ARCHIVED -  Telecom Public Notice CRTC 1987-28

Telecom Public Notice

Ottawa, 1 June 1987

Telecom Public Notice CRTC 1987-28

BELL CANADA - REVENUE REQUIREMENT FOR THE YEAR 1988

In CRTC Telecom Public Notice 1987-15, dated 20 March 1987 (Public Notice 1987-15) the Commission announced a proceeding to consider an application filed under Tariff Notice 2270A by Bell Canada (Bell), on 17 March 1987, requesting approval of proposed tariff revisions providing for the implementation of a rate rebalancing plan effective 1 January 1988. The proceeding also includes consideration of Telecom Canada revenue settlement issues and an application filed by British Columbia Telephone Company (B.C. Tel) to revise its TransCanada toll rate schedules. In Bell's application, the company said that it has estimated the cumulative financial effect of its proposed toll and local rate revisions at $-127.7 million and $+125.7 million, respectively, in 1988.

On 21 April 1987, as part of the proceeding and in response to interrogatory Bell(CRTC)20Mar87-401 RRB, Bell provided revenue and expense forecasts for 1988. The company forecast a rate of return on average common equity on a regulated basis at 13.2% for 1988, which is near the top of the range, 12.25% to 13.25%, established for 1987 by the Commission in Bell Canada - Review of Revenue Requirements for the Years 1985, 1986 and 1987, Telecom Decision CRTC 86-17, 14 October 1986.

Bell's financial forecasts for 1988, and its underlying assumptions, were based on the company's January 1987 View which substantially originated from mid-year 1986. The underlying assumptions, including those relating to the overall economic activity within Bell's operating territory, may now differ appreciably from those utilized by the company in its preparation of the January 1987 View. The Commission notes that the annualized first quarter financial results for Bell for 1987 are substantially better than forecast in the January 1987 View.

In light of these factors, the Commission has determined that it is appropriate to initiate a proceeding to establish Bell's revenue requirement, including its rate of return on common equity, for 1988. As a result of determining the company's revenue requirement, the Commission will consider the establishment of new rates for 1988 for any or all of Bell's rate schedules, including rates that differ from those proposed by the company in Tariff Notice 2270A.

In the circumstances, the Commission has decided to address, within the context of a single proceeding, the establishment of a revenue requirement for 1988 for Bell, as well as the issues raised in Public Notice 1987-15. The Commission will not address the revenue requirement of B.C. Tel in this proceeding.

In light of the foregoing, the Commission establishes the procedures set out below, to supplement the procedures set out in Public Notice 1987-15.

1. Bell shall file with the Commission for approval a proposed notice to subscribers describing the proceeding to establish Bell's revenue requirement for 1988 and to deal with the issues raised in Public Notice 1987-15 by 23 June 1987.

2. The Commission shall, within 15 days after receipt of the proposed notice to subscribers, provide Bell with an approved version of the notice to subscribers.

3. Bell shall mail to each subscriber, within 45 days of receipt of the approved version, a copy of the notice and shall place as soon as practicable in each of its business offices for public inspection a copy of this Public Notice and of all material filed with the Commission pursuant to paragraphs 4 and 5, below.

4. The Commission directs Bell to file with the Commission, and serve on interested parties registered in respect of Part III applications by Bell and on interveners pursuant to paragraph 5 at page 6 of Public Notice 1987-15, the Memoranda of Support contemplated by section 38(1)(b) of the CRTC Telecommunications Rules of Procedure (the Rules) to address the test year 1988, by 31 July 1987.

5. Responses to the initial set of Commission interrogatories, to be addressed to Bell by 3 July 1987, shall be filed with the Commission and served on those receiving the Memoranda of Support, by 31 July 1987.

6. Persons not interveners pursuant to paragraph 5 of Public Notice
1987-15, and who wish to intervene by virtue of the addition of the revenue requirement component to this proceeding, must notify the Commission of their intention to do so by writing to the Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, with a copy to Bell directed to Mr. E.E. Saunders, Q.C, c/o Mr. Peter J. Knowlton, Assistant General Counsel, Bell Canada, 25 Eddy Street, 4th Floor, Hull, Québec, J8Y 6N4, by 4 September 1987.

7. Interrogatories addressed by interveners to Bell are required to be filed with the Commission and served on Bell by 4 September 1987.

8. Bell is required to file responses to these interrogatories with the Commission and to serve them on all interveners by 29 September 1987.

9. Memoranda consisting of the material intended to be presented by interveners as evidence addressing matters raised by the revenue requirement component of this proceeding shall be filed, consistent with the procedures prescribed in section 43(6) of the Rules, at a time to be
determined at the pre-hearing conference.

10. The remaining procedures applicable to the revenue requirement component of this proceeding shall be those set out in paragraphs 16 and following at pages 8 and 9 of Public Notice 1987-15.

Fernand Bélisle
Secretary General