Opinion ID: 786960
Heading Depth: 3
Heading Rank: 1

Heading: Determination of Common Costs

Text: 15 In its First Cost Decision adopting the TELRIC methodology, the CPUC noted that the costs from retail services should be excluded from the price of a UNE. Id. at 52. This is so, according to the CPUC, because retail costs are not attributable to the production of network elements that are offered to interconnecting carriers. Id. at 62. 16 In the same decision, the CPUC determined the amount of common costs that would be included in determining the common cost allocator, as well as the amount of common costs that were retail-based and thus would be excluded. See id. at 63 n. 55 (In this phase ... our task is to determine the retail portion of common costs that are likely to be incurred by Pacific in a forward-looking environment.). While Pacific claimed before the CPUC that its total common costs were approximately $1.2 billion, MCI and AT & T claimed that this figure included over $200 million in retail-related costs. The CPUC agreed with MCI and AT & T only in part, determining that only $68 million of the costs claimed by Pacific as common had a clear retail component and thus should be excluded. The district court described these excluded costs as those that, in a hypothetical forward-looking environment in which Pacific is solely a wholesaler, Pacific would not incur. AT & T, 228 F.Supp.2d at 1093. In other words, under the CPUC's analysis, if Pacific were to cease all of its retail operations, the CPUC should consider all of the remaining common costs. Since only $68 million of the additional common costs claimed by Pacific would not exist in a hypothetical world in which Pacific engaged in no retail operations, the CPUC excluded only those costs.