At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 7* day of December, 2001.

Transcription

1 *,OlFF PAGE 1236comb127 1 wpd At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 7* day of December, 21. CASE NO T-PC (REOPENED) VERIZON WEST VIRGINIA INC. Petition of Verizon West Virginia Inc. for approval of a proposed asset transfer to and related transactions with Verizon Advanced Data Inc. CASE NO T-PC (REOPENED) VERIZON WEST VIRGINIA INC. W a BELL ATLANTIC - WEST VIRGINIA INC. Application for approval of an interconnection agreement with Bell Atlantic Network Data, Inc., sub nom. Verizon Advanced Data Inc. COMMISSION ORDER The Commission previously approved Verizon West Virginia Inc. s (Verizon WV) transfer of certain assets to an affiliate, for the provision of advanced services, and Verizon s entry into an interconnection agreement with that affiliate. The Federal Communications Commission (FCC) recently authorized the reintegration of the advanced services affiliate into Verizon WV. As recommended by the parties, the Commission shall approve the reintegration, with the result that Verizon WV will again provide advanced services.

2 PROCEDURE Verizon Advanced Data Inc. (VADI) was formed to provide advanced data services, pursuant to FCC directives as a result of the merger of Bell Atlantic Corporation and GTE Corporation. Utilities Division Final Staff Memorandum p. 1, attached to Initial & Final Joint Staff Memorandum, Case No T-PC (Aug. 23,2). The FCC required that VADI be treated as a competitive local exchange carrier,2 and, as a result, Verizon WV petitioned the Commission for permission to enter into an interconnection agreement with VADI. Comm n Order p. 2, Case No T-PC. On September 13, 2, the Commission approved Verizon WV s entry into the interconnection agreement with VADI. Comm n Order p. 2, Case No T-PC. Later, the Commission reopened the case and approved an amendment to that agreement. Comm n Order p. 3, Case No T-PC (Dec. 2,2). 1 See Memorandum, Opinion & Order, In the Matter of GTE Corporation, Transferor, and Bell Atlantic Corporation, Transferee, for Consent to Transfer Control, CC Docket 9-14, FCC -221 (Rel. June 16, 2), fi 263. In a separate case, VADI was granted a certificate of public convenience and necessity to provide advanced data services. See Comm n Order p. 6, Case No T-CN (Nov. 1, 2). These advanced services are broadband packet switched data services, such as Frame Relay service, Asynchronous Transfer Mode (ATM) service, Digital Subscriber service, Internet Protocol Routing service and Switched Multi-megabit Data service (SMDS). Id. p. 1. See also Petition pp. 1-2 & n. 3, Case Nos T-PC & -995-T-PC. If VADI wished to provide basic local exchange service, VADI had to obtain hrther Commission approval. Id. p Virginia

3 On November 28,2, the Commission granted its consent for Verizon to enter into agreements to sell to VADI all of the assets that Verizon used to provide advanced services and to provide certain services to VADI. Comm n Order pp. 5-6, Case No T-PC. On October 16, 21, Verizon WV petitioned the Commission to reopen these proceedings for the approval of a novation, submitted with its petition, thereby facilitating the reintegration of VADI into Verizon WV, as recently authorized by the FCC.3 In addition, Verizon WV moved that the Commission consolidate these proceedings for purposes of entering an order. Under the novation, Verizon WV will accept back all plant and equipment, as well as certain supporting assets, that are currently dedicated to VADI s provision of advanced services. Petition p. 4, Case Nos T-PC & -995-T-PC. Verizon WV will return the stock it received, and VADI and Verizon WV will be released fiom their respective obligations under the service and interconnection agreements. Id. VADI will assign back to Verizon WV the advanced services customer accounts. Id. Upon the Commission s approval of the novation, Verizon WV will file revised tariffs to reflect the advanced services it will provide. Id. Thereafter, VADI will petition to withdraw its certificate. Id. 3 A novation under West Virginia law is the discharge of an existing obligation by the substitution of a new binding obligation. See, e.g., Perlick & Co. v. Lakeview Creditor s Trustee Committee, 171 W. Va. 195, 298 S.E.2d 228, Syl. Pt. 2 (1982). 3

