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Telecom Public Notice CRTC 98-3
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Ottawa, 23 February 1998 |
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FORM OF REGULATION FOR TELUS COMMUNICATIONS (EDMONTON) INC.
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Reference: 8085-RP0007/98 |
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I INTRODUCTION |
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The regulatory framework of TELUS
Communications (Edmonton) Inc. (TCEI) (formerly ED TEL Communications Inc.)
is subject to the Directive to the Canadian Radio-television and
Telecommunications Commission on the Regulation of Edmonton Telephones
Corporation and ED TEL Communications Inc., P.C. 1994-1779, 25 October
1994 (the Directive). Among other things, the Directive specifies: |
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(a) a form of incentive regulation with an
allowed rate of return on average common equity (ROE) range of 11.5% to
13.5% (earnings above 13.5% go entirely to benefit ratepayers; if the
company's projected earnings are below 11.5%, the company may apply to the
Commission for an increase in rates); |
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(b) the recovery of a shareholder entitlement,
defined in the Directive as the difference between the market and net book
value of common shareholders' equity at the time of privatization, with a
minimum of 12% of the Total Shareholder Entitlement (i.e., the Shareholder
Entitlement amount plus a reasonable return on the unrecovered portion) to
be included in the company's annual revenue requirement; and |
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(c) the treatment of directory operations as
being partially integral to the operations of the company, such that 18% of
total Yellow Page Directory revenues, less tariff payments for business
customer listings used therein, are to be included in the calculation of
the company's annual revenue requirement. |
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The Directive expires on 25 October 1998.
Accordingly, the Commission hereby initiates a proceeding to determine the
appropriate regulatory regime for TCEI to be implemented after the
Directive has expired. |
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II ISSUES |
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A. Appropriate Regulatory Regime |
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In Review of Regulatory Framework,
Telecom Decision CRTC 94-19,
16 September 1994, the Commission determined, among other things, that
earnings regulation would, for certain of the Stentor Resource Centre Inc.
member companies' Utility segment (i.e., local and access services), be
replaced with price cap regulation effective 1 January 1998. |
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In Price Cap Regulation and Related Issues,
Telecom Decision CRTC 97-9,
1 May 1997 (Decision 97-9),
the Commission set the principles and components of price cap regulation
for BC TEL, Bell Canada, The Island Telephone Company Limited, Maritime Tel
& Tel Limited, MTS NetCom Inc., The New Brunswick Telephone Company,
Limited, NewTel Communications Inc. and TELUS Communications Inc. (TCI)
(the telephone companies). TCEI was not a party to this proceeding. |
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The Commission directs TCEI to show cause, by
6 April 1998, why some or all of the Commission's determinations in
Decision 97-9 should not
apply to it. |
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Further, the Commission is of the preliminary
view that it is appropriate to extend the regulatory regime under the
Directive to the end of 1998 and to align the start of a new regulatory
regime with the beginning of the 1999 calendar year. This would provide a
consistent basis from which to calculate the rates going into the price cap
period, and would also put TCEI on the same regulatory filing schedule as
the telephone companies. |
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Accordingly, the Commission will be initiating
a separate process during this proceeding to examine whether the regulatory
regime under the Directive should be extended to the end of 1998. |
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B. Going-in Rates and Related Issues |
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The Commission directs TCEI to file, by
6 April 1998, its financial forecast and other related information for
1998. |
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In Decision
97-9, the Commission noted
that TCEI was not a party to that proceeding and that it would not be under
price cap regulation effective 1 January 1998. The Commission also stated
that, given the contribution mechanism approved in Contribution Regime
in Alberta, Telecom Decision CRTC
95-22, 27 November 1995,
TCEI's contribution rate would have to be recalculated annually and
combined with TCI's contribution rate to derive the Blended Alberta rate.
