093_HB0875sam001 SRS093 00109 SDF 00109 a 1 AMENDMENT TO HOUSE BILL 875 2 AMENDMENT NO. . Amend House Bill 875, by replacing 3 everything after the enacting clause with the following: 4 "Section 5. The Public Utilities Act is amended by 5 adding Section 13-408 as follows: 6 (220 ILCS 5/13-408 new) 7 Sec. 13-408. Rates for unbundled loops provided as part 8 of an unbundled network element platform. This Section 9 applies to and covers certain unbundled network element rates 10 that shall be charged by incumbent local exchange carriers 11 that are subject to regulation under an alternative 12 regulation plan under Section 13-506.1 of this Act. The 13 General Assembly finds and determines that it should provide 14 direction to the Illinois Commerce Commission regarding the 15 establishment of the monthly recurring tariffed rates that 16 such incumbent local exchange carriers shall charge other 17 telecommunications carriers for unbundled loops provided in 18 combination with other unbundled network elements as part of 19 a network elements platform in order to ensure (i) that such 20 rates shall not significantly impair the incumbent local 21 exchange carrier's ability to raise capital on reasonable 22 terms or maintain a reasonable capital structure and (ii) -2- SRS093 00109 SDF 00109 a 1 that such incumbent local exchange carriers are able to 2 recover the efficient, forward-looking costs of creating, 3 operating, and maintaining the network outside plant 4 infrastructure capacity and switching and transmission 5 network capacity necessary to permit such incumbent local 6 exchange carriers to meet in a timely and adequate fashion 7 the obligations imposed by Section 8-101 of this Act. Nothing 8 contained in this Section 13-408 shall be deemed to relieve 9 an incumbent local exchange carrier from its burden of proof 10 under State or federal law with respect to these rates. 11 The Illinois Commerce Commission shall set the recurring 12 rates affected incumbent local exchange carriers receive for 13 unbundled loops provided in combination with other unbundled 14 network elements as part of a network elements platform in 15 accordance with the requirements delineated below. 16 (a) Cost of capital. The General Assembly directs that 17 the Illinois Commerce Commission, in calculating the cost of 18 capital, shall employ an evaluation that considers (i) the 19 current cost of capital, (ii) bypass of the incumbent local 20 exchange carrier's telecommunications network, (iii) the 21 regulatory risks assumed and created by the Federal 22 Communications Commission's unbundled network element costing 23 methodology, and (iv) the effect of increased risks because 24 of wholesale customer bankruptcies and bad debt. The General 25 Assembly finds that such evaluation shall also consider (i) 26 the risks associated with a forward-looking, competitive 27 telecommunications marketplace and (ii) a long-term analysis 28 that mitigates the impacts of transitory short-term 29 fluctuations in the telecommunications industry. In addition, 30 the Commission shall adjust all existing tariffed monthly 31 recurring rates for unbundled loops provided in combination 32 with other unbundled network elements as part of a network 33 elements platform that are currently in effect to make such 34 rates consistent with this provision. -3- SRS093 00109 SDF 00109 a 1 (b) Depreciation rates. The General Assembly further 2 directs that the Commission shall employ, consistent with the 3 Federal Communications Commission's unbundled network element 4 costing methodology, depreciation rates that are 5 forward-looking and consider the economic lives as reflected 6 in the incumbent local exchange carrier's books of accounts 7 as reported to the investment community under the regulations 8 of the Securities and Exchange Commission. Use of an 9 accelerated depreciation mechanism shall be required to the 10 extent consistent with the requirements of the Federal 11 Communications Commission's unbundled network element costing 12 methodology and use of a depreciation rate based on 13 historical rate-of-return regulation derived lives of the 14 elements and facilities in question shall be prohibited. In 15 addition, the Commission shall adjust all existing tariffed 16 monthly recurring rates for unbundled loops provided in 17 combination with other unbundled network elements as part of 18 a network elements platform that are currently in effect to 19 make such rates consistent with this provision. 20 Section 99. Effective date. This Act takes effect upon 21 becoming law.".