4 Verizon WV said that the integration of VADI s operations into Verizon WV will eliminate multiple Verizon incumbent local exchange carriers (ILECs) in the same service territory, reduce customer confusion and return Verizon WV s operations to their basic state before entry of the FCC s merger order. Id. p. 5. Until June 3, 24, Verizon WV will provide advanced services through a separate division. Id. pp. 5, 8. Verizon WV asked for expedited approval, writing, Although the exact timetable for VADI s reintegration is not fmalized - and it cannot be without this Commission s approval - the parties intend to begin all permissible work as quickly as possible in order to ensure that the transfer is seamless. Id. p. 9. Verizon WV said that the Commission approved a streamlined procedure to handle affiliate transaction filings in the settlement of Verizon WV s new incentive regulation plan, and that streamlined procedure requires the Commission to act within a certain time period, as follows: Those provisions require the Staff and the CAD to recommend to the Commission within thirty (3) days of a filing whether an investigation is to be undertaken. If no such recommendation is made, the Commission is to enter an order within fifteen (15) days. (footnotes omitted) -7 Id citing Comm n Order, Case No T-GI (Oct. 3, 21). On October 22,21, Verizon WV supplemented its petition by filing a schedule of the assets to be transferred. 4

5 On November 5, 21, Commission Staff filed its Further Final Joint Staff Memorandum, recommending that the Commission enter an order: (1) reopening these proceedings; (2) consolidating these proceedings; (3) approving the novation, pursuant to W Va. Code , without approving its specific terms and conditions; (4) directing that Verizon WV and VADI make responsive tariff filings to reintegrate VADI s services into Verizon WV s tariffs within thuty (3) days of the entry of the Commission s order; and (5) directing that VADI file to withdraw its certificate of convenience and necessity within that same *-day (3-day) period. On November 16, 21, counsel for Verizon WV filed a letter with the Executive Secretary s office requesting that the Commission permit Verizon WV and VADI to make the appropriate filings to be effective no later than January 1,22 to coincide with the new calendar year, if necessary in connection with the business plans of Verizon WV and VADI. Counsel for Verizon WV indicated that Staff had been consulted and had no objection to this request. As a practical matter, moreover, the granting of this request may change the effective dates of the tariffs and the certificate withdrawal by only a matter of days, Verizon WVwrote. Id. The Consumer Advocate Division (CAD), which was an intervenor in Case Number T-PC, has filed no objection to the granting of Verizon WV s petition. 5

6 On December 4, 21, Verizon WV s director of regulatory matters asked that the Commission permit the tariff and accounting changes for the reintegration of VADI to be effective December 1,21. Ltr. p. 1. DISCUSSION These cases should be reopened to consider Verizon s petition and novation. Further, the motion to consolidate these cases is reasonable and should be granted. II ll In Case Number -3 ls-t-c, the Commission approved Verizon WV s Incentive Regulation Plan (IRP) by order dated October 3,21. Paragraph 2 of the IRP,4 which is II II The IRP Settlement sets forth the expedited procedure for affiliated transactions as follows: 2. Aililiated Transactions Because of the development of the competitive market for telecommunications in the nation and in West Virginia, the Parties recognize that certain procedures designed for a hlly regulated environment should be streamlined. One of these areas may be consideration and approval of affiliated transactions under W. Va. Code (f). On an experimental basis for the term of this IRP, the Staff and CAD agree that they will, upon the filing by Verizon WV of a petition for consent and approval of an affiliated transaction, pursuant to the provisions of W. Va. Code (f), recommend to the Commission within thirty (3) days of such filing whether an investigation of the proposed transaction should be undertaken. If neither the Staff nor the CAD recommends such an investigation at the expiration of said thirty (3) day period, the Parties recommend to the Commission that it issue an order pursuant to W. Va. Code (f) within fifteen (1 5) days of the expiration of said thirty (3) day period authorizing Verizon WV to proceed with the transaction, provided that such authorization shall in no case be construed as expressing or implying the Commission s approval of the specific terms and conditions of such transaction, whether for purposes of ratemaking or otherwise. 6 Virginia

