DT 99-036 Bell Atlantic Special Contract with McLane, Graf, Raulerson & Middleton, P.A. Order Denying the Special Contract without Prejudice O R D E R N O. 23,173 March 25, 1999 On December 22, 1998, Bell Atlantic - New Hampshire (BA-NH) filed with the New Hampshire Public Utilities Commission (Commission) pursuant to RSA 378:18, a petition seeking approval for a Centrex Special Contract with McLane, Graf, Raulerson & Middleton (McLane). See Docket No. DR 98-221. The proposed Special Contract would provide Centrex line systems comprised of Analog and Integrated Services Digital Network (ISDN) lines. Along with the Special Contract, BA-NH filed contract overviews and cost study details in support of the filing. BA-NH's cost study avers that the Special Contracts' proposed rates exceed the incremental costs of the services being provided, pursuant to the requirements of RSA 378:18-b. On January 21, 1999, the Commission issued Order No. 23,108 denying without prejudice the request for approval. On February 26, 1999, Bell Atlantic filed a letter requesting that the Commission reconsider its treatment of the McLane contract and a limited number of additional contracts. Along with the letter, Bell Atlantic refiled the cost study details that were filed with the original December 22, 1998 petition. Staff's review of the proposed Special Contract raised questions as to whether the proposed rates meet the requirement of RSA 378:18-b. The questions arise in the context of the current evolution of the telecommunications industry to a competitive industry after passage of the Telecommunications Act of 1996 (TAct). BA-NH's filing follows the incremental cost calculation methodology which was heretofore accepted as adequate. However, as required by the Federal Communications Commission (FCC) in implementing the TAct, the Commission must employ a Total Element Long Run Incremental Cost (TELRIC) methodology for calculating the costs of unbundled network elements (UNEs) that BA-NH offers for sale to Competitive Local Exchange Carriers (CLECs). When the rates under this contract are compared to the TELRIC prices that Bell Atlantic has sought our approval of in docket DE 97-171, it is not clear that the requirements RSA 378:18-b have been met. Furthermore, there are outstanding concerns that approval of this special contract at the proposed rates will have the effect of being anti-competitive and subsidized by other captive ratepayers. Accordingly, we believe it is appropriate to move ahead with docket DT 99-018 to explore the issues raised by Bell Atlantic's employment of an incremental cost methodology for purposes of meeting its obligation under RSA 378:18-b and using another methodology for setting wholesale prices charged to competitors. Bell Atlantic refiled the original cost study details which Staff raised concerns about in DR 98-221. Nothing in the current request persuades us to reconsider Order No. 23,108 at this time. Therefore, we will deny the request to reconsider approval of this contract. Bell Atlantic may refile the petition after resolution of docket DT 99-018, our investigation into the questions outlined above. Based upon the foregoing, it is hereby ORDERED, that Bell Atlantic's petition for approval of the Special Contract is hereby DENIED without prejudice. By order of the Public Utilities Commission of New Hampshire this twenty-fifth day of March, 1999. Douglas L. Patch Susan S. Geiger Nancy Brockway Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary