Opinion ID: 1874673
Heading Depth: 1
Heading Rank: 6

Heading: Loading Factors

Text: Verizon also argues that the Commission arbitrarily adjusted the loading factors in the ICM-FL model, having incorrectly perceived a linearity problem in Verizon's loading factors calculations. However, we conclude that the loading factors were properly adjusted by the Commission following its analysis of the evidence and a determination that certain adjustments needed to occur to avoid distorted costs. The Commission found that Verizon's material and engineering loading factors were linear, meaning that they did not take into account the size or type of cable involved. From the record it appears that failure to take into account the size or type of cable can result in distorted costs between areas. The Commission concluded that it needed to make adjustments to the loading factors presented by Verizon to compensate for this problem. To remedy the problem, the Commission adjusted those loading factors that appeared to be outliers when compared with those approved for BellSouth in Order No. PSC-01-1181-FOC-TP. We note the Commission's discussion of this issue in its order: While rates clearly must be based on TELRIC costs to be compliant with the FCC's rules, that fact does not speak against comparing the rates of similarly situated companies in the same state. We agree with Verizon that rates set in other states may not provide a reasonable benchmark. However, rates set in the same state by the same commission may provide a gauge by which to measure whether the rates proposed by a company, in this case Verizon, are so totally beyond the realm of reason that they must be rejected. Caution must be exercised to make sure the rates include similar factors. Once it can be ascertained that the rates have been calculated in a similar fashion, there is no reason why such comparisons cannot prove useful. Id., order at 17. Verizon contends that the reliance on the BellSouth proceeding was erroneous. However, since the Commission had only recently engaged in the process of determining UNE rates for BellSouth, another ILEC, it stands to reason that the process would have informed and enlightened the Commission in their setting of Verizon's rates. We find no error in the use of some comparison between BellSouth and Verizon in order to ensure some consistency of UNE rates between similarly situated ILECs in Florida. Furthermore, we find Verizon's contention that the Commission's adjustments were not based on evidence in the record is without merit. In its recommendation, the Commission staff cited to specific Verizon exhibits which raised staff's concern about the linearity problem. Therefore, we conclude that the Commission's decisions were based on a review of the available evidence. The resulting adjustments were within the Commission's discretion, as it is vested with the broad responsibility of setting rates. See Gulf Coast Elec. Co-op., Inc. v. Johnson, 727 So.2d 259, 262 (Fla.1999). Therefore, we affirm the Commission's decision with respect to Verizon's loading factors.