N.M. Admin. Code § 17.11.18.15

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

Section 17.11.18.15 - COSTING METHODOLOGY

A. Formula. The forward-looking economic cost of an element shall be calculated as the sum of:

(1) the total element long-run incremental cost (TELRIC) of the element; and

(2) a reasonable allocation of forward-looking common costs.

B. Calculation of TELRIC.

(1) Least cost technology. An ILEC shall calculate TELRIC on the basis of the most economically efficient choice of technology, or mix of technologies, in the long run, provided that such choice shall be:

(a) restricted to technologies that are currently available on the market and for which vendor prices can be obtained;

(b) consistent with the level of output necessary to satisfy current demand levels for all services using the UNE in question; and

(c) consistent with overall network design and topology requirements.

(2) Forward-looking cost of capital. In calculating the TELRIC of an element, an ILEC shall use the forward-looking cost of capital.

(3) Depreciation rates. In calculating forward-looking economic costs of elements, an ILEC shall use depreciation rates for capital assets that reflect changes in the economic value of those assets over time.

C. Reasonable allocation of forward-looking common costs. The commission shall consider an allocation of forward-looking common costs to an element to be reasonable if the ILEC demonstrates that:

(1) the sum of the allocation of forward-looking common costs plus the TELRIC of the element does not exceed the stand-alone costs associated with the element; in this context, stand-alone costs are the total forward-looking costs, including corporate costs, that would be incurred to produce a given element if that element were provided by an efficient firm that produced nothing but the given element; and

(2) the sum of the allocation of forward-looking common costs for all elements and services equals the total forward-looking common costs, exclusive of retailing costs, attributable to operating the ILEC's total network so as to provide all the elements and services offered.

D. Factors that may not be considered. In calculating the forward-looking economic cost of an element, an ILEC shall not consider embedded costs, retailing costs, opportunity costs, revenues associated with elements or telecommunications service offerings other than the element for which a rate is being established.

E. Units. The forward-looking economic cost per unit of an element equals the forward-looking economic cost of the element, calculated as prescribed in 17.11.18.15 NMAC, divided by a reasonable projection of the sum of the total number of units of the element the ILEC is likely to provide to requesting LECs and the total number of units of the element the ILEC is likely to use in offering its own services, during a reasonable measuring period.

(1) For elements an ILEC offers on a flat-rate basis, the number of units shall be the discrete number of UNEs the ILEC uses or provides (e.g., local loops or local switch ports).

(2) For elements an ILEC offers on a usage-sensitive basis, the number of units shall be the unit used to measure usage of the element (e.g., minutes of use or number of call-related database queries).

N.M. Admin. Code § 17.11.18.15

17.11.18.15 NMAC - N, 1-1-01; A, 08-15-06