7 attached to that order, establishes a streamlined procedure for affiliate transaction filings under W. Va. Code (f). Under that procedure, if neither the Staff nor the CAD object to an affiliate transaction petition within thty (3) days of its filing, Verizon WV, the Staff and the CAD recommend to the Commission that it authorize that transaction pursuant to W. Va. Code (f) within fifteen (15) days of the expiration of that thntyday (3-day) period (emphasis provided). Such authorization, however, is not to be construed as expressing or implying the Commission s approval of the specific terms and conditions of such transaction, whether for the purposes of ratemaking or otherwise. Contrary to Verizon WV s assertion in the petition, the expedited procedure does not require the Commission to issue an order within 15 days, after the 3-day period for Staff and the CAD to investigate an affiliated transaction filing. The 15-day period for the Commission to act is a goal, and the Commission shall, when feasible, endeavor to meet that goal. The Commission shall not, though, abbreviate its review of a proceeding simply to meet that goal. Further, the Commission wishes to make clear that the Commission may choose to review an affiliated transaction filing, even if Staff does not issue a memo in its 3-day window. The Commission is not required to approve any transaction for which a Staff memo. 7 Mrginia

8 ~ has not been filed. In the present case, neither the Staff nor the CAD objected to Verizon WV's petition within thuty (3) days of its filing, and the Staff recommended that the Commission approve that petition. In addition, the Commission notes that the immediate reintegration of VADI was explicitly authorized by the FCC, which concluded that the immediate reintegration of VADI's advanced services "is in the public interest and furthers the goal of promoting the deployment of Advanced Ser~ices."~ The Commission concludes that the reintegration of VADI, which currently provides advanced services, into Verizon WV is in the public interest. That reintegration will eliminate multiple affiliated Verizon incumbent local exchange carriers in the same service territory, reduce customer confusion, and return Verizon WV's operations to the status quo (with certain differences explained in the petition) that existed before the spin-off of advanced services to VADI. Verizon WV's petition and the attached novation describe the proposed transaction in detail, and the Commission hereby grants its authorization for that transaction. However, consistent with the terms of Verizon WV's IRP, the Commission's authorization of the VADI reintegration shall not be construed as expressing or implying the In re Applicatzon of GTE Corporation, Transferor, and Bell Atlantic Corporation, Transferee, For Consent to Tranger Control, CC Docket No , Order (Adopted and Released: September 26, 21). 8

9 Commission s approval of the specific terms and conditions of such transaction, whether for the purposes of ratemaking or other~ise.~ When it filed this proceeding, Verizon WV noted that the timetable for the reintegration had not been fmalized and could not be finalized without Commission approval. Petition p. 9. Commission Staff recommended that the Commission approve the novation. Further Final Joint Staff Memorandum (Nov. 5, 21). Staff also recommended that the Commission direct Verizon WV and VADI to make responsive tariff filings and require VADI to file to withdraw its certificate within thty (3) days of the entry of the Commission s order. Id. In response, Verizon WV asked to be permitted to make those filings no later than January 1,22, to coincide with the new calendar year, if necessary in connection with the business plans of Verizon WV and VADI. Ltr. p. 1 (Nov. 16,21). As a practical matter, moreover, the granting of this request may change the effective dates of the tariffs and the certificate withdrawal by only a matter of days, Verizon WV wrote. - Id. Then, on December 3, Verizon WV asked the Commission to allow the tariff and accounting changes for the reintegration of VADI to become effective December 1,21. Ltr. p. 1. Under the circumstances, the Commission shall allow the reintegration to coincide 9

10 with the new calendar year. That is the target date which most often appears in the file. Indeed, as late as November 16*, Verizon requested the Commission s indulgence of a couple of extra days, if needed, to accommodate January 1. Further, Verizon WV s December 3rd request does not indicate why Verizon WV wanted to change the reintegration date, nor does the request include any grounds to support the allowing the tariffs to take effect retroactively. FINDINGS OF FACT 1. On October 16,21, Verizon West Virginia Inc. (Verizon WV) petitioned the Commission to reopen these proceedings for the approval of a novation submitted with its petition, thereby facilitating the reintegration of Verizon Advanced Data Inc. (VADI) into Verizon WV as recently authorized by the Federal Communications Commission (FCC). 2. In Case Number -318-T-C, the Commission approved Verizon WV s Incentive Regulation Plan (IRP) by order dated October 3,21. Paragraph 2 of the IRP, which is attached to that order, establishes a streamlined procedure for affiliate transaction filings under W. Va. Code (f). Under that procedure, if neither the Staff nor the CAD object to an affiliate transaction petition within thlrty (3) days of its filing, Verizon WV, the Staff and the CAD recommend to the Commission that it authorize that transaction pursuant to W. Va. Code (f) within fifteen (15) days of the expiration of that thutyday (3-day) period. Such authorization, however, is not to be construed as expressing or 1

11 implying the Commission s approval of the specific terms and conditions of such transaction, whether for the purposes of ratemaking or otherwise. 3. Neither the Staff nor the CAD have objected to Verizon WV s petition in this proceeding within the requisite thirty (3) days. The Staff, to the contrary, has recommended approval of that petition, without approving the specific terms and conditions of the petition or the attached novation. 4. The reintegration of VADI will eliminate multiple affiliated Verizon incumbent local exchange carriers in the same service territory, reduce customer confusion, and essentially return Verizon WV s operations to the status quo that existed before the spin-off of advanced services to VADI. Verizon WV s petition and the attached novation describe the proposed transaction in detail. I 5. Until Verizon WV s December 3rd letter, there was no objection regarding the filing of responsive tariffs and for the withdrawal of VADI s certificate of public convenience and necessity, to be effective no later than January 1, 22. CONCLUSIONS OF LAW 1. The reintegration of advanced services currently provided by VADI into Verizon WV is in the public interest. 11

12 2. Consistent with the terms of Verizon WV s IN), the Commission s authorization of the VADI reintegration shall not be construed as expressing or implying the Commission s approval of the specific terms and conditions of such transaction, whether for the purposes of ratemaking or otherwise. ORDER IT IS THEREFORE ORDERED that Case Numbers T-PC and -995-T- PC are reopened. IT IS FURTHER ORDERED that the novation proposed herein be, and hereby is, authorized by the Commission, without approval of the novation s specific terms and conditions, whether for the purposes of ratemaking or otherwise. IT IS FURTHER ORDERED that these cases be consolidated for the purposes of entering an order. IT IS FURTHER ORDERED that Verizon West Virginia Inc. and Verizon Advanced Data Inc. file responsive tariffs to be effective no later than January 1, 22. IT IS FURTHER ORDERED that Verizon Advanced Data Inc. file to withdraw its certificate of public convenience and necessity to be effective no later than January 1, e

13 waived. IT IS FURTHER ORDERED that public hearing on the proposed transaction is IT IS FURTHER ORDERED hat upon entry of this order these cases shall be removed from the Commission's docket of active cases. IT IS FURTHER ORDERED that the Commission's Executive Secretary serve a copy of this order upon Verizon by facsimile and by United States First Class Mail and upon Commission Staff by hand delivery. CLWfsek 1236cb.wpd 13