The Mont. PSC is eyeing retail or wholesale rate cuts for Qwest t...
The Mont. PSC is eyeing retail or wholesale rate cuts for Qwest to ensure its ratepayers benefit from sharp increases in the company’s federal universal service subsidies the last 10 years. In 2005 the PSC opened an inquiry on…
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Qwest’s use of universal service high-cost support funds (Case D2005.6.105). In the latest docket report, the PSC said Qwest’s annual universal service subsidy jumped from $1.3 million in 1996 to $16 million yearly for 2004-06. Qwest said universal service subsidies go to add, upgrade and maintain network facilities in its high-cost areas; the PSC noted Qwest’s gross network investment statewide fell from $52.6 million in 1996 to $24.6 million in 2005. The PSC said Qwest’s gross construction cost has fallen more than 50% since 1996, as its universal service subsidies “have increased dramatically.” Qwest said universal service support doesn’t offset its rural network construction expenses so its rates should stay the same. But the PSC said that while there’s no evidence Qwest improperly uses universal service subsidies, “it is difficult to pinpoint exactly where the USF money is going,” or verify that Mont. customers get maximum benefit from the subsidies. The PSC said it may order direct ratepayer benefits of $8-$10 million via a cut in basic exchange rates, killing Qwest’s monthly extended area calling surcharge, or implement MCI’s proposal to cut Qwest intrastate access charges. The PSC hired a consultant to study these and other alternatives for using Qwest’s universal service revenue to benefit ratepayers. The consultant’s report is due June 12; Qwest’s response, July 19. Data requests must be completed by Aug. 30, and hearings will open Sept. 26.