Section 810-RICR-20-00-2.4 - Calculation of Avoided Cost DiscountA. When calculation the avoided cost discount for wholesale rates, the incumbent local exchange carrier shall start with its jurisdictionally separated costs for the State of Rhode Island. From the jurisdictionally separated accounts, it will make the following calculations in its cost study of retail avoided costs to produce two components (direct cost component and an indirect cost component) of the total avoided cost discount:1. Include as avoided direct costs the intrastate costs in USOA accounts 6611 (product management), 6612 (sales), 6613 (product advertising), 6621 (call completion services), 6622 (number services), and 6623 (customer services). The sum of these intrastate costs will be divided by intrastate revenues to yield the direct avoided cost discount component of the total avoided cost discount.2. Include as avoided indirect costs a portion of the intrastate costs included in USOA accounts 6121-6124 (general support expenses), 6711, 6712, 6721-6728 (corporate operations expenses), and 5301 (telecommunications uncollectables). These intrastate costs are assumed to be avoided in the same proportion to total intrastate revenues as direct costs are avoided, as defined in § 2.4(A)(1) of this Part above, to yield the indirect avoided cost discount component of the total avoided cost discount.3. The total avoided cost discount will be the sum of the direct avoided cost component as described in § 2.4(A)(1) of this Part above, and the indirect avoided cost component, as described in § 2.4(A)(2) of this Part above.4. Not included plant-specific expenses and plant non-specific expenses other than general support expenses, that is, not included accounts 6110-6116 and 6210-6565, except as provided above.5. Costs included in accounts 6611-6613 and 6621-6623 may be included in wholesale rates (that is, excluded from the avoided costs) only to the extent that a party demonstrates that specific costs in these accounts will be incurred and are not avoidable with respect to services sold at wholesale, or that specific costs in these accounts are not included in the costs of services sold at retail. Costs included in accounts 6110-6116 and 6210-6565 may be treated as direct avoided costs (see § 2.4(A)(3) of this Part above), and excluded from wholesale rates only to be the extent that a party demonstrates that specific costs in these accounts can reasonably be avoided when an incumbent local exchange carrier provides a telecommunications service to a requesting carrier for resale.6. An incumbent local exchange carrier may include up to one (1) per cent of the amount in account 5301 (telecommunications uncollectables) in its resale rates to compensate itself for the risk we impose upon it by requiring that it continue to serve the ultimate customers, without interruption, in the event of default by the carrier reselling its services.B. In the event a reseller defaults in its payments to the carrier providing the wholesale service, the carrier providing the wholesale service may not disconnect any of the ultimate retail customers who have paid their bills, and must continue to serve them without interruption, at its regular tariffed rates for the service. Its remedies shall be limited to claims against the reseller for all services it provides for which the reseller collected payment (recognizing that many telecommunications services are normally paid for in advance).C. The foregoing requirements, after due notice and an opportunity for hearing, are hereby adopted and filed with the Secretary of State this 29th day of January, 1998, to become effective thirty (30) days after filing, in accordance with the provisions of R.I. Gen. Laws 1956 (1998 Reenactment) §§42-35-2(a)(2) and 42-35-3.810 R.I. Code R. 810-RICR-20-00-2.4