Opinion ID: 2329366
Heading Depth: 1
Heading Rank: 4

Heading: the loss of bis revenues

Text: C & P asserts that the Commission should have approved its request to recoup from District of Columbia ratepayers $3,270,000 in revenues which C & P estimated it would lose as a result of the termination of its Billing Inquiry Service (BIS) agreement with AT & T. We affirm the Commission's ruling on this issue. At divestiture AT & T lacked the facilities to handle inquiries from its customers about their long distance telephone bills. C & P agreed to provide this service to AT & T temporarily until AT & T could set up its own system for billing inquiries. Prior to the hearing before the Commission, AT & T had announced plans to discontinue its subscription to C & P's BIS because it could now provide the service for itself. The Commission gave three separate reasons for its decision to disallow recovery of the BIS revenues which C & P was about to lose. First, it held that C & P's proposal did not meet the established known and certain standard for changes in expenses which occur outside of the test year. Second, C & P sought to recoup its lost revenues in the form of a surcharge, and the Commission ruled that C & P had not met the heightened standard for approval of a surcharge (as opposed to a rate adjustment). Third, the Commission expressed concern that C & P had not raised this issue until five months after it had filed its application for a rate adjustment, and ruled that C & P had not justified its tardiness. We hold that the Commission's first ground is sufficient to sustain its ruling, and thus we do not consider the second and third. As a matter of long-standing policy, the Commission permits adjustments to test year figures for known and certain changes in operating expenses and revenues which occur within a reasonable time after the test year, as long as the record is still open. See Order No. 8300 at 83; Potomac Electric Power Co., 29 Pub. Util. Rep. 4th 585, 590 (D.C.PSC 1979); see also New England Telephone & Telegraph Co. v. Public Utilities Commission, 470 A.2d 772, 775 (Me.1984). In this case, however, it rejected C & P's request for such an adjustment because the changes were not known and certain. At the time of the hearing in this case, the Federal Communications Commission (FCC) had recently issued an interim order stating that it then had under consideration measures designed to provide relief at the interstate level to operating companies (such as C & P) which were faced with the prospect of lost revenues due to AT & T's termination of BIS contracts. 50 Fed.Reg. 26204 (1985). Some of those revenue losses would probably have to be made up by adjustments in intrastate rates. The effect of the FCC order, however, was to render the proper amount of such adjustments uncertain. The purpose of the interim order was to establish measures for the allocation of costs in what is known as Account 645, which includes BIS costs. In its order the FCC adopted a formula by which adjustments were to be made in the access charge tariffs of the local Bell Operating Companies (BOCs) in order to ensure proper recovery of the interstate portion of Account 645 costs and of other related expenses. Id. at 26205-26208; see also 47 C.F.R. § 67.365 (1985). The formula made the amount of recovery of the interstate portion of those costs known and certain, but only for the duration of the interim order. That order was to remain in effect for one year from the date on which AT & T began to provide billing inquiry services itself, or until the FCC issued an order setting up permanent allocation procedures for Account 645. 50 Fed.Reg. at 26206-26208; see 47 C.F.R. § 67.365 (1985). At the time of the proceedings in this case before the Commission, neither the date when the FCC's permanent order would take effect nor the amounts of the interstate adjustments in the access charge tariffs that would be permanently ordered by the FCC were known or knowable. Since the amount of relief to be provided by the FCC at the interstate level would likely change within the period for which C & P's rates were being set in this proceeding, and since the date of that change was not fixed, the Commission ruled that it would be premature to make the adjustments requested by C & P. The Commission also ruled that C & P should first seek relief from the FCC, under the procedures established in the interim order, before attempting to recoup its loss of the BIS revenues from District of Columbia ratepayers. Order No. 8300 at 147-149. On this issue the Commission's decision is entirely sound. Its reasoning is persuasive, and its ruling is supported by substantial evidence, namely, the FCC order itself. We therefore affirm the denial of C & P's request to recover the lost BIS revenues. [9]