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Pearce testified that their calculations were reflected on
spreadsheets on his laptop computer, and when he retired in 1999,
he returned the computer to Qwest. Qwest could not find the
spreadsheets. Despite the missing underlying spreadsheets, we
find that Mr. O’Callaghan and Mr. Pearce credibly justified
Qwest’s use of an incremental base rate of $6,019.
Respondent also questions why the incremental base rate did
not include the costs of digging the trench, costs associated
with perfecting rights-of-way, and why the base rate was not
adjusted to reflect cost increases based on terrain or budget
overruns. However, respondent recognizes that Qwest had to incur
these costs regardless of whether one conduit or multiple
conduits were installed. As found above, because Qwest was
obligated to incur these costs to perform its customer contracts,
allocating all of these costs to the customer contracts reflects
the economic reality of the projects.
Because Qwest incurred only certain incremental costs to
install additional conduit or pull additional fiber, and because
Qwest was willing to incur only limited risk to do so, we find
that Qwest’s allocation of only those costs to its retained
assets was consistent with Qwest’s decision-making process and
the economic reality of the transactions.
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