1 STATUTORY OR OTHER AUTHORITY: The Washington Utilities and Transportation Commission takes this action under Notice No. WSR 01-02-102, filed with the code reviser on January 3, 2001. The commission brings this proceeding pursuant to RCW 80.04.160 and 80.01.040.

2 STATEMENT OF COMPLIANCE: This proceeding complies with the Open Public Meetings Act (chapter 42.30 RCW), the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 43.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).

3 DATE OF ADOPTION: The commission adopts this rule on the date that this order is entered.

4 CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: The purpose of the proposed repeal of certain sections of chapter 480-80 WAC and the adoption of those sections in the various industry rules is to achieve better organization and to facilitate the use of these rules by regulated companies, the commission, and the public. The only proposed change in language is a new section added to WAC 480-80-010 Application of rules, to assure previously granted exemptions from chapter 480-80 WAC do not apply to price lists and contracts. The change of title of chapter 480-80 WAC to Utilities general -- Tariffs, price lists, and contracts, better reflects the content of the chapter.

5 RCW 34.05.325 requires that the commission prepare and provide to commenters a concise explanatory statement about an adopted rule. The statement must include the identification of the reasons for adopting the rule, a summary of the comments received regarding the proposed rule, and responses reflecting the commission's consideration of the comments.

6 The commission often includes a discussion of those matters in its rule adoption order. In addition, most rule-making proceedings involve extensive work by commission staff that includes summaries in memoranda of stakeholder comments, commission decisions, and staff recommendations in each of those areas.

7 In this docket, to avoid unnecessary duplication, the commission designates the discussion in this order as its concise explanatory statement, supplemented where not inconsistent by the staff memoranda presented at the adoption hearing and at the open meetings where the commission considered whether to begin a rule making and whether to propose adoption of specific language. Together, the documents provide a complete but concise explanation of the agency actions and its reasons for taking those actions.

8 REFERENCE TO AFFECTED RULES: This rule amends the following section of the Washington Administrative Code:

WAC 480-80-010

Application of rules.

REFERENCE TO REPEALED RULES: This rule repeals the following sections of the Washington Administrative Code:

WAC 480-80-047	Access charges.
WAC 480-80-048	Collective consideration of Washington intrastate rate, tariff, or service proposals.
WAC 480-80-049	Caller identification service.
WAC 480-80-120	Notice to the public of tariff changes.
WAC 480-80-390	Mandatory cost changes for telecommunications companies.
WAC 480-120-027	Price lists.
WAC 480-120-066	Contract for service.
WAC 480-90-061	Contract for service.
WAC 480-100-061	Contract for service.
WAC 480-120-022	Classification proceedings.
WAC 480-120-023	Content of petition for classification of competitive telecommunications services and companies.
WAC 480-120-024	Waiver of regulatory requirements for competitive telecommunications companies.
WAC 480-120-025	Investigations.

REFERENCE TO ADOPTED RULES: This rule adopts the following sections of the Washington Administrative Code:

WAC 480-120-541	Access charges.
WAC 480-120-542	Collective consideration of Washington intrastate rate, tariff, or service proposals.
WAC 480-120-543	Caller identification service.
WAC 480-90-193	Notice to the public of tariff changes.
WAC 480-100-193	Notice to the public of tariff changes.
WAC 480-120-043	Notice to the public to tariff changes.
WAC 480-120-544	Mandatory cost changes for telecommunications companies.
WAC 480-80-035	Price lists.
WAC 480-80-325	Contract for service.
WAC 480-80-326	Contract for gas and electric service.
WAC 480-121-061	Classification proceedings.
WAC 480-121-062	Content of petition for classification of competitive telecommunications services and companies.
WAC 480-121-063	Waiver of regulatory requirements for competitive telecommunications companies.
WAC 480-121-064	Investigations.

9 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a preproposal statement of inquiry (CR-101) on September 17, 1999, at WSR 99-19-086.

10 ADDITIONAL NOTICE AND ACTIVITY PURSUANT TO PREPROPOSAL STATEMENT: The statement advised interested persons that the commission was considering entering a rulemaking on rules related to tariffs. The commission also informed persons of the inquiry into this matter by providing notice of the subject and the CR-101 to all persons on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3) and by sending notice to all affected companies. In addition to information about the rule making, the notice requested written responses from interested persons on the rules that are currently in chapter 480-80 WAC that they believe should be in the regulated industry chapters, and on those rules that are in the regulated industry chapters that should be in chapter 480-80 WAC. The commission accepted written comment regarding the CR-101 through October 18, 1999. Pursuant to notice, the commission engaged in three workshops with interested persons/stakeholders and solicited written comments on five additional occasions.

11 NOTICE OF PROPOSED RULE MAKING: The commission filed a notice of Proposed Rule Making (CR-102) on January 3, 2001, at WSR 01-02-102. The commission scheduled this matter for oral comment and adoption under Notice No. WSR 01-02-102 at 9:30 a.m., Wednesday, March 14, 2001, in the Commission's Hearing Room, Second Floor, Chandler Plaza Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons the opportunity to submit written comments to the commission.

12 COMMENTERS (WRITTEN COMMENTS): The commission received written or verbal comments from The Association of Communications Enterprises (ASCENT), Avista Utilities, Cascade Natural Gas Corporation, Northwest Natural Gas, Public Counsel, Puget Sound Energy, Qwest, Verizon, and the Washington Independent Telephone Association (WITA). Comments ranged from indifference to support of the proposal.

13 RULE-MAKING HEARING: The rule proposal was considered for adoption, pursuant to the notice, at a rule-making hearing scheduled during the commission's regularly scheduled open public meeting on March 14, 2001, before Chairwoman Marilyn Showalter and Commissioner Richard Hemstad. The commission heard oral comments from Fred Ottavelli, representing commission staff. No other interested persons made oral comments.

14 COMMISSION ACTION: After considering all of the information regarding this proposal, the commission repealed, amended, and adopted the rules as proposed in the CR-102 at WSR 01-02-102.

15 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: In reviewing the entire record, the commission determines that the title of chapter 480-80 WAC should be changed to Utilities general -- Tariffs, price lists, and contracts, WAC 480-80-047, 480-80-048, 480-80-049, 480-80-120, 480-80-390, 480-120-022, 480-120-023, 480-120-024, 480-120-025, 480-120-027, 480-120-066, 480-90-061, and 480-100-061 should be repealed; WAC 480-120-043, 480-120-541, 480-120-542, 480-120-543, 480-120-544, 480-90-193, 480-100-193, 480-121-061, 480-121-062, 480-121-063, 480-121-064, 480-80-035, 480-80-325, and 480-80-326 should be adopted; and that WAC 480-80-010 should be amended to read as set forth in Appendix A, as rules of the Washington Utilities and Transportation Commission, to take effect pursuant to RCW 34.05.380(2) on the thirty-first day after filing with the code reviser.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 14, Amended 1, Repealed 13.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 14, Amended 1, Repealed 13.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.

17 The title of chapter 480-80 WAC is changed to read Utilities general -- Tariffs, price lists, and contracts, WAC 480-80-047, 480-80-048, 480-80-049, 480-80-120, 480-40-390, 480-120-022, 480-120-023, 480-120-024, 480-120-025, 480-120-027, 480-120-066, 480-90-061, and 480-100-061 are repealed; WAC 480-120-043, 480-120-541, 480-120-542, 480-120-543, 480-120-544, 480-90-193, 480-100-193, 480-121-061, 480-121-062, 480-121-063, 480-121-064, 480-80-035, 480-80-325 and 480-80-326 are adopted; and WAC 480-80-010 is amended to read as set forth in Appendix A, as rules of the Washington Utilities and Transportation Commission, to take effect on the thirty-first day after the date of filing with the code reviser pursuant to RCW 34.05.380(2).

18 This order and the rule set out below, after being recorded in the register of the Washington Utilities and Transportation Commission, shall be forwarded to the code reviser for filing pursuant to chapters 80.01 and 34.05 RCW and chapter 1-21 WAC.

DATED at Olympia, Washington, this 4th day of April, 2001.

Washington Utilities and Transportation Commission

Marilyn Showalter, Chairwoman

Richard Hemstad, Commissioner

OTS-4574.2

AMENDATORY SECTION(Amending Order R-238, Cause No. U-85-44, filed 9/19/85)

WAC 480-80-010   Application of rules.   (1) These rules shall apply to any public service company, defined as such by the laws of the state of Washington, as amended, operating a gas, electric, telecommunications, water or irrigation plant which is subject to the jurisdiction of the Washington utilities and transportation commission as to rates and service.

(2) Upon acceptable showing by any utility, the commission may waive or modify, as to that utility, the provisions of any rule herein contained, except when such provisions are fixed by statute.

(3) In no case shall any utility deviate from these rules unless authorized in writing by the commission.

(4) Competitively classified telecommunications companies previously granted exemptions from chapter 480-80 WAC Utilities general -- Tariff are not exempt from WAC 480-80-035 Price lists and WAC 480-80-325 Contract for service. Exemptions from the provisions of chapter 480-80 WAC include only the provisions in effect at the time the exemption was granted.

[Statutory Authority: RCW 80.01.040. 85-20-003 (Order R-238, Cause No. U-85-44), 480-80-010, filed 9/19/85; Order R-5, 480-80-010, filed 6/6/69, effective 10/9/69.]

(2) All price lists filed with the commission must describe the service being offered and all prices, charges, terms, and conditions pertaining thereto. Each page of every price list shall contain, in general, the company name, the page number, and the effective date. All subsequent revisions of a price list shall bear consecutive revision numbers. Price lists must provide sufficient detail for customers and potential customers reasonably to determine what is being offered and what charges the customer incurs in obtaining the service.

(3) Contracts (including modifications to previously executed contracts) for services which are governed by this section may be offered subject to the requirements of this subsection.

(a) Contracts of companies classified "competitive" under RCW 80.36.310 shall be filed with the commission not later than five business days after execution. A contract filed pursuant to this subdivision will not be rejected by the commission in the absence of competent evidence that the contract is unlawful.

(b) Contracts which offer services classified as "competitive" under RCW 80.36.330 shall be filed with the commission at least ten days prior to the effective date. Such contracts may not include both "price listed" and "tariffed" services unless the tariffed services are set forth separately and offered under an approved tariff or contract (see WAC 480-80-330). A contract filed pursuant to this subdivision may be rejected if the telecommunications company is unable to document that the price charged covered its relevant costs under either a long run incremental cost analysis or a fully distributed cost analysis, whichever is lower, or any other commission-approved cost method. A contract filed pursuant to this subdivision may also be rejected upon a showing that it is otherwise unlawful. To meet its burden of proving that the contract is cost-based, the company shall, at a minimum, provide the following information at the time of filing:

(i) A statement summarizing the basis of the rate or charge proposed in the contract and an explanation of the derivation of the proposed rate or charge; and

(ii) An explanation of all cost computations involved in arriving at the derivation of the level of the rate or charge in the contract.

(c) All contracts filed pursuant to this subsection shall be for a stated time period.

(d) Filings under this subsection may be submitted with portions designated "confidential" pursuant to WAC 480-08-015. However, any filing which designates as "confidential" the essential terms and conditions will be rejected by the commission.

(4) Federal contracts. Where a federal agency asserts its authority to solicit a firm offer of services and a contract subject to this section is submitted in response to that solicitation, the provisions of subsection (3) of this section will not apply. Upon the acceptance of such a contract offer by the federal agency, the telecommunications company shall immediately file the contract with the commission and must include the same documentation otherwise required by this section.

(5) Federal universal service contracts with schools, libraries, and rural health care providers pursuant to 47 CFR, Part 54. When a telecommunications company enters into a contract to provide competitively classified service to a school, library, or rural health care provider, as part of the federal universal service program, the telecommunications company must file the contract if the rates, terms, or conditions of the prediscounted contract service depart from the price list. The contract must be filed immediately upon acceptance by the administrator of the federal universal service program. The filing must include the same documentation required for approval by subsection (3)(b) of this section. The contract shall become effective immediately upon filing with the commission, or at such later time as is specified in the contract.

