Cost companies are telecommunication companies that receive settlements from the National Exchange Carrier Association (NECA) based on their actual costs, rather than on the basis of average formulas (average schedule companies). Cost companies are required to submit to NECA, no later than July 31st every year, a full cost study. Kiesling Associates Cost Consultants prepare these cost studies, with the assistance of the companies themselves through conversations and data requests.
The FCC rules and regulations are codified in Title 47 of the Code of Federal Regulations (CFR).Part 36 contains the Jurisdictional Separations Procedures, which are standard procedures for separating Telecommunications Property Costs, Revenues, Expenses, Taxes and Reserves for Telecommunications Companies.Part 69 contains the Application of Access Charges.This part establishes rules for access charges for interstate or foreign access services provided by telephone companies.
It is important to note Part 32, which details investment and expense accounts that regulated telecommunications companies are required to use, forms the basis of the accounting records. Part 64, which proscribes how non-regulated costs are removed from the regulated company's assets and liabilities, is required to be followed for a cost company.
After removing non-regulated amounts, Part 36 rules separate state and local investment and expenses from interstate.The interstate portion then uses Part 69 rules to allocate amounts to common line, traffic sensitive (including local switching and special access) and non-access.Part 36 results define your total company's rate base and revenue requirement by jurisdiction, while Part 69 results show your interstate rate elements for developing access rates, either in the NECA tariff and pool or in an individual company's tariff.
The Cost Consulting group at Kiesling Associates also prepares information pulled from the completed Part 69 to notify NECA what amounts to report for your Average Net Investment, Expenses and other taxes and FIT adjustments on a cost basis.
The cost of preparing the Cost Study (Part 36 and Part 69) might be eligible to be directly assigned to interstate and get paid back dollar for dollar from the interstate jurisdiction.