In this proceeding, the Commission will determine the 1998 contribution
requirement for TCEI and the Blended Alberta rate. |
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With respect to setting the level of rates for
local services going into the new regime, the Commission will examine in
this proceeding the amount (if any) of rate rebalancing required, issues
related to shareholder entitlement and integrality of directory operations
as well as other issues, such as an appropriate ROE and the company's
going-in contribution requirement, as well as the Blended Alberta rate,
effective 1 January 1999. |
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In an effort to streamline the process to
determine an appropriate ROE, the Commission directs TCEI to show cause, by
6 April 1998, why the ROE applicable to TCI, to be determined in the
proceeding initiated by Implementation of Price Cap Regulation, 1997
Contribution Charges and Related Issues, Telecom Public Notice CRTC
97-11, 25 March 1997, should not apply to
TCEI. |
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C. Other Matters |
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By letter dated 1 May 1997, the Commission
requested TCEI to show cause why some or all of the Commission's
determinations in the following decisions should not apply to TCEI: |
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(a) Unbundled Rates to Provide Equal Access,
Telecom Decision CRTC 97-6,
10 April 1997 (Decision 97-6); |
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(b) Local Competition, Telecom Decision
CRTC 97-8, 1 May 1997
(Decision 97-8); and |
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(c) Responsibility for Carrier Specific
Costs for the Provision of Local Number Portability, Telecom Order CRTC
97-591, 1 May 1997 (Order
97-591). |
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By letter dated 13 May 1997, TCEI requested
that all of the 1 May 1997 decisions, including Decision
97-9, be effective in its
serving area on 1 January 1998. |
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By letter dated 27 May 1997, the Commission
stated that the Directive precludes it from implementing a price cap form
of regulation for TCEI prior to 25 October 1998. The Commission also noted
that it would issue a public notice to seek comments on why Decisions
97-6 and
97-8 and Order
97-591 should not apply to
TCEI. |
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In TELUS Communications (Edmonton) Inc. -
Local Competition and Related Issues, Telecom Public Notice CRTC
97-28, 21 July 1997, the Commission
initiated a proceeding on whether Decisions
97-6 and
97-8 and Order
97-591 should apply to TCEI,
effective 1 January 1998 or on another date in advance of the expiry of the
Directive. The determinations to be made in that decision may impact on the
financial forecasts to be filed by TCEI and, ultimately, on the final
determinations to be made in this proceeding. Once that decision is issued,
TCEI will have an opportunity to update its evidence and submissions. |
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III PROCEDURE |
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TCEI is made a party to this
proceeding. |
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Other parties wishing to participate fully in
this proceeding must notify the Commission of their intention to do so by
writing to Mrs. Laura M. Talbot-Allan, Secretary General, CRTC, Ottawa,
Ontario, K1A 0N2, fax: 819-953-0795, by 25 March 1998. Parties are to
indicate in the notice their Internet email address, if available. If
parties do not have access to the Internet, they are to indicate in their
notice whether they wish to receive disk versions of hard copy filings. The
Commission will issue a complete list of parties and their mailing
addresses (including Internet email addresses if available), identifying
those parties who wish to receive disk versions. |
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Any person who wishes merely to file written
comments in this proceeding, without receiving copies of the various
submissions, may do so by writing to the Commission at the address noted in
paragraph 17 by 17 August 1998. |
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By letter of 23 February 1998, the Commission
has addressed interrogatories to TCEI. TCEI is directed to file responses
to the interrogatories with the Commission, serving copies on all parties,
by 6 April 1998. |
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TCEI is directed to file
its evidence or submissions in this proceeding, serving copies on all
parties, by 6 April 1998. |
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Any party may address interrogatories to TCEI.
Any such interrogatories must be filed with the Commission and served on
TCEI by 8 May 1998. |
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Responses to interrogatories addressed
pursuant to paragraph 21 are to be filed with the Commission and served on
all parties by 8 June 1998. |
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Requests by parties for further responses to
their interrogatories, specifying in each case why a further response is
both relevant and necessary, and requests for public disclosure of
information for which confidentiality has been claimed, setting out the
reasons for disclosure, must be filed with the Commission and served on the
party or parties in question by 15 June 1998. |
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Written responses to requests for further
responses to interrogatories and for public disclosure must be filed by
TCEI with the Commission and served on the party making the request by 22
June 1998. |
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The Commission will issue a determination with
respect to requests for disclosure and for further responses as soon as
possible, and intends to direct that any information to be provided
pursuant to that determination be filed with the Commission and served on
all parties to the proceeding by 8 July 1998. |
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Parties other than TCEI may file evidence or
other submissions relevant to this proceeding. Parties intending to file
evidence should so inform the Commission and other parties by 15 June 1998,
indicating the subject matter of their evidence. Any such evidence or other
submissions must be filed with the Commission and served on all other
parties by 16 July 1998. |
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Parties may address interrogatories to any
party who files evidence or submissions pursuant to paragraph 26. Any such
interrogatories must be filed with the Commission and served on the party
or parties in question by 27 July 1998. |
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Responses to interrogatories addressed
pursuant to paragraph 27 are to be filed and served on all parties by 10
August 1998. |
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All parties may file comments, serving copies
on all other parties, by 17 August 1998. |
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All parties may file replies to any comments,
serving copies on all parties who filed comments, by 24 August 1998. |
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Where a document is to be filed or served by a
specific date, the document must be actually received, not merely sent, by
that date. |
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In addition to hard copy filings, parties are
encouraged to file with the Commission electronic versions of their
submissions in accordance with the Commission's Interim Telecom
Guidelines for the Handling of Machine-Readable Files, dated
30 November 1995. The Commission's Internet email address for
electronically filed documents is
public.telecom@crtc. gc.ca. Electronically filed documents can
be accessed at the Commission's Internet site at
http://www.crtc.gc.ca. |
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This document is available in alternative
format upon request. |
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Laura M. Talbot-Allan
Secretary General |