Michigan rejects SBC request to double wholesale rates

The Michigan Public Service Commission (PSC) today rejected “with prejudice” Ameritech Michigan’s request to double the rates it charges wholesale customers in the state.

SBC Communications, parent company of Ameritech, had filed the Michigan application last month because its costs to provision unbundled network elements are higher than those “previously authorized by the commission,” according to the order issued today. The carrier had filed similar applications in Ohio in June and in Illinois about two weeks ago.

SBC also had asked the commission to waive its requirement – “to the extent necessary” – that requires Ameritech Michigan to file complete cost studies when seeking a rate change, according to the order.

In previous orders, the Michigan PSC found that Ameritech Michigan should not be required to file total service long run incremental cost (TSLRIC) studies every two years, but also said the carrier should not be permitted to file in less than two years unless it can demonstrate a “fundamental change in circumstances.” It also required Ameritech Michigan to explain any cost increase of more than 10% and to perform an “extended” TSLRIC study when seeking such an adjustment to its wholesale rates.

Competitive carriers that purchase UNEs from SBC contended that the application should be rejected because Ameritech Michigan inappropriately substituted a new methodology rather than updating the prior [TSLRIC] studies. In addition, competitors argued that the application was frivolous because Ameritech Michigan only months ago voluntarily reduced retail rates, which must be no less than cost, for unlimited local calling, only to now claim that costs have “suddenly increased.”

The commission in its order agreed that the cost studies filed with the application do not comply with its previous directives. It also said it was not persuaded by Ameritech Michigan’s argument that it waive the cost-study requirement.

However, the commission also acknowledged that Ameritech Michigan’s costs might have changed since the PSC last examined them and accordingly launched a rate proceeding on its own motion.

A spokeswoman for the Illinois Commerce Commission said today that the commission would not rule on SBC’s application in that state until it receives a staff recommendation. The staff has yet to review the matter and is not scheduled to meet again until next week. However, the spokeswoman said SBC’s request to have the matter resolved within 90 days was impractical. She said the earliest the staff would make a recommendation, at this point, is October 16.

“We’re talking about major policy issues here,” she said.