As regulators continue to investigate industrywide restructuring as an answer to regional electric rate disparities and calls from large consumers for price reductions, the trend of dealing with...
Calif. Reviews LEC Cost Studies
The California Public Utilities Commission (CPUC) has approved a Total Service Long Run Incremental Cost (TSLRIC) study submitted by Pacific Bell, a local-exchange carrier (LEC), for use in pricing bundled and unbundled basic-service network offerings. The CPUC rejected similar studies submitted by GTE California, Inc., finding that the LEC had employed flawed methodologies and that the studies lacked adequate supporting data.
At the same time, the CPUC directed Pacific Bell to change certain assumptions used in its loop studies to reduce the cost for all access line services by approximately $2.25 per month. The CPUC also found "a substantial probability" that the LEC had incorrectly assigned as shared and common costs approximately $145 million in operating expenses. Critics had argued that the carrier "gamed" the allocation process to overstate costs for services that competitors must purchase relative to its own retail services. Critics also alleged that the LEC assigned relatively higher costs to the subset of its retail services that will face little competition in the near future. The CPUC directed the carrier to review the cost assignments and either assign the suspect costs directly to particular services or document fully why they should be not so assigned. Re Framework for Network Architecture Development of Dominant Carrier Networks, R.93-04-003, Decision 96-08-021, Aug. 2, 1996 (Cal.P.U.C.).
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