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ARCHIVED -  Telecom Order CRTC 97-1578

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Telecom Order

Ottawa, 30 October 1997
Telecom Order CRTC 97-1578
Bell Canada (Bell) filed for approval a Phase III/Split Rate Base (SRB) Manual Update report on 8 May 1997 for use in the production of its 1996 Phase III/SRB results.
File No.: 96-2202
1. The Phase III/SRB Manual Update report was filed, with explanations, in accordance with Proposed Revisions to the Phase III Manual Update Procedure, Telecom Letter Decision CRTC 89-26, 1 December 1989, Review of Regulatory Framework, Telecom Decision CRTC 94-19, 16 September 1994, Review of Phase III of the Cost Inquiry, Telecom Decision CRTC 94-24, 18 November 1994 and Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995 (Decision 95-21).
2. In Decision 95-21, the Commission determined that Phase III reporting by Broad Service Categories would be replaced by reporting of Split Rate Base results for the Utility and Competitive segments.
3. In Telecom Order CRTC 97-1332, 16 September 1997, the Commission approved the Stentor Settlement Arrangement to replace the Stentor Settlement Plan effective 1 January 1997. As a result, investment studies, which were conducted on a periodic basis, will no longer be updated.
4. Bell proposed to integrate its Phase III/SRB cost development and assignment process with its Activity Based Costing (ABC) initiative which is a management system designed to measure the financial performance of the company's lines of business, primarily focusing on operating expenses.
5. No comments were received from any interested party.
6. The Commission notes that the ABC system involves an exhaustive mapping of causal drivers to associate activity costs with cost objectives and that at the core of the ABC system are some 250 activities and sub-activities and associated costs which are generated through the integration of data by organization from the company's General Ledger. The Commission further notes that the ABC system will be subject to an internal audit.
7. In the Commission's view, the proposed changes to Phase III/SRB are consistent with recent tariff filings, other CRTC directives and, in many cases, reflect a greater degree of discreteness.
8. The Commission considers that the proposed revisions conform with previous Commission decisions with respect to appropriate assignment rationale, or are of a housekeeping nature, and finds them acceptable.
9. The Commission considers that the ABC system allows a more discrete identification and assignment of costs between the Utility and Competitive segments because the focus is now on lines of business.
10. However, the Commission also considers that the format of the proposed SRB Manual does not allow for easy location of assignment details.
11. In light of the forgoing, the proposed Phase III/SRB Manual Update report filed by Bell is approved.
12. Bell is directed to provide a list of the expense items included in each section of the revised Phase III/SRB Manual as well as a topical index at the same time its next update submission is filed.
13. The amended pages to Bell's Phase III/SRB Manual, including all updates approved in this Order that are relevant to the production of the 1996 SRB results, are to be filed with the Commission within 30 days of the date of this Order.
14. Copies of the amended pages to Bell's Phase III/SRB Manual are to be served on interested parties by the same date.
Laura M. Talbot-Allan
Secretary General
This document is available in alternative format upon request.

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