Utah Admin. Code R746-8-401 - Rate-of-Return Regulated Providers

(1) A rate-of-return regulated provider is eligible for ongoing UUSF support pursuant to Section 54-8b-15 if the provider:

(a) is a carrier of last resort;

(b) complies with Commission orders and rules;

(c) charges, at a minimum, the affordable base rate of $18 per access line, unless a petition brought pursuant to Subsection R746-8-401(3) is granted after adjudication;

(d) includes as revenue, in calculating UUSF support, the amounts described in Subsection R746-8-401(2);

(e) offers Lifeline service on terms and conditions prescribed by the Commission;

(f) operates as a facilities-based provider, not a reseller; and

(g) demonstrates, in the report filed by the rate-of-return regulated provider under Subsection R746-8-401(6), that its costs exceed its revenues as required by Section 54-8b-15.

(2) A rate-of-return regulated provider shall include as revenue, in calculating UUSF support:

(a) for the sale of wholesale broadband internet access service or broadband internet access service sold in combination with a voice service access line to the same end-user, a reasonable cost-based value per connection per month; and

(b) for the sale of stand-alone wholesale broadband internet access service or stand-alone broadband internet access service a minimum, $25 per connection per month plus an access recovery charge calculated under 47 C.F.R. Subsection 51.917(e) and reflected in the rate-of-return regulated provider's annual tariff review plan for the sale of stand-alone wholesale broadband internet access service or stand-alone broadband internet access service, unless:

(i) the Commission approves a petition to deviate from the revenue minimum under Subsection R746-8-401(3); or

(ii) the rate-of-return regulated provider offers wholesale broadband internet access service to a Lifeline subscriber in accordance with Subsection R746-8-401(4).

(3) A r at e -of-return regulated provider may petition the Commission to deviate from the affordable base rate set forth in Subsection R746-8-401(1)(c) or the wholesale broadband internet access service and broadband internet access service revenue minimum described in Subsection R746-8-401(2)(b), and the Commission shall grant the petition if:

(a) for a petition to deviate from the affordable base rate described in Subsection R746-8-401(1)(c), the rate-of-return regulated provider demonstrates to the satisfaction of the Commission:

(i) that the affordable base rate is not reasonable in the provider's designated support area;

(ii) the rate-of-return regulated provider imputes income up to the affordable base rate in calculating the provider's UUSF disbursement; or

(iii) the Commission determines that deviation from the affordable base rate is otherwise in the public interest.

(b) for a petition to deviate from the wholesale broadband internet access service or broadband internet access service revenue minimum described in Subsection R746-8-401(2)(b), the Commission determines that the deviation from the minimum revenue amounts is in the public interest.

(4)

(a) For calculating UUSF support, a rate-of-return regulated provider may include in revenue a minimum of $18 per connection per month, plus an access recovery charge calculated in accordance with 47 C.F.R. Subsection 51.917(e), if the rate-of-return regulated provider:

(i) elects to offer a stand-alone wholesale broadband internet rate to provide a reduced cost broadband internet access service for eligible Lifeline subscribers, and

(ii) provides the full amount of the wholesale reduction in included revenue to each eligible Lifeline subscriber as a discount to the cost of a broadband internet access service plan.

(b) A rate-of-return regulated provider that elects to provide a reduced cost broadband internet access service or offer a wholesale broadband internet Lifeline rate shall:

(i) provide information to the Division and the Commission detailing the reduced cost broadband internet access service offering or the wholesale broadband internet customer; and

(ii) annually certify that each Lifeline subscriber who subscribes to the reduced cost broadband internet access service offering has received the discount described in Subsection R746-8-401(4)(a)(ii).

(5) The Division shall, consistent with Rule R746-400,

(a) prepare an annual report form to be completed by the rate-of-return regulated provider annually that includes an estimate of UUSF support, and

(b) provide the annual report form to each provider, by February 14 each year.

(6) A rate-of-return regulated provider shall file its annual report, in the form provided by the Division in a company specific docket by April 15 including, when available, audited financial statements for the year matching the annual report.

(a) The provider shall include a trial balance matching the audited financial statement and annual report.

(b) The provider may identify and include additional required or needed adjustments.

(7) For calculating a rate-of-return regulated provider's ongoing UUSF distribution :

(a) Alternative Connect America Cost Model Funds are considered federal universal service fund revenue under Subsection 54-8b-15(4)(a)(ii)(D).

(b) The rate-of-return regulated provider's state rate-of-return shall be equal to the weighted average cost of capital rate-of-return prescribed by the FCC for rate-of-return regulated carriers, for the year in which the UUSF distribution is made.

(c) The rate-of-return regulated provider's depreciation costs are calculated using an FCC-allowed depreciation method and prescribed depreciation rates or FCC adjusted depreciation rates.

(d) The rate-of-return regulated provider may file a petition with the Commission to modify its prescribed depreciation rates.

(8) A r at e -of-return regulated provider shall include with its annual report, in the form prepared by the Division under Subsection R746-8-401(5)(a), for each of its accounts:

(a) the depreciation method used;

(b) the current depreciation rate applied; and

(c) an indication of whether the depreciation rate being applied is the Commission prescribed depreciation rate or an FCC adjusted depreciation rate.

(d) A rate-of-return regulated provider using a group asset depreciation method that complies with Subsection R746-8-401(7)(c) and FCC orders, shall periodically apply the FCC adjustment formula to its groups of assets to ensure that the average remaining life and future net salvage value estimates are reasonable and that the resulting effective depreciation rate for assets in each group is reasonably similar to the prescribed rate for the group when considering remaining net value and average remaining life.

(i) When applying the FCC adjustment formula, the rate-of-return regulated provider shall determine the average remaining life of the asset group by reviewing its continuing property records; considering relevant additions, disposals, repairs, obsolescence, and refurbishment of the asset group units associated with an asset group; then identifying whether the asset group unit additions have historically remained in each asset group longer or shorter than the asset group's Commission prescribed life; and using the data to determine an estimated life for typical group additions.

(ii) When applying an FCC adjustment formula, the rate-of-return regulated provider shall:

(A) provide with its annual report a narrative summary and a spreadsheet with formulas intact, that demonstrate its calculation of the average remaining life of the asset group when the provider applies an FCC adjusted depreciation rate including narrative support for any management assumptions used in the calculation; and

(B) certify to the Commission in the annual report that:

(I) its management has reviewed the depreciation rates applied, including any changes to its asset groups and salvage values;

(II) its estimated depreciation expense is consistent with the average remaining life of each asset group;

(III) its depreciation method is an FCC-allowed depreciation method; and

(IV) it has complied with Section R746-8-401.

(9)

(a) Annually, the Division shall make a recommendation regarding whether and how each rate-of-return regulated provider's monthly UUSF distribution should be adjusted.

(b) The Division shall use the following criteria and inputs in calculating its recommended UUSF distribution:

(i) the current FCC rate-of-return as set forth in Subsection R746-8-401(7)(b); and

(ii) the provider's financial information from its last annual report described in Subsection R746-8-401(8).

(10)

(a) The Division shall file annually, a non-confidential, non-binding estimate of any UUSF by September 1 in the rate-of-return regulated provider specific docket assigned by the Commission.

(b) The Division shall provide to the rate-of-return regulated provider any analyses and documents, including confidential information, in addition to the information described in Subsection R746-8-401(9), that clearly identifies any adjustments that the Division believes are in the public interest.

(c) Interested parties may seek intervention within 15 days of the Division's filing of the preliminary estimate referred to in Subsection R746-8-401(10)(a).

(d) After filing the preliminary recommendation, the Division, the rate-of-return regulated provider, and any other party shall review and analyze the preliminary recommendation.

(e) The Division shall file a final recommendation with the Commission by November 1.

(f) After the Division files the final recommendation with the Commission, any party may challenge the Division's recommendation by notifying the Commission no later than November 15.

(g) If the Division's recommendations are not challenged and the Commission finds the rate-of-return regulated provider's costs and UUSF disbursements to be reasonable, the new UUSF distribution amounts will begin on January 1 of the following year.

(h) If the Division's recommendations are challenged or the Commission does not approve the recommendations, the Commission will convene a scheduling conference and determine the appropriate process for resolving the contested issues.

(i) If the Division's recommendation for a rate-of-return regulated provider's UUSF distribution has been challenged or if the Commission does not approve the recommendations, the rate-of-return regulated provider may continue to receive its current UUSF payments until the Commission has ruled on the challenge.

(j) While the challenge is being adjudicated, the difference between UUSF payments received starting January 1 and the UUSF payment amounts ultimately determined by the Commission, is the overpayment or underpayment of UUSF amounts.

(k) The overpayment or underpayment of UUSF amounts will be recovered or distributed respectively as an adjustment to each monthly disbursement, spread evenly over the remaining months of the calendar year.

(l) If the approved UUSF monthly distribution amounts are less than the monthly recovery for an overpayment, the-rate-of-return regulated provider will be ordered to repay the balance in monthly payments to the UUSF, spread evenly over the remaining months of the calendar year.

Notes

Utah Admin. Code R746-8-401

Adopted by Utah State Bulletin Number 2018-6, effective 2/21/2018 Amended by Utah State Bulletin Number 2018-14, effective 6/21/2018 Amended by Utah State Bulletin Number 2019-2, effective 12/24/2018 Amended by Utah State Bulletin Number 2022-02, effective 1/1/2022