Title 3 . Commerce, Community, and Economic Development

Chapter 48 . Telecommunications

Section 425. Depreciation practices for local exchange carriers

3 AAC 48.425. Depreciation practices for local exchange carriers

(a) The Federal Communications Commission's Depreciation Ranges Adopted in CC Docket No. 98-137, dated December 17, 1999, is adopted by reference and is used as the depreciation ranges in this section. A local exchange carrier may use depreciation projection lives and future net salvage levels from the depreciation ranges for the carrier's property accounts for purposes of developing intrastate depreciation rates. Depreciation rates developed using the depreciation ranges shall be filed with the commission, and those depreciation rates may go into effect without commission approval if the filing meets the requirements of (f) of this section and the filing is not suspended under (g) of this section.

(b) A local exchange carrier requesting a depreciation projection life or net salvage level not included in the depreciation ranges shall obtain commission approval of its proposed depreciation rates before placing the rates in effect.

(c) The commission will consider the actual useful life of depreciated equipment and facilities in establishing depreciation rates.

(d) When proposing depreciation rates, a local exchange carrier has the burden of proof to demonstrate that its proposed depreciation or amortization expenses are adequate, but not excessive, in accordance with AS 42.05.471 , and in accordance with generally accepted accounting principles.

(e) Regardless of whether the depreciation ranges are used, the rates proposed in a depreciation study filed under this section become effective if

(1) after publishing notice of the depreciation study in a newspaper of general circulation in the affected service areas of the local exchange carrier, the commission does not receive opposing comments within the comment period of the commission's public notice; and

(2) the commission does not take action within six months after the filing date of a complete depreciation study.

(f) A local exchange carrier may apply depreciation rates developed from the depreciation ranges without commission approval 90 days after the filing of a complete depreciation study that complies with the requirements established in this subsection. The depreciation rates proposed under this subsection are presumed to be adequate, but not excessive, if the proposed rates and study comply with the following requirements:

(1) the proposed depreciation rates are based on a depreciation study that uses the remaining life method of depreciation;

(2) the proposed depreciation rates are based on a depreciation study that uses the straight-line method of depreciation;

(3) the depreciation ranges are used for all property accounts of the carrier;

(4) after publishing notice of the depreciation study in a newspaper of general circulation in the affected service areas of the local exchange carrier, the commission does not receive opposing comments within the comment period of the commission's public notice;

(5) the depreciation study clearly demonstrates the procedures and methods by which the proposed depreciation rates were developed, and that (b) of this section does not apply;

(6) the proposed change in the intrastate depreciation expense does not exceed eight percent from the carrier's previous year's intrastate annual depreciation expense when adjusted to eliminate changes in expense that result from changes in plant account balances; however, the carrier must demonstrate in its filing that the adjustment is just and reasonable.

(g) Notwithstanding (f) of this section, for good cause shown, the commission may issue an order instituting an investigation and suspending the depreciation proposal submitted under (f) of this section. The commission may either approve, deny, or require modification to the carrier's proposal to ensure that adequate, but not excessive, depreciation rates apply in accordance with AS 42.05.471 .

History: Eff. 9/16/2005, Register 175

Authority: AS 42.05.141

AS 42.05.151

AS 42.05.381

AS 42.05.411

AS 42.05.421

AS 42.05.431

AS 42.05.471

Editor's note: A copy of the Federal Communication Commission's Depreciation Ranges Adopted in CC Docket No. 98-137, dated December 17, 1999, is available for inspection at the offices of the Regulatory Commission of Alaska as specified in 3 AAC 48.010(a) .