Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) CC Docket No. 99-35 Long-Term Telephone Number ) Portability Tariff Filings of ) Ameritech Operating Companies, ) Transmittal Nos. 1186, 1187, 1204 Pacific Bell, ) Transmittal Nos. 2029, 2051, 2056 Southwestern Bell Telephone Companies, ) Transmittal Nos. 2745, 2761, 2764, 2765 and U S WEST Communications, Inc. ) Transmittal Nos. 965, 975, 1002 MEMORANDUM OPINION AND ORDER Adopted: October 6, 1999 Released: October 6, 1999 By the Deputy Chief, Common Carrier Bureau: I. INTRODUCTION 1. In this Order, we clarify that the above-referenced carriers may calculate the interest rate on their local number portability refunds based on the Internal Revenue Service individual overpayment rate specified in 26 U.S.C.  6621(a)(1)(B). II. BACKGROUND 2. On July 16, 1999, the Commission issued orders concluding its investigations into the long-term number portability tariff transmittals filed by Ameritech Operating Companies (Ameritech), GTE Telephone Operating Companies and GTE System Telephone Companies, Pacific Bell, Southwestern Bell Telephone Companies (Southwestern Bell), and U S WEST Communications, Inc. (U S WEST). In those orders, the Commission ordered Ameritech, Pacific Bell, Southwestern Bell, and U S WEST to refund to their respective customers, with interest, the difference between the actual local number portability revenues they obtained pursuant to their local number portability tariffs and the revenues that would have been obtained based on rates prescribed in the Commission's orders. The Commission's orders stated that interest "shall be computed on the basis of interest specified by the United States Internal Revenue Service [IRS]." 3. In their joint refund plan, Pacific Bell and Southwestern Bell state that "[i]nterest will be calculated on a daily compounded basis using the applicable IRS quarterly underpayment rate. For the first quarter, this rate was 7%, while for the second and third quarters the rate is 8%." In its refund plan, Ameritech states that it will use an "8% per annum" rate, which is the "Internal Revenue Service's rate for Corporate underpayment and non-corporate underpayment and overpayments as of July 1, 1999, the most recent date this rate was set." U S WEST states that "[i]nterest will be calculated and compounded daily at the IRS rate in effect for the period in which refunds are due," but it does not specify which interest rate it intends to use (IRS underpayment or overpayment rate). III. DISCUSSION 4. We require the LECs listed above to issue their number portability refunds with interest on the principal amount owed computed on a daily compounded basis at the individual overpayment rate established by the Internal Revenue Service pursuant to section 6621(a)(1)(B) of the Internal Revenue Code of 1986, as amended, 26 U.S.C.  6621(a)(1)(B), for the period in which refunds are due. In previous decisions regarding interest paid on refunds, the Commission has used both the interest rate for underpayment of taxes and the rate for overpayment of taxes due to the Internal Revenue Service. In Western Union Telegraph Co. (Western Union MO&O), the Commission determined that certain interconnected carrier parties (ICPs) must pay to Western Union Telegraph Company (Western Union) the difference between the rates they actually paid and the rates subsequently prescribed by the Commission. In considering the appropriate interest rate to be assessed on this payment, the Commission adopted "the commonly held view that interest is not a penalty, but is simply the price that one pays for using another person's money." The Commission concluded that "it would be inequitable to allow Western Union to calculate interest using the higher punitive interest rate established by the Internal Revenue Service . . . as this dispute involves no criminal wrongdoing on the part of the ICPs." The Commission reiterated that it met its burden to "'do equity' among the parties in this . . . dispute" by allowing the imposition of interest on the refund, but that it did not wish to "penalize any party to this proceeding." 5. Here, we follow the reasoning of the Western Union MO&O and allow carriers to utilize the IRS individual overpayment rate. We do not wish to penalize the carriers involved, as they filed their tariffs in good faith and are refunding money charged in excess of those rates that the Commission prescribed. End users overpaid carriers during the refund period, however, and we believe that carriers, who consequently had use of the end users' money during this period, should compensate them for this overpayment. We direct the carriers listed above to calculate the interest on their number portability refunds based on the Internal Revenue Service individual overpayment rate as specified in 26 U.S.C.  6621(a)(1) for the applicable refund period, which is 7.99%. IV. ORDERING CLAUSES 6. ACCORDINGLY, IT IS ORDERED that pursuant to sections 4(i), 202(b), 203, 204(a), and 205(a) of the Communications Act, 47 U.S.C.  154(i), 201(b), 203, 204(a), 205(a), and through the authority delegated pursuant to section 0.291 of the Commission's rules, 47 C.F.R.  0.291, Ameritech Operating Companies, Pacific Bell, Southwestern Bell Telephone Companies, and U S WEST Communications, Inc. SHALL CALCULATE INTEREST on their local number portability refunds discussed in Commission Memorandum Opinion and Orders FCC 99-158 and FCC 99-169 pursuant to the Internal Revenue Service individual overpayment rate, 26 U.S.C.  6621(a)(1), in effect for the period in which the refunds are due, as discussed above. FEDERAL COMMUNICATIONS COMMISSION Yog R. Varma Deputy Chief, Common Carrier Bureau