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Any contract with an information provider shall require that the information provider, in any institutional advertising or promotion, state prominently in such advertising the cost to the customer.

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     The following sections of the Washington Administrative Code are repealed:

WAC 480-80-047	Access charges.
WAC 480-80-048	Collective consideration of Washington intrastate rate, tariff, or service proposals.
WAC 480-80-049	Caller identification service.
WAC 480-80-120	Notice to the public of tariff changes.
WAC 480-80-390	Mandatory cost changes for telecommunications companies.

OTS-4575.1

NEW SECTION
WAC 480-90-193   Notice to the public of tariff changes.   (1) Except as to variations between the prescribed maximum and minimum rates in banded tariffs previously authorized by the commission, every utility desiring to change, modify, cancel or annul any rate, must place on file the tariff containing such modification or change at its listed business offices in the territory affected thereby for a period of at least thirty days prior to the expiration of statutory notice in connection therewith. A notice, coincident with or immediately prior to the date of such filing, that such tariff is on file at said offices shall be posted at the cashier's windows or other places where the customers pay their bills at the aforesaid offices. Said posted notice shall give anyone viewing same a brief summary as to the content of the tariff; state that the tariff is being submitted to the Washington utilities and transportation commission at Olympia; indicate the inserted effective date thereof; and relate that a copy of the tariff is available for inspection.

(2) If there is no listed business office in the territory to be affected by a tariff proposal subject to this notification but there is a payment agency therein, posted notice with the same content and timing as set forth above shall be employed at each such agency which notice, in addition thereto, shall give the name, address and telephone number of the nearest listed business office responsible for that service area at which such tariff may be examined in person without assigning any reason therefor.

(3) In lieu of the above posted notice, insofar as payment agencies are concerned, the utility may stamp or print on each bill or envelope in which such bill is mailed, enclose therewith or separately mail, with the same content as set forth above with respect to the posted notice in payment agencies and at the earliest practicable date subsequent to filing, a notice to each subscriber to be affected by the tariff proposal. Commencing ninety days or earlier from July 31, 1959, the latter procedure must be followed in those instances where a utility does not have a listed business office or a payment agency in the service area where notice, as set forth above, could otherwise be employed in a service area subject to a tariff proposal falling within this notification procedure.

(4) Whenever the alternative provision is chosen or must be used, the utility shall use such other adequate and appropriate means of notification, on or by the filing date, that will reasonably insure notice to the public of tariff revisions proposed and the effect on the public in the service area or areas involved. Such other notification may include personal contacts, letters or mailing pieces, newspaper articles or advertisements and radio and television announcements.

(5) The commission may require such other notification to the public as may be necessary in any particular case of tariff filing: Provided, That where a tariff or a part of a tariff is filed involving no increase in charges to its patrons; where the users to be affected by a tariff change are so few in number the utility chooses to advise each by direct mail or contact; or where there is no one to be affected by the tariff proposal, the utility may forego posting of notice relative thereto and will not be required to have a copy of the proposed tariff available for inspection.

(6) The inserted effective date, unless otherwise directed, shall be a date not less than thirty days after the date the commission receives the tariff. Also, if the commission permits the tariff to become effective without statutory notice, the period of notice to the public shall still be for at least thirty days after the date the commission receives the tariff.

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     The following section of the Washington Administrative Code is repealed:

WAC 480-90-061

Contract for service.

OTS-4576.1

NEW SECTION
WAC 480-100-193   Notice to the public of tariff changes.   (1) Except as to variations between the prescribed maximum and minimum rates in banded tariffs previously authorized by the commission, every utility desiring to change, modify, cancel or annul any rate, must place on file the tariff containing such modification or change at its listed business offices in the territory affected thereby for a period of at least thirty days prior to the expiration of statutory notice in connection therewith. A notice, coincident with or immediately prior to the date of such filing, that such tariff is on file at said offices shall be posted at the cashier's windows or other places where the customers pay their bills at the aforesaid offices. Said posted notice shall give anyone viewing same a brief summary as to the content of the tariff; state that the tariff is being submitted to the Washington utilities and transportation commission at Olympia; indicate the inserted effective date thereof; and relate that a copy of the tariff is available for inspection.

(2) If there is no listed business office in the territory to be affected by a tariff proposal subject to this notification but there is a payment agency therein, posted notice with the same content and timing as set forth above shall be employed at each such agency which notice, in addition thereto, shall give the name, address and telephone number of the nearest listed business office responsible for that service area at which such tariff may be examined in person without assigning any reason therefor.

(3) In lieu of the above posted notice, insofar as payment agencies are concerned, the utility may stamp or print on each bill or envelope in which such bill is mailed, enclose therewith or separately mail, with the same content as set forth above with respect to the posted notice in payment agencies and at the earliest practicable date subsequent to filing, a notice to each subscriber to be affected by the tariff proposal. Commencing ninety days or earlier from July 31, 1959, the latter procedure must be followed in those instances where a utility does not have a listed business office or a payment agency in the service area where notice, as set forth above, could otherwise be employed in a service area subject to a tariff proposal falling within this notification procedure.

(4) Whenever the alternative provision is chosen or must be used, the utility shall use such other adequate and appropriate means of notification, on or by the filing date, that will reasonably insure notice to the public of tariff revisions proposed and the effect on the public in the service area or areas involved. Such other notification may include personal contacts, letters or mailing pieces, newspaper articles or advertisements and radio and television announcements.

(5) The commission may require such other notification to the public as may be necessary in any particular case of tariff filing: Provided, That where a tariff or a part of a tariff is filed involving no increase in charges to its patrons; where the users to be affected by a tariff change are so few in number the utility chooses to advise each by direct mail or contact; or where there is no one to be affected by the tariff proposal, the utility may forego posting of notice relative thereto and will not be required to have a copy of the proposed tariff available for inspection.

(6) The inserted effective date, unless otherwise directed, shall be a date not less than thirty days after the date the commission receives the tariff. Also, if the commission permits the tariff to become effective without statutory notice, the period of notice to the public shall still be for at least thirty days after the date the commission receives the tariff.

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     The following section of the Washington Administrative Code is repealed:

WAC 480-100-061

Contract for service.

OTS-4578.1

NEW SECTION
WAC 480-120-541   Access charges.   (1) Review of tariffed access charges required. All local exchange telecommunications companies in the state of Washington shall annually review and if necessary update the traffic sensitive and nontraffic sensitive carrier common line switched access tariffs and billing and collection tariffs on file with the commission. The review shall be conducted in the manner prescribed in the Eighteenth and Nineteenth Supplemental Orders in Cause No. U-85-23 et al., including the transition to a twenty-five percent allocation factor, or as may be otherwise prescribed by commission order or rule, and each company's access charge revenue requirement shall be adjusted for changes in extended area service routes that have occurred since the previous update.

(2) Filing dates. The review shall be conducted and a report of results filed by July 1st of each year beginning October 1, 1991. Each company shall at the same time file such revised tariffs as it may deem to be required by its report. The tariffs shall be effective September 1st of the same year. The tariffs shall reflect usage and cost data of the previous year.

(3) Data filing requirement. With each annual report, each company shall also file complete workpapers and data sufficient for the staff of the commission to review the correctness of the report and related tariff filing, if any.

(4) A company with special circumstances may petition for exemption from this rule. A company with less than five thousand access lines may seek and obtain a waiver of this rule for a given year: Provided, That the rule may not be waived in two consecutive calendar years.

[]

(2) All initial WECA tariffs and all changes to such tariffs shall be submitted to the commission subject to all the procedural requirements and protections associated with telecommunications company filings before the commission.

(3) Nothing contained in this rule shall prevent any member of WECA from independently submitting to, or filing with, the commission directly any tariff, revenue requirement computation, report, or proposal.

