ARCHIVED - Telecom Decision CRTC 2004-53

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Telecom Decision CRTC 2004-53

  Ottawa, 30 July 2004

Télébec - Interim rates for the 2004 annual price cap period

  Reference: 8678-C12-200404749
  In this decision, the Commission makes interim service rates for Société en commandite Télébec for all capped services, effective 1 August 2004.



In Implementation of price regulation for Télébec and TELUS Québec, Telecom Decision CRTC 2002-43, 31 July 2002 (Decision 2002-43), the Commission directed Société en commandite Télébec (Télébec) to file, for the remainder of the price cap period, annual updates to the service basket limit (SBL) and service basket index (SBI), with supporting calculations, formulae, and spreadsheets for each basket/sub-basket of capped services as applicable, by 31 May of each year.


The Commission also directed Télébec to file its service improvement plan (SIP) proposal and, for funding purposes, to identify capital expenditures and Phase II costs by year over the SIP roll-out period, segregated between high-cost serving areas (HCSAs) and non-HCSAs. In Decision 2002-43, the Commission considered that Télébec would be able to recover its non-HCSA SIP costs from the deferral account established in that decision. However, the Commission determined that the residual going-in revenue requirement, or transitional subsidy, must be depleted before funds could flow into the deferral account.

Télébec's SIP application


On 31 March 2003, Télébec filed its proposed SIP pursuant to Decision 2002-43. Télébec provided details of its proposed capital expenditures and its estimated Phase II costs for implementing its HCSA and non-HCSA SIP.


In its SIP proposal, Télébec submitted that, although in Decision 2002-43 the Commission had considered that Télébec would be able to recover its non-HCSA SIP costs from the deferral account established in that decision, there would in fact be insufficient funds in its deferral account to fund its non-HCSA SIP.


Télébec indicated that it would have no choice but to increase rates to recover these costs, if the Commission, in the proceeding initiated by Implementation of competition in the local exchange and local payphone markets in the territories of Télébec and TELUS (Québec), Public Notice CRTC 2001-69, 14 June 2001 (Public Notice 2001-69), determined that some of its exchanges were to be classified as non-HCSAs.


The Commission received comments by l'Union des consommateurs, dated 9 April 2003, on the SIP proposal application. However these comments did not address financial compensation for Télébec's SIP.

Télébec's 2004 annual price cap filing


On 18 June 2004, Télébec filed its annual price cap filing, including updates to the SBL and SBI. The company submitted supporting calculations, formulae, and spreadsheets for each basket/sub-basket of capped services.


Télébec did not propose any rate increases with its 2004 annual price cap filing.


The Commission received no comments with respect to Télébec's annual price cap filing.

Commission analysis and determination


The Commission notes that Télébec started its SIP implementation in 2003 with a planned completion date in 2006.


The Commission recognizes that, based on the information filed by Télébec and depending on the Commission's determinations in Public Notice 2001-69, there may be insufficient funds in Télébec's deferral account to fully compensate the company for its non-HCSA SIP.


The Commission notes that Télébec does not currently have funds in its deferral account because it has been using funds that would otherwise accumulate in its deferral account to reduce its residual going-in revenue requirement.


The Commission notes that its determination with respect to Télébec's SIP proposal and the associated funding requirement is yet to be released. The Commission also notes that in its determination, the company may be allowed to file a rate proposal to recover its SIP costs in non-HCSAs.


In order for Télébec to capture the annualized effect of any rate increases that may be required to fully recover its non-HCSA SIP costs, the Commission considers that Télébec's rates for all capped services should be made interim effective 1 August 2004, which is the beginning of the third price cap year, since the Commission's decision concerning Télébec's SIP proposal will be issued after that date.


Accordingly, the Commission makes interim, effective 1 August 2004, Télébec's rates for all capped services, pending the Commission's determination on any rate proposals that Télébec may be directed to file pursuant to the Commission's decision concerning the company's SIP proposal or, if no such direction is given, the Commission's determination in the Télébec SIP proceeding.
  Secretary General
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Date Modified: 2004-07-30

Date modified: