
services. For each application for a service filed pursuant to this title, the
DCTU shall file with the commission and OPUC a LRIC study for the service
consistent with the principles described in subsection (d) of this section and
the specific requirements set forth in subsection (g) of this
section.
(4) Unbundling of existing
tariffed services. When an application filed pursuant to this title proposes a
service that previously had been bundled with other BNFs into a tariffed
service, the DCTU shall carefully reexamine the identification of groups of
services that share significant common costs (as required under subsection (h)
of this section). If the new service significantly changes the identification
of groups of services and the identification of common costs, the DCTU should
update all studies required under this section that are affected by these
changes.
(k) Review
process for LRIC studies. A LRIC study considered under this section will be
reviewed administratively to determine whether the DCTU's LRIC study is
consistent with the principles, instructions and requirements set forth in this
section.
(1) Sufficiency. The LRIC study will
be examined for sufficiency. To be sufficient, the LRIC study must conform to
the prototype studies developed under the workplan approved by the commission.
If the presiding officer or the commission staff concludes that material
deficiencies exist in the LRIC study, the DCTU will be notified within 15 days
of the filing date of the specific deficiency in its LRIC study. The DCTU will
have 15 days from the date it is notified of the deficiency to file a corrected
LRIC study.
(2) Time schedule.
(A) No later than 45 days after the filing
date of the sufficient LRIC study, any party that demonstrates a justiciable
interest may file with the presiding officer written comments or
recommendations concerning the LRIC study.
(B) No later than 55 days after the filing
date of the sufficient LRIC study, OPUC may file with the presiding officer
written comments or recommendations concerning the LRIC study.
(C) No later than 65 days after the filing
date of the sufficient LRIC study, commission staff must file with the
presiding officer written comments or recommendations concerning the LRIC
study.
(D) No later than 75 days
after the filing date of the sufficient LRIC study, any party that demonstrates
a justiciable interest, OPUC, or the DCTU may file with the presiding officer a
written response to the commission staff's recommendation.
(E) No later than 85 days after the filing
date of the sufficient LRIC study, the presiding officer must complete an
administrative review to determine whether the DCTU's LRIC study is consistent
with the principles, instructions and requirements set forth in this section.
The presiding officer must approve the LRIC study or order the DCTU to refile
the LRIC study incorporating all modifications recommended by the presiding
officer.
(F) Any party may appeal
to the commission an administrative determination by a presiding officer within
five days after the date of notification of the determination. The commission
will rule on the appeal within 30 days after the date it receives the appeal.
If the commission or a presiding officer orders a cost study to be changed, the
dominant certificated telecommunications utility must be ordered to make those
changes within a period that is commensurate with the complexity of the LRIC
study.
(3) Requests for
information. While the LRIC study is being administratively reviewed, the
commission staff, OPUC, and any party that demonstrates a justiciable interest
may submit requests for information to the DCTU. Answers to such requests for
information must be provided within ten days after receipt of the request by
the DCTU to commission staff, OPUC and any party that demonstrates a
justiciable interest.
(4)
Suspension. At any point within the first 45 days of the review process, the
presiding officer, the commission staff, OPUC, the DCTU, or any party that
demonstrates a justiciable interest may request that the review process be
suspended for 30 days. The presiding officer may grant a request for suspension
only if he or she has determined that the party has demonstrated that good
cause exists for such suspension.
(5) Effective date of the LRIC study. The
effective date of the LRIC study shall be the date it is approved by the
presiding officer.
(l)
Notice requirements. At least ten days before a DCTU files any workplan or LRIC
study pursuant to this section, the DCTU shall file with the commission and
OPUC a notice of its intent to file such workplan or LRIC study and the
expected filing date. The DCTU's notice shall indicate that the filing is being
made pursuant to this section. The commission shall then publish notice of the
DCTU's intent to file the workplan or LRIC study in the Texas
Register.