(4) The commission has the authority to supervise the activities of WECA. However, such supervision shall not compromise the independent evaluation by the commission of any filing or proposal which must be submitted to the commission for final approval.

(5) To the extent that WECA is involved in the collection and redistribution of funds pursuant to commission orders authorizing certain revenue sharing arrangements under common tariff, it shall maintain and provide to the commission monthly and annual financial reports relating to such arrangements. These reports shall include actual fund collections and distributions to each member local exchange company and the basis upon which the collection and distribution is made.

(6) Each local exchange telecommunications company serving less than one million access lines in the state of Washington has the option of utilizing the Washington Exchange Carrier Association as its filing agent/tariff bureau. Companies utilizing WECA may file collectively nontraffic sensitive, traffic sensitive, special access and/or billing and collection revenue and revenue requirement computations and/or tariffs.

(7) Nothing in this section shall be construed as amending or modifying WECA's current methods of administering the NTS/USF pools or the community calling fund under WAC 480-120-400, et seq.

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(2) In order to qualify for jurisdictional separations or mandatory accounting and tax change treatment, a filing seeking to increase rates shall meet the following requirements at a minimum:

(a) It shall be accompanied by a recital that the company has or will within forty-five days of the filing complete distribution in the manner specified in WAC 480-80-125 of a notice to customers containing information as to the rate increase consistent with that required in that portion of the rule denominated "summary of requested rate increases," and further containing the name and mailing address of the commission and public counsel, and advising the customers that they may contact the same with respect to the proposed rate change. Proof of compliance with the foregoing shall be on file with the commission at least thirty days before any rates sought under this procedure shall be made effective.

(b) The filing shall be accompanied by supporting documentation demonstrating the calculation of the proposed increase and the authority for the change.

(c)(i) A company seeking this treatment for a proposed increase shall submit a rate of return statement, on a commission basis, which demonstrates that the company is not presently exceeding a reasonable level of earnings. If the company is exceeding a reasonable level of earnings, the proposed increase shall be reduced accordingly. All supporting documentation used to develop the rate of return statement shall be provided with the filing. For the purposes of this rule, "reasonable level of earnings" is the company's authorized overall rate of return or the rate of return developed pursuant to (e) of this subsection, whichever is more current. Companies with revenues exceeding five hundred million dollars annually may use their authorized rate of return if established within the prior two years. If no return has been established within two years, such companies may not be accorded the procedures designated by this rule, unless in the judgment of the commission, such authorized return is not unreasonable for purposes of a filing under this rule. If a company cannot depict Washington intrastate results of operations with reasonable accuracy, the total Washington realized return may be used for this test.

(ii) The rate of return statement shall not be a fully pro formed results of operations statement, but must depict the results of operations on a commission basis. For purposes of this rule, "commission basis" means that the rate base includes those standard rate base components that have been historically accepted by the commission for ratemaking, and further includes restating actual adjustments which restate a company's booked results of operations to a rate-making basis and also includes an appropriate pro forma debt adjustment. These restating adjustments should be made to account for jurisdictional differences where they depart from FCC Part 32. Accounting rules set forth in WAC 480-120-031 may be used as a guide to satisfy most adjustments required to restate per books results of operations. Nonoperating, nonrecurring, or extraordinary items, and unregulated operating items, or any other item that materially distorts test period earnings or expenses shall be removed from booked results of operations before the achieved return is calculated. For purposes of this rule, "commission basis" does not include new theories or approaches which have not been previously addressed to and resolved by the commission.

(d) The supporting documentation specified in (b) and (c) of this subsection shall be submitted at the time of the tariff filing or the first notice to customers, whichever occurs first.

(e) The qualifying overall rate of return will be either not greater than 9.73 percent or based upon a 10.45 percent return on equity. The 9.73 percent overall rate of return will be adjusted according to the following table:

Using the 10.45 percent return on equity, the overall fair rate of return will be determined on an individual company basis giving consideration to the company's cost of debt and preferred equity, each adjusted for any known and measurable effects, and utilizing an appropriate capital structure.

For the purposes of this rule only, "appropriate capital structure" shall be defined as a minimum of forty percent equity and a maximum of sixty percent equity. Capital structures outside these parameters will be adjusted to the minimum or maximum, whichever is closer.

The rates shall be reviewed during the third quarter of each calendar year, and such action taken as may be necessary and appropriate to reflect the current capital market conditions: Provided, That nothing herein shall foreclose more frequent review and adjustment of the overall rate of return or return on equity as circumstances may indicate. Nothing in this rule shall foreclose a utility from seeking a different return on equity, nor shall the returns or the methodologies stated in this section be considered as precedent for any other commission proceedings.

(3) Except for costs identified with a particular customer class, any revenue requirement change sought to be reflected by this treatment shall be spread on a uniform revenue percentage basis by customer class, defined as residential, business, and interexchange, whether or not classified as competitive.

Costs identified with interexchange services shall be spread to access charges using approved commission methodology. Costs identified with any other specific class or service shall be spread to that class or service on a uniform percentage basis. In exceptional circumstances, a company may propose an alternative rate design or rate spread.

(4) If the commission has reason to believe that the quality of the company's service is not consistent with its public service obligations, or if the commission has reason to believe that the company's results of operations, proposed rate design or proposed rate spread, or proposed alternative rate design or rate spread require a more extensive review, the commission may decline to apply the procedures contemplated by this rule.

(5) If jurisdictional separations or mandatory accounting and tax change treatment is found to be appropriate, the commission will ordinarily take final action within ninety days of the date of filing.

(6) Nothing in this section shall be construed to prevent any company, the commission, or any customer from utilizing any other procedures which are otherwise permitted by law.

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(2) If there is no listed business office in the territory to be affected by a tariff proposal subject to this notification but there is a payment agency therein, posted notice with the same content and timing as set forth above shall be employed at each such agency which notice, in addition thereto, shall give the name, address and telephone number of the nearest listed business office responsible for that service area at which such tariff may be examined in person without assigning any reason therefor.

(3) In lieu of the above posted notice, insofar as payment agencies are concerned, the utility may stamp or print on each bill or envelope in which such bill is mailed, enclose therewith or separately mail, with the same content as set forth above with respect to the posted notice in payment agencies and at the earliest practicable date subsequent to filing, a notice to each subscriber to be affected by the tariff proposal. Commencing ninety days or earlier from July 31, 1959, the latter procedure must be followed in those instances where a utility does not have a listed business office or a payment agency in the service area where notice, as set forth above, could otherwise be employed in a service area subject to a tariff proposal falling within this notification procedure.

(4) Whenever the alternative provision is chosen or must be used, the utility shall use such other adequate and appropriate means of notification, on or by the filing date, that will reasonably insure notice to the public of tariff revisions proposed and the effect on the public in the service area or areas involved. Such other notification may include personal contacts, letters or mailing pieces, newspaper articles or advertisements and radio and television announcements.

(5) The commission may require such other notification to the public as may be necessary in any particular case of tariff filing: Provided, That where a tariff or a part of a tariff is filed involving no increase in charges to its patrons; where the users to be affected by a tariff change are so few in number the utility chooses to advise each by direct mail or contact; or where there is no one to be affected by the tariff proposal, the utility may forego posting of notice relative thereto and will not be required to have a copy of the proposed tariff available for inspection.

(6) The inserted effective date, unless otherwise directed, shall be a date not less than thirty days after the date the commission receives the tariff. Also, if the commission permits the tariff to become effective without statutory notice, the period of notice to the public shall still be for at least thirty days after the date the commission receives the tariff.

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     The following sections of the Washington Administrative Code are repealed:

WAC 480-120-022	Classification proceedings.
WAC 480-120-023	Content of petition for classification of competitive telecommunications services and companies.
WAC 480-120-024	Waiver of regulatory requirements for competitive telecommunications companies.
WAC 480-120-025	Investigations.
WAC 480-120-027	Price lists.
WAC 480-120-066	Contract for service.

