29058.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
ALBION TELEPHONE COMPANY FOR AUTHORITY TO BORROW UP TO $15,000,000 FROM THE RURAL TELEPHONE UTILITIES SERVICE (RUS). )
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CASE NO. ALB-T-02-2

ORDER NO. 29058

On May 24, 2002, Albion Telephone Company (Albion) filed an Application for Loan Approval requesting authority to execute a loan contract amendment and supplemental mortgage with the Rural Utilities Service (RUS) in an amount not to exceed $15,000,000. In this Order we approve the Application as conditioned below.
THE APPLICATION
Albion’s Application alleges that the loan proceeds will be utilized to: 1) upgrade central office switching, 2) install additional fiber and upgrade outside plant, 3) fund construction to meet anticipated customer growth, and 4) general system improvements.
The loan should qualify for the 5% hardship loan rate with a 15-year loan maturity. If RUS does not designate it as a hardship loan, the interest rate will be set at RUS’s then-current market rates at the time of closing. The loan will be secured by a first mortgage lien on Albion’s assets under a Supplemental Mortgage and Security Agreement.
Albion further alleges that the proposed transaction is consistent with the public interest. Construction of the upgraded facilities will improve service for Albion’s existing Idaho customers and enable Albion to offer broadband communications services to both business and residential users.
FINDINGS OF FACT
AND
CONCLUSIONS OF LAW

Albion is a telephone corporation within the definition of Idaho Code § 61121 and is a public utility within the definition of Idaho Code § 61129.
The Idaho Public Utilities Commission has jurisdiction over this matter pursuant to the provisions of Idaho Code § 61901 et seq., and the Application reasonably conforms to Rules 141-150 of the Commission’s Rules of Procedure, IDAPA 31.01.01-141-150.
After examining the Application and supporting documents, the Commission finds that a hearing in this matter is not required, and that the proposed transaction is consistent with the public interest and Albion’s proper performance of its duties as a public utility.
The general purposes to which the funds will be put are lawful purposes under the Public Utilities Law of the State of Idaho and are compatible with the public interest. However, this general approval of the general purposes to which the funds will be put is neither a finding of fact nor a conclusion of law that any particular construction program from which Albion may benefit by the approval of this Application has been considered or approved by this Order, and this Order shall not be construed to that effect.
The issuance of an Order authorizing the borrowing of funds does not constitute agency determination/approval of the type of financing or the related costs for ratemaking purposes, which determination the Commission expressly reserves until the appropriate proceeding.
So that the Commission can keep abreast of loan developments, this Order is conditioned upon Albion meeting the following reporting requirements. The Company shall provide: 1) copies of the RUS final loan approvals including documentation for advances; 2) a copy of any executed collateral documentation; 3) copies of all annual certification, covenant reports, and letters regarding these determinations; and 4) the “Report of Securities Issued”. However, this limited oversight does not guarantee that the costs of such projects will be automatically recovered in the next rate case. To the extent that these loan funds are used for non-regulated services, any adjustments associated with non-regulated costs will occur in future rate cases.
Albion has paid the fees required by Idaho Code § 61-905.
The Commission finds that this Application should be approved as conditioned by the reporting requirements set out below.
O R D E R
IT IS THEREFORE ORDERED that Albion Telephone Company’s Application for authority to execute a loan contract amendment and supplemental mortgage with the Rural Telephone Utilities Service (RUS) up to $15,000,000 is hereby granted as conditioned above.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory authority of this Commission with respect to rates, service, accounts, valuation, estimates, or determination of costs, or any other matter that may come before this Commission pursuant to this jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Chapter 9, Title 61, Idaho Code, or any act or deed done or performed in connection with this Order shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any funds authorized under the provisions of Chapter 9, Title 61, Idaho Code.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of Albion's exhibits or other material accompanying the Application for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory orders previously issued in this Case No. ALB-T-02-2 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order or in interlocutory orders previously issued in this Case No. ALB-T-02-2. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration in response to issues raised in the petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this day of June 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean Jewell
Commission Secretary

O:ALBT0202_ln

ORDER NO. 29058 1

Office of the Secretary
Service Date
June 20, 2002