N.M. Admin. Code § 17.11.13.17

Current through Register Vol. 35, No. 23, December 10, 2024

Section 17.11.13.17 - MINIMUM PRICING POLICY

A. Unless otherwise ordered by the Commission upon specific request by the applicant containing ample justification for the request and why none of the pricing methodologies discussed below are applicable to the petition, the information provided with or contained in a petition shall be such that it will provide the Commission with the minimum price or the range of prices for a competitive public telecommunications service developed through one of the following pricing methodologies:

(1) Direct Cost Pricing:

(a) This methodology shall start with the total current cost of the investments involved with the competitive service and develop the broad categories of service, including interstate if applicable, that are using that investment.

(b) It shall further develop for the categories of service, current maintenance expenses using maintenance to investment ratios, current overhead administrative expenses using overhead administrative expenses to investment ratios and current ad valorum taxes using ad valorum taxes to investment ratios.

(c) Where investment is shared with non-competitive service or services, it shall in the calculation of spearate [separate] competitive service costs develop the dollar amount of usage sensitive investment to be used by the competitive service through allocations based on usage by the board categories of service, and apply the factors from subparagraph A.2 [1 (b)] of this section to obtain a reasonable allocation of shared costs and allocated costs of the competitive service.

(2) Fully Allocated Cost Pricing: This methodology shall utilize a "Stand Alone Cost Study" which uses a basic building block approach to develop the investments for competitive services. It shall develop, for the competitive service, expenses for maintenance activities, installation activities and other support activities as applicable. It shall reflect current labor rates, all expenses common to the investment shared between competitive and non-competitive services fairly prorated between such services, apply an expected return to investments, and utilize an appropriate tax factor applied to return.

(3) Incremental Cost Pricing: This methodology identifies the incremental forward-looking cost caused by placing one or more additional units in service. The general categories or direct costs included in an incremental cost study include annual capital costs and operating expenses. The capital costs are the annual costs of depreciation, cost of money, and income taxes. The operating expenses are the annual costs of maintenance, administration, ad valorem and other taxes.

(4) Avoidable Cost Pricing: This methodology is applicable to services associated with items of equipment that are restricted. The avoidable cost study identifies the costs which can be avoided if the equipment is eliminated or removed from service.

B. After filing of a petition, the Commission may order that the applicant file another cost study utilizing a pricing methodology of the Commission's choice if the Commission decides that the cost study originally filed does not meet the circumstances of the petition. The applicant shall continue to have the burden of establishing that a service is subject to competition and that it is in the public interest for the Commission to establish a minimum rate or range of rates.

C. Upon request by the Commission, prior to or during hearing upon the petition, applicant shall submit such additional data, information, or exhibits, as may be specified by the Commission.

D. If an applicant files with the Commission in its petition a cost methodology which differs from the cost methodology employed to allocate costs for the same or similar service in a prior proceeding, the applicant shall file with the petition a summary description of how the costing methodology differs and why it differs from the cost methodology employed to allocate costs for the same or similar service in the prior proceeding.

N.M. Admin. Code § 17.11.13.17

Recompiled 12/30/01