4 Colo. Code Regs. § 723-2-2407
Current through Register Vol. 47, No. 20, October 25, 2024
Section 4 CCR 723-2-2407 - Specific Cost-Segregation Standards and Guidelines(a) All investments and expenses attributable to interstate jurisdictional services are to be allocated using applicable federal rules. Each provider shall be able to demonstrate that such rules have been properly applied.(b) Each service shall be treated specifically in the cost-segregation procedure. There shall be a description of each service provided by the provider that identifies the service, the service family, and describes how the service or service family is provided. Unless the service qualifies for treatment as an incidental service under paragraph 2403(b) or a de minimis service under paragraph 2403(c), sufficient information about the service shall be given to determine the appropriate cost categories to be employed.(c) In order to provide a consistent approach to segregating all costs, the Commission requires that the following factors be applied (listed in descending order of preferred application):(I) Costs shall be directly assigned whenever possible. Directly assignable costs are defined as those costs that can be attributed only to a specific service (this employs the Traceability principle in subparagraph 2406(b)(II)). Where more than one service uses an investment or causes a cost to be incurred, direct assignment is inappropriate.(II) Methods of segregating common or joint investments and expenses shall use the provider's own engineering and service-provisioning design criteria as the primary assumptions (this employs the Variability principle in subparagraph 2406(b)(III)). When design criteria are used, the segregation method employed shall include the following to the maximum extent possible: (A) If the service incorporates amounts of use that vary by time period and the engineering design criteria are sensitive to the peak-period usage (for example, end office or toll switching), then the segregation method shall also follow the engineering cost causation.(B) Common or joint costs that vary in direct proportion to the relative amounts of use of a service shall be segregated based upon those relative amounts of use.(III) Common or joint costs that do not vary in direct proportion to the relevant amounts of use of the service shall be segregated by a surrogate measure that has a logical or observable correlation to the use of the service (this employs the Capacity Required principle in subparagraph 2406(b)(IV)); except that a time-reporting method of allocation shall be used for certain labor-intensive items as required in subparagraph (IV).(IV) A time-reporting method of allocation shall be used for labor-intensive customer operations, service related expenses, or investments of significance. The allocation of joint marketing (USOA Account Number 6610), operator services, local business office, and planning costs shall employ actual time-reporting methods for the allocation, if not directly assigned.(A) An allocation method that uses statistically valid samples based on time reporting is permissible.(B) A method other than a strict time-reporting allocation method may be approved by the Commission if it can be verified that the surrogate method is reasonably related to the expense being allocated.(V) Residual common marketing expenses that cannot be directly assigned or directly or indirectly attributed shall be allocated using a general marketing allocator. This allocator shall be derived from the previously assigned or attributed marketing expenses between regulated and deregulated operations.(VI) Common costs for which there is no direct or indirect measure of allocation shall be segregated using an appropriate general allocator that is based upon total expenses otherwise assigned (this employs the beneficiality principle in subparagraph 2406(b)(V)).(d) General allocators shall be used only in exceptional cases and, then, only when the justification for their use is fully explained.(e) Providers shall provide the Commission with all the data necessary to verify the cost segregation.(f) It is inappropriate to allocate investments or expenses associated with the newly developed services exclusively to existing services. As new services begin to use joint and common investments and expenses are incurred, the methods of segregation shall be modified to track the usage and expenses.39 CR 21, November 10, 2016, effective 12/1/201640 CR 15, August 10, 2017, effective 9/1/201741 CR 03, February 10, 2018, effective 3/2/201842 CR 02, January 25, 2019, effective 2/14/201942 CR 07, April 10, 2019, effective 4/30/201943 CR 02, January 25, 2020, effective 2/14/202043 CR 17, September 10, 2020, effective 8/17/202044 CR 17, September 10, 2021, effective 8/11/202144 CR 18, September 25, 2021, effective 10/15/202145 CR 03, February 10, 2022, effective 12/29/202145 CR 01, January 10, 2022, effective 1/30/202246 CR 05, March 10, 2023, effective 3/30/2023