Sec.  51.609   Determination of avoided retail costs.

   (a) Except as provided in  Sec. 51.611, the amount of avoided retail costs shall
   be  determined  on  the  basis  of a cost study that complies with the
   requirements of this section.

   (b) Avoided retail costs shall be those costs that reasonably can be avoided
   when an incumbent LEC provides a telecommunications service for resale at
   wholesale rates to a requesting carrier.

   (c) For incumbent LECs that are designated as Class A companies under  Sec. 32.11
   of  this chapter, except as provided in paragraph (d) of this section,
   avoided retail costs shall:

   (1)  Include as direct costs, the costs recorded in USOA accounts 6611
   (product management and sales), 6613 (product advertising), 6621 (call
   completion services), 6622, (number services), and 6623 (customer services)
   ( Sec.  Sec. 32.6611, 32.6613, 32.6621, 32.6622, and 32.6623 of this chapter);

   (2) Include, as indirect costs, a portion of the costs recorded in USOA
   accounts 6121–6124 (general support expenses), 6720 (corporate operations
   expenses), and uncollectible telecommunications revenue included in 5300
   (uncollectible revenue) (Secs. 32.6121 through 32.6124, 32.6720 and 32.5300
   of this chapter); and

   (3) Not include plant-specific expenses and plant non-specific expenses,
   other than general support expenses ( Sec.  Sec. 32.6112–6114, 32.6211–6565 of this
   chapter).

   (d)  Costs  included in accounts 6611, 6613 and 6621–6623 described in
   paragraph (c) of this section ( Sec.  Sec. 32.6611, 32.6613, and 32.6621–6623 of this
   chapter) may be included in wholesale rates only to the extent that the
   incumbent LEC proves to a state commission 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  retail  prices of resold services. Costs included in accounts
   6112–6114  and  6211–6565  described  in paragraph (c) of this section
   ( Sec.  Sec. 32.6112–32.6114, 32.6211–32.6565 of this chapter) may be treated as
   avoided retail costs, and excluded from wholesale rates, only to the extent
   that a party proves to a state commission that specific costs in these
   accounts  can  reasonably  be avoided when an incumbent LEC provides a
   telecommunications service for resale to a requesting carrier.

   (e) For incumbent LECs that are designated as Class B companies under  Sec. 32.11
   of this chapter and that record information in summary accounts instead of
   specific USOA accounts, the entire relevant summary accounts may be used in
   lieu of the specific USOA accounts listed in paragraphs (c) and (d) of this
   section.

   [ 61 FR 45619 , Aug. 29, 1996, as amended at  67 FR 5700 , Feb. 6, 2002;  69 FR 53652 , Sept. 2, 2004]