OTS-4577.1

NEW SECTION
WAC 480-121-061   Classification proceedings.   (1) Rules of practice and procedure applicable. The rules of practice and procedure before the commission, chapter 480-08 WAC, shall apply generally to proceedings to classify a telecommunications company as a competitive telecommunications company or a service as a competitive telecommunications service.

(2) Initiation of classification proceedings. A telecommunications company shall initiate a classification proceeding by filing a petition with the commission. The commission may initiate a classification proceeding on its own motion by order instituting investigation.

(3) Notice to affected companies and public counsel. The commission shall serve a copy of the petition or its order upon all telecommunications companies which may be affected by the proceeding, and upon the public counsel section of the office of the attorney general. Service by the commission shall be made as provided in WAC 480-08-060(4). Alternatively, the commission may direct petitioner to serve a copy of the petition upon such parties as the commission directs. Service by petitioner shall be made in accordance with WAC 480-08-060(3).

(4) Notice to customers of classification proceeding. The commission may require a telecommunications company to give notice of the pendency of the classification proceeding. The commission shall determine the manner and distribution of notice.

(5) Appearances and intervention. Any person desiring to participate in a classification proceeding may petition to intervene as provided in WAC 480-08-070.

(6) Commission may require appearance. In any classification proceeding the commission may require all regulated telecommunications companies potentially affected by the proceeding to appear as parties to determine their classification.

(7) Burden of proof. In any classification proceeding, the telecommunications company shall have the burden of demonstrating that the company or services at issue are subject to effective competition. Effective competition means that customers of the service have reasonably available alternatives and that the service is not provided to a significant captive customer base. In determining whether a service is competitive, factors the commission shall consider include, but are not limited to:

(a) The number and size of alternative providers of services;

(b) The extent to which services are available from alternative providers in the relevant market;

(c) The ability of alternative providers to make functionally equivalent or substitute services readily available at competitive rates, terms, and conditions; and

(d) Other indicators of market power, which may include market share, growth in market share, ease of entry, and the affiliation of providers of services.

A telecommunications company will not be classified as competitive unless it demonstrates that the telecommunications services it offers are subject to effective competition.

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(1) Name and address of the petitioner;

(2) A description of the services it offers;

(3) Names and addresses of any entities which would be classified as "affiliated interests" of the petitioner pursuant to RCW 80.16.010;

(4) A statement of the services the petitioner contends are subject to effective competition, and with respect to each such service the following information shall be provided:

(a) Descriptions of all services in the petitioner's definition of the relevant market for the service;

(b) Names and addresses of all providers of such services known or reasonably knowable to the petitioner;

(c) Prices, terms, and conditions under which such services are offered to the extent known or reasonably knowable to the petitioner;

(d) A geographical delineation of the relevant market;

(e) An estimate of petitioner's market share and any past or projected change in market share;

(f) A description of ease of entry into the market;

(g) A statement of whether petitioner has a significant captive customer base and the basis for any contention that it does not;

(h) A verifiable cost of service study supporting the contention that the price or rate charged for the service covers its cost. A petition which contends that all of a company's services are competitive and does not seek classification for some services if others are denied classification is exempted from this requirement;

(i) The manner by which notice of price list changes will be provided to customers and the commission.

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(2) Any telecommunications company seeking competitive classification shall include as part of its petition for classification any requests for waivers of regulatory requirements. Requests for waiver not included in a classification petition shall be granted or denied in writing. The commission reserves the right to set any such request for hearing at its discretion. Any request for waiver of regulatory requirements must include a statement as to how competition will serve the same purposes as public interest regulation.

(3) The commission may revoke waivers of regulatory requirements in the same manner in which they were granted if such revocation would protect the public interest.

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(2) Reclassification. After notice and hearing, the commission may reclassify any competitive telecommunications company or service if such reclassification would protect the public interest. In any such hearing the burden shall rest on the telecommunications company to demonstrate that the existing classification is proper and consistent with the public interest.

(3) Refunds. If the commission finds after notice and hearing that any class of subscribers to a noncompetitive telecommunications service has paid excessive rates because of below cost pricing of competitive telecommunications services, the commission may order refunds or credits.

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Washington State Code Reviser's Office