DT 99-036
                         Bell Atlantic
Special Contract with McLane, Graf, Raulerson & Middleton, P.A. 
      Order Denying the Special Contract without Prejudice
                    O R D E R   N O.  23,173
                         March 25, 1999
       On December 22, 1998, Bell Atlantic - New Hampshire
     (BA-NH) filed with the New Hampshire Public Utilities Commission
     (Commission) pursuant to RSA 378:18, a petition seeking approval
     for a Centrex Special Contract with McLane, Graf, Raulerson &
     Middleton (McLane).  See Docket No. DR 98-221.  The proposed
     Special Contract would provide Centrex line systems comprised of
     Analog and Integrated Services Digital Network (ISDN) lines. 
     Along with the Special Contract, BA-NH filed contract overviews
     and cost study details in support of the filing. BA-NH's cost
     study avers that the Special Contracts' proposed rates exceed the
     incremental costs of the services being provided, pursuant to the
     requirements of RSA 378:18-b.
       On January 21, 1999, the Commission issued Order No.
     23,108 denying without prejudice the request for approval. On
     February 26, 1999, Bell Atlantic filed a letter requesting that
     the Commission reconsider its treatment of the McLane contract
     and a limited number of additional contracts. Along with the
     letter, Bell Atlantic refiled the cost study details that were
     filed with the original December 22, 1998 petition.
       Staff's review of the proposed Special Contract raised
     questions as to whether the proposed rates meet the requirement
     of RSA 378:18-b.  The questions arise in the context of the
     current evolution of the telecommunications industry to a
     competitive industry after passage of the Telecommunications Act
     of 1996 (TAct).  BA-NH's filing follows the incremental cost
     calculation methodology which was heretofore accepted as
     adequate.  However, as required by the Federal Communications
     Commission (FCC) in implementing the TAct, the Commission must
     employ a Total Element Long Run Incremental Cost (TELRIC)
     methodology for calculating the costs of unbundled network
     elements (UNEs) that BA-NH offers for sale to Competitive Local
     Exchange Carriers (CLECs).  When the rates under this contract
     are compared to the TELRIC prices that Bell Atlantic has sought
     our approval of in docket DE 97-171, it is not clear that the
     requirements RSA 378:18-b have been met.  Furthermore, there are
     outstanding concerns that approval of this special contract at
     the proposed rates will have the effect of being anti-competitive
     and subsidized by other captive ratepayers. Accordingly, we
     believe it is appropriate to move ahead with docket DT 99-018 to
     explore the issues raised by Bell Atlantic's employment of an
     incremental cost methodology for purposes of meeting its
     obligation under RSA 378:18-b and using another methodology for
     setting wholesale prices charged to competitors.
       Bell Atlantic refiled the original cost study details
     which Staff raised concerns about in DR 98-221.  Nothing in the
     current request persuades us to reconsider Order No. 23,108 at
     this time.  Therefore, we will deny the request to reconsider
     approval of this contract.  Bell Atlantic may refile the petition
     after resolution of docket DT 99-018, our investigation into the
     questions outlined above.
       Based upon the foregoing, it is hereby 
       ORDERED, that Bell Atlantic's petition for approval of
     the Special Contract is hereby DENIED without prejudice.
       By order of the Public Utilities Commission of New
     Hampshire this twenty-fifth day of March, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary