Opinion ID: 2599819
Heading Depth: 3
Heading Rank: 1

Heading: The PSC's decision in the underlying administrative proceeding

Text: [¶ 17] When Qwest submitted its 2004 TSLRIC Study to the PSC for review and approval, a key issue was whether or not the Study complied with the following provision of the PSC regulations: Telecommunications companies which prepare and file TSLRIC studies in accordance with these rules shall design the studies to reflect the differences in costs associated with providing local exchange service to geographically distinct groups of customers. Telecommunications companies shall provide cost information for groups of customers disaggregated to the smallest practical size, which shall consider factors as defined in Section 519(a) to (d), inclusive. TSLRIC numbers for local exchange services shall not be expressed as company wide or state wide average costs unless the telecommunications company can demonstrate that there are no significant differences in the cost of providing telecommunications services to geographically disparate groups of customers. PSC Rules and Regulations, ch.V, § 541. [¶ 18] Qwest asserted that its TSLRIC Study appropriately reflected differences in costs for local exchange services in geographically distinct groups. Qwest explained that it had disaggregated cost information for four different groups of customers, based on density and distance from a central office. The first group was located in the Base Rate Area, with the highest density of customers and the shortest distance from the central office. The remaining three groups were located in Zone 1, Zone 2, or Zone 3, with progressively lower densities of customers and progressively longer distances from the central office. Qwest's TSLRIC Study keeps the four groups separate, or disaggregated. However, within each group, TSLRIC costs were averaged on a statewide basis. Thus, costs for customers in the Base Rate Area of the Afton Exchange were averaged with customers in the Base Rate Area of, for example, the Cheyenne Exchange. Similarly, costs for customers in Afton's Zone 3 were averaged with costs for customers in, for example, Cheyenne's Zone 3. Contending that its method of disaggregation presented information for groups of customers of the smallest practical size, Qwest emphasized that the PSC had approved this method of disaggregation on previous occasions. [¶ 19] Silver Star, on the other hand, asserted that Qwest's 2004 TSLRIC Study expressed information as company wide or state wide average costs, and therefore, Qwest had the burden of demonstrating that there are no significant differences in the cost of providing telecommunications services to geographically disparate groups of customers, as required by PSC Rules and Regulations, ch.V, § 541. Silver Star pointed out that Qwest, in other, earlier proceedings, had shown that the Afton Exchange was one of the most expensive to serve. Thus, Silver Star urged, Qwest's method of averaging costs in the Afton Exchange with costs in other parts of the state effectively masked significant cost differences. Silver Star asserted that Qwest should disaggregate TSLRIC costs separately for each of its Wyoming Exchanges. [¶ 20] The PSC found a middle course. As for the Afton Exchange, it found evidence that costs in the Afton Exchange varied materially from statewide averages. It also found that the Afton Exchange was unusual, in that it had been a competitive market for several years. Thus, the PSC concluded, Qwest had not met its burden of demonstrating no significant differences in the cost of services as between the Afton Exchange and other parts of the state. However, the PSC concluded that Qwest did not have to disaggregate TSLRIC costs separately for each of its Wyoming Exchanges. Following this middle course, the PSC made a finding of fact in its Final Order that the Afton Exchange was a suitable place for a test of the continuing validity of Qwest's approach to pricing and disaggregation. Thus, while we have approved of Qwest's modeling approach in the past, that does not relieve us of the ongoing duty to make certain that it continues to serve the intent of the Act into the future. This is the first time we have been presented with this fundamental challenge to Qwest's TSLRIC compliance and so we must make this examination for the first time. A further examination of the costs in the Afton exchange would help us to better understand whether the retail service prices and the level of disaggregation presented by Qwest comply with the Act. The PSC's corresponding conclusion of law was as follows: We conclude that a TSLRIC study by Qwest of the Afton exchange, modeled individually and stating exchange-specific TSLRIC results for the Afton base rate area and each of the three Afton rural zones should be required to help demonstrate the degree to which the level of disaggregation offered by Qwest in this case fairly complies with the disaggregation requirements of Section 541 of our Rules and serves the public interest as expressed in the Act. A proper demonstration would clearly show the Commission whether or not the base rate area and zone prices were in fact above the TSLRIC levels offered by Qwest in this case and would be a useful test to assist the Commission in discerning whether or not the instant study could be approved under Wyoming law as legally supportive of Qwest's Wyoming prices. On this basis, the PSC ordered Qwest to prepare and submit an exchange-specific TSLRIC Study for the Afton Exchange.