Letter
Ottawa, 24 May 2006
File No.: 8638-C12-73/02
By E-mail
Mr. Terry Connolly
Director - Tariffs and Regulatory Filings
TELUS Communications Company
21-10020-100 Street NW
Edmonton , Alberta
T5J 0N5
Dear Mr. Connolly:
Re: TCC Service Improvement Plan - 2005 Tracking Report
On 31 March 2006, pursuant to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), TELUS Communications Company (TCC) filed with the Commission its annual service improvement plan (SIP) tracking report. On 6 April 2006 , TCC filed a cost study related to the tracking report.
With reference to the above-mentioned information provided by the company, TCC is requested to file responses to the attached interrogatories within 14 days from the date of this letter.
Yours sincerely,
Original signed by
John Macri
Director, Financial & Regulatory Matters
Telecommunications
cc: H. Thompson, CRTC (819) 953-6081
Attachment
ATTACHMENT
1. (A) With respect to the company's revised non-high-cost serving area service improvement plan (SIP) covering the years 2003 to 2007 proposed in the 6 April 2006 submission, provide a revised annual draw down estimate for 2006 and beyond using the methodology outlined below:
(i) For each of the annual SIP actual capital expenditures incurred for the years 2003, 2004 and 2005 as proposed in Attachment 4 - Part A, page 2 of 9 - Revised, calculate the end-of-study present worth of annual costs (PWAC) terminal value as at 1 January 2006 using the discounted service potential methodology;
(ii) For each of the annual SIP capital expenditures estimated for the years 2006 and 2007 as proposed in Attachment 4 - Part A, page 2 of 9 - Revised, calculate the PWAC of the SIP capital costs assuming that the study period is equal to the weighted average plant lives of the associated SIP plant (or using the life estimate of the major plant category as a proxy), identifying the plant life assumed (note that these plant lives should be consistent with the plant lives approved in Decision 98-2);
(iii) Add the PWACs from steps (i) and (ii) above;
(iv) Calculate a separate maintenance expense PWAC, estimated at 10% of the PWAC costs determined from step (iii);
(v) Calculate a separate estimate of the present worth of revenues (PWR) associated with the SIP-related customer revenues as proposed in Attachment 4 - Part A, page 4 of 9 - Revised, indicating the types of revenues included and how, with supporting rationale, these revenues are determined;
(vi) Calculate the net PWAC by summing the PWACs from steps (iii) and (iv), less the PWR from step (v); and
(vii) Calculate the SIP annual draw down amount, estimated as the annual equivalent cost (AEC) of the net PWAC from step (vi), and where the AEC is the PWAC amortized over the life estimate used in part (ii).
(B) Provide the company's views on the use of the methodology in part (A) above to calculate the revised annual draw down estimate.
2. (A) With respect to the company's revised high-cost serving area (HCSA) SIP covering the years 2003 to 2007 proposed in the 6 April 2006 submission, for each HCSA band (Bands E, F, and G), provide a revised SIP cost adjustment to be included in the company's 2006 annual total subsidy requirement calculation using methodology outlined below:
(i) For each of the annual SIP actual capital expenditures incurred for the years 2003, 2004 and 2005 as proposed in Attachment 4 - Part A, page 5 of 9 - Revised, calculate the end-of study PWAC terminal value as at 1 January 2006 using the discounted service potential methodology;
(ii) For each of the annual SIP capital expenditures estimated for the years 2006 and 2007 as proposed in Attachment 4 - Part A, page 5 of 9 - Revised, calculate the PWAC of the SIP capital costs assuming that the study period is equal to the weighted average plant lives of the associated SIP plant (or using the life estimate of the major plant category as a proxy), identifying the plant life assumed (note that these plant lives should be consistent with the plant lives approved in Decision 98-2);
(iii) Add the PWACs from steps (i) and (ii) above;
(iv) Calculate a separate maintenance expense PWAC, estimated at 10% of the PWAC costs determined from step (iii) for Bands E and F, and 20% for the PWAC costs for Band G;
(v) Calculate a separate estimate of the PWR associated with the SIP-related customer revenues as proposed in Attachment 4 - Part A, page 6 of 9 - Revised adjusted to provide customer revenues for the period 2003 to 2007; further explain what types of revenues are included and how, with supporting rationale, these revenues are determined;
(vi) Calculate the net PWAC by summing the PWACs from steps (iii) and (iv), less the PWR from step (v);
(vii) For each HCSA Band, calculate the revised 2006 monthly equivalent cost (MEC) per network access service (NAS), based on the net PWAC from step (vi) unitized on the PW demand; and
(viii) Provide the revised total SIP adjustment by Band for the 2006 Total Subsidy Requirement, and provide the supporting calculations to derive this per NAS SIP adjustment from the revised 2006 MEC per NAS provided in the response to part (vii).
(B) Provide the company's views on the use of this methodology to calculate the revised SIP cost adjustment to be included in the company's 2006 annual total subsidy requirement calculation.
Date Modified: 2006-05-24
|