20090323_2514.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEG AL
WORKING FILE
FROM:TERRI CARLOCK
DATE:MARCH 20, 2009
RE:SUBJECT: MID V ALE TELEPHONE COMPANY'S LETTER PETITION.
Midvale Telephone (Midvale; Company) filed on February 20, 2009, a letter regarding
the proposed Employee Stock Ownership Plan (ESOP) it is working to adopt. Midvale does not
believe the proposed change of ownership of the stock requires Commission approval but wants
the Commission to verify its conclusion.
Midvale is currently owed by two shareholders, Lane Williams and Shirley Archