ARCHIVED - Decision CRTC 2001-203
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Decision CRTC 2001-203
Ottawa, 29 March 2001
Ms. Dorothée Biron
Subject: Ex parte requests dated 23 February 2001 with respect to the interim approval of a service improvement plan (SIP) and revenue requirement.
Dear Ms. Biron:
The Commission is hereby communicating its evaluation of the merit of the above-mentioned requests.
In the SIP request, Québec-Téléphone asks the Commission to give interim approval before 30 March 2001 for a service improvement plan in certain areas of its service territory.
In Telephone service to high-cost serving areas, Telecom Decision CRTC 99-16, dated 19 October 1999, the Commission established, at paragraph 45, the basic service objective, whereby basic service should be extended to as many Canadians as feasible. The Commission also directed all incumbent local carriers to file SIPs for Commission approval, or to demonstrate that the basic service objective has been and will continue to be achieved in their territory. Finally, these SIPs should also include proposals for the funding of such improvements. In the case of Québec-Téléphone, the Commission directed that it include its SIP in the proceeding to implement price caps. The Commission is of the opinion that the proposal before it is not detailed enough to enable it to decide at this time on the costs, type and nature of the investments.
However, the Commission points out that construction may begin without the Commission's prior approval. The Commission is of the opinion that it would be more appropriate to review the investments made in 2001 in the context of the proceeding to establish the final 2001 contribution rate.
The Commission therefore denies the request for interim approval of the SIP and directs Québec-Téléphone to:
In a separate ex parte request, Québec-Téléphone also asked the Commission to give interim approval before 30 March 2001 in order for it to meet a need for additional revenue.
In Québec-Téléphone 1999 final contribution rate approved, Order CRTC 2000-860, dated 19 September 2000, the Commission points out that, should Québec-Téléphone request and substantiate a residential local rate increase during the transition period prior to the introduction of price caps, the Commission may consider allowing the use of excess earnings and accumulated interest to defer or reduce the need for residential local rate increases.
In CRTC grants conditional approval to Québec-Téléphone's business rate restructuring proposal, Order CRTC 2001-217, dated 14 March 2001, the Commission gave its conditional approval for Québec-Téléphone to proceed with its business rate restructuring, the condition being that this restructuring not be funded through use of the excess earnings currently held in a deferral account or through a local residential rate increase.
The Commission is therefore of the opinion that the calculation of revenue requirements should be done using the methodology described on the following page. The Commission deems that, given the interim nature of the deferral account, the Commission might permit Québec-Téléphone to use it retroactively. The Commission is of the opinion that expenditures for such things as the writing-off of assets, employee benefits, and maintenance and improvement of networks might be considered as operating expenditures in the proceeding to establish the final 2001 contribution rate.
Consequently, the Commission denies the request for interim approval of a revenue requirement. The Commission directs Québec-Téléphone to file an abridged version of its application for the public record within 7 days of this decision.
In light of the above, the Commission is of the opinion that Québec-Téléphone should adopt the following methodology in the proceeding to establish the final 2001 contribution rate, in order to demonstrate:
b) the need for an additional revenue requirement:
In addition, Québec-Téléphone should include these calculations in connection with the proceeding to establish the final 2001 contribution rate, clearly showing how the calculations were done and what the impact of this is on the Utility segment ROE.
The Commission points out that the ex parte approach should not be followed for this type of application in future. According to Review of regulatory framework, Telecom Decision CRTC 94-19, dated 16 September 1994, section IV I-2, ex parte treatment is generally applied to applications for competitive services.
Date Modified: 2001-03-29
- Date modified: