20230628Final_Order_No_35832.pdf

ORDER NO. 35832 1

Office of the Secretary
Service Date
June 28, 2023
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF CAMBRIDGE
TELEPHONE COMPANY’S OBJECTION TO
ITS 2023 ANNUAL ASSESSMENT FEES
)
)
)
)
CASE NO. CAM-T-23-01

ORDER NO. 35832

On May 15, 2023, Cambridge Telephone Company (“Company”) informed the
Commission of the Company’s objection to its 2023 assessment fees. Idaho Code § 61-1007 states
that the Commission is to issue a written notice of a hearing to the Company upon the Company’s
timely objection. Idaho Code § 61-1007 further states the hearing in this matter must be held after
ten and within 20 days after the Company receives written notice of the hearing. The Commission
must then issue a written order within 20 days.
On May 26, 2023, the Commission issued a Notice of Objection and set the matter for
hearing. Order No. 35795.
On June 6, 2023, Staff filed the Affidavits of Johan Kalala-Kasanda and Nancy Ashcraft.
On June 8, 2023, the Commission held a hearing where the Company and Staff presented
their positions (“Hearing”).
Having reviewed the record, we now issue this Order rejecting the Company’s Objection
for the reasons outlined below.
THE OBJECTION
The Company claimed it overstated its intrastate revenue to the Commission that resulted
in an assessment of $8,884.29 instead of $1,839.57—which the Company claimed is the amount
it should owe if it had submitted the correct data on its intra-state revenue.
THE PARTIES’ POSITIONS
I. The Company’s Position
The Company argued it overstated its intrastate operating revenues and certain income
included in its GIOR was not GIOR because it came from operations in Oregon, Washington,
Nevada, or from non-regulated sources. The Company believed that Staff mistook its total
operating revenue reported in its 2022 Annual Report with its GIOR and noted that the figure
included in the 2022 Annual Report represented all the Company’s revenue from interstate,
intrastate, regulated, and non-regulated activities.
ORDER NO. 35832 2

The Company represented that the Annual Report filed with the Commission was total
revenues and that only Form I to the Annual Report and the verified GIOR provided intrastate
revenues whereby the correct GIOR could be determined. The Company stated that income from
cellular services, internet services, and other non-regulated services should not be included in
GIOR.
II. Commission Staff’s Position
Staff argued that the GIOR should include all intrastate revenues. Whether or not a utility’s
income comes from a regulated or non-regulated source does not affect whether it is GIOR if it is
derived from intrastate activities according to Staff. Staff stated the Commission has broadly
required utilities to include intrastate revenue from both regulated and non-regulated business
activities within the State of Idaho. Staff cited Case No. EIR-R-01-1; Order No. 28760 where the
Commission relied on the broad definition of gross income in 26 U.S.C. §16(a) to determine the
railroad objecting to its annual assessment must include intrastate income from both regulated and
non-regulated sources in its GIOR.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company and the Company’s objection in this
case under Idaho Code §§ 61-121, 129, and 1007. The Idaho Legislature has defined the
Commission’s authority to collect assessments from the utilities it regulates in Title 61 Chapter 10
of the Idaho Code.1 The Idaho Legislature directs each utility to file a verified return annually with
the Commission that shows the GIOR from the utilities’ intrastate business activities in Idaho.
Idaho Code § 61-1003. The Commission bases its annual assessment on the GIORs filed by the
utilities it regulates and assesses the utilities proportionately “the amount which will be required
to defray the expense of the [C]ommission for supervision and regulation . . . during the ensuing
fiscal year.” Idaho Code § 61-1004.
A major discussion at the Hearing focused on interstate vs. intrastate revenues and
regulated vs. non-regulated revenues. The Idaho Legislature did not distinguish between regulated
and non-regulated revenues in Idaho Code § 61-1003 when it directed each regulated utility to file
an annual return with the Commission showing its “gross operating revenues from its intrastate
utility business.” The requirement to include intrastate revenue is not in dispute here because the

1 Title 61 Chapter 10 of Idaho Code directs the Commission to collect special regulatory fees from the railroads and
public utilities it regulates. Railroads and public utilities are distinguished in Title 61 Chapter 10 only by the amount
to be assessed to the respective groups under Idaho Code § 61-1004.
ORDER NO. 35832 3

Parties do not disagree that intrastate revenue must be included in the annual GIOR. The Parties’
incongruity here hinges on whether intrastate revenue includes revenue from just regulated sources
or from both regulated and non-regulated sources. We are therefore required to determine what
constitutes gross income for purposes of the GIOR under Title 61 Chapter 10. In Case No. EIR-R-
01-01; Order No. 28760 we determined what constitutes gross income when we said:
The term “gross operating intrastate revenues” is not defined in the Public Utilities
Law. When construing words used in a statute, the Idaho Supreme Court assigns to
them their plain and ordinary meaning unless to do so would reach an absurd result.
Idaho State Tax Commission v. Beacom, 131 Idaho 569, 961 P.2d 660 (Ct. App.
1998). Black’s Law Dictionary defines the term “gross revenue” as “receipts of a
business before deductions for any purpose except those items specifically
exempted.” 633 (5th ed. 1979). In addition, Idaho Code § 63-3011 defines the term
“gross income” as having the same meaning as defined in Section 61(a) of the
Internal Revenue Code. The Tax Code defines “gross income” as

All income from whatever sources derived, including (but not limited to)
the following items: compensation for services, including fees,
commissions, fringe benefits, and similar items; gross income derived from
business; gains derived from dealings in property; interests; rents;
royalties; dividends; . . . annuities, income from life insurance and
endowment contracts; pensions; income from discharge of indebtedness;
distributive shares of partnership gross income; income in respect of a
decedent; and income from an interest in an estate or trust.

26 U.S.C. § 61(a) (emphasis added). In discussing the concept of “gross income,”
our Supreme Court has interpreted gross income as including income from any
source. Henderson v. Smith, 128 Idaho 444, 915 P.2d 6 (1996) (construing the Idaho
Child Support Guideline, I.R.C.P. 6(c)(6)).
Case No. EIR-R-01-1; Order No. 28760 at 10.
The Company’s objection is based on the premise that it over-reported its GIOR. In the
present case the Company filed its Annual Report where it claimed that its Operating Revenues in
Idaho were the same as the total Company operating revenues in 2022. It filed its GIOR with a
different figure for intrastate operating income (the amount the annual assessment would be based
upon). The Company then revised its 2022 Annual Report’s Income and Retained Earnings
Statement by moving its miscellaneous revenues account from corporate operations to
nonregulated revenue. This change significantly reduced the GIOR claimed by the Company.
Later, in response to Staff’s Audit Request it revised its GIOR again, slightly increasing the amount
it reported for its intrastate revenues. Lastly, at the Hearing the Company submitted one page of
ORDER NO. 35832 4

its Form I2 which included yet another figure for total revenues which it now claims is the correct
amount for its GIOR. At the Hearing the Company stated its over-reported GIOR included income
or revenue from both interstate and non-regulated business activities, which it argued should only
include income from regulated, intrastate activities. Our decision in Case No. EIR-R-01-1 did not
distinguish between regulated and non-regulated sources of income when determining what
qualifies as gross income. Nor did our previous decision narrow the definition of gross income to
suggest that it might exclude revenues from non-regulated business activities. We are guided by
this decision in the present case.
As the record stands, the Company has presented five different figures representing its
operating revenue or GIOR in just over two months’ time. We would be hard-pressed to determine
which of these figures is the Company’s actual GIOR at this point. Further, we do not have
sufficient evidence on the record to support any of the Company’s claimed GIORs because of its
position that non-regulated intrastate business activities should be excluded from its GIOR. Based
on the record before us, and because we are unconvinced Company derived its GIOR in the manner
prescribed above, we agree with Staff that the Company’s GIOR is $4,482,486.00. We direct the
Company to file its future GIORs inclusive of all sources of intrastate income—regulated and non-
regulated.
O R D E R
IT IS HEREBY ORDERED that the Company’s Objection is rejected due to its
inconsistent reporting. The Commission is unable to support a finding that the income in question
was not intrastate income. Based on the record before us, the correct amount for the Company’s
GIOR is $4,482,486.00 resulting in an assessment of $8,884.29 due within 21 days of the service
date of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.

2 Form I contains separated results where Idaho revenues are separated from total company revenues. Form I was not
attached to the 2022 Annual Report. The Company claimed it filed the Form I with its Annual Report but it was not
included with the report on file with the Commission. In past years the Company has filed a Form I with its Annual
Reports.
ORDER NO. 35832 5

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 28th day of
June 2023.

ERIC ANDERSON, PRESIDENT

JOHN R. HAMMOND JR., COMMISSIONER

EDWARD LODGE, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\TELECOM\CAM-T-23-01\CAMT2301_Final_dh.docx