28196.mod.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF CAMBRIDGE TELEPHONE COMPANY, INC. AND COUNCIL TELEPHONE COMPANY FOR AN ORDER AUTHORIZING THE MERGER OF THE APPLICANT COMPANIES. )
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CASE NO. CAM-T-99-1
COU-T-99-1

NOTICE OF APPLICATION

NOTICE OF MODIFIED PROCEDURE

ORDER NO. 28196

On October 20, 1999, Cambridge Telephone and Council Telephone Companies filed an Application requesting that the Commission authorize the merger of the two telephone companies with Cambridge as the surviving corporation. Cambridge is a Title 61 regulated telephone company providing services in Cambridge, Indian Valley, Cuprum, and Lowman exchanges. Cambridge is a closely held corporation. Council is a Title 61 telephone company providing service in the Council exchange. Council is a wholly-owned subsidiary of Cambridge.

NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that the Application recites that Council was created as a Cambridge subsidiary when Cambridge purchased the former Council exchange from U S WEST in 1994. The Commission approved the purchase in 1996 with several conditions including a 3-year rate freeze for Council customers. The Application states that the original rationale for operating Council as a separate subsidiary (i.e., the rate freeze) no longer exists. Moreover, the Federal Communications Commission (FCC) treats the two companies as a single entity for purposes of federal universal service support.
YOU ARE FURTHER NOTIFIED that the Application asserts that the merger will provide a number of advantages. First, combining the two entities will result in some cost savings from the elimination of duplicative functions such as separate books and records. Second, the merger will eliminate “the regulatory cost” associated with allocating joint and common costs between the two companies. Finally, the combined entities will have better access to capital. Operation and control of the two companies will not change because the officers of both corporations are identical. Merger Application at 2.
YOU ARE FURTHER NOTIFIED that the Companies state that the merger will require the approval and cooperation of both companies’ lenders. “Cambridge has a total debt to Rural Utility Services (“RUS”) in the amount of $3,141,765, secured by a first mortgage lien on Cambridge’s assets. Council has a total debt of $4,255,798 to CoBank secured by a first mortgage lien on Council’s assets. Applicants are requesting that both RUS and CoBank agree to a shared first mortgage lien on the merged entity’s assets.” Id. at 3. Until the lenders have given their consent, the Companies will keep the Commission informed with regards to the ongoing negotiations with the lenders. At such time as the lenders consent to the merger, the Companies will inform the Commission.
YOU ARE FURTHER NOTIFIED that the parties maintain that the merger is revenue neutral and will not affect the rates or charges of either company. The parties have filed a separate rate case (Nos. CAMT-99-2/COU-T-99-2). In the rate case, the parties seek an increase in annual revenues of approximately $240,000. They also request that the Commission consolidate the two Companies’ Certificates of Public Convenience and Necessity.
YOU ARE FURTHER NOTIFIED that the Applicants request that the Commission process this Application under Modified Procedure. The Companies maintain that the merger will not affect the Commission’s jurisdiction over the Companies or the surviving corporation.

NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the public interest may not require a formal hearing in this matter and will proceed under Modified Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules of Procedure, IDAPA 31.01.01.201 through -.204.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this Application may file a written comment in support or opposition with the Commission within twenty-one (21) days from the date of this Notice. The comment must contain a statement of reasons supporting the comment. Persons desiring a hearing must specifically request a hearing in their written comments. Written comments concerning this application shall be mailed to the Commission and the Applicant at the addresses reflected below:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
Street Address for Express Mail:
472 W WASHINGTON ST
BOISE, ID 83702-5983 CONLEY WARD
GIVENS PURSLEY, LLP
277 N 6TH ST, STE 200
PO BOX 2720
BOISE ID 83701-2720
All comments should contain the case caption and case number shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that if no written comments are received within the time limit set, the Commission will consider this matter on its merits and enter its Order without a formal hearing. If written comments are received within the time limit set, the Commission will consider them and, in its discretion, may set the same for formal hearing.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and specifically Idaho Code §§ 61-526 and 61-528. The Commission may enter any final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted pursuant to the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
IT IS HEREBY ORDERED that this Application be processed under Modified Procedure. Persons desiring to submit comments regarding the Application must do so within 21 days of the service date of this Order.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of November 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

Vld/O: CAM-T-99-1/COU-T-99-1_dh

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 28196 1

Office of the Secretary
Service Date
November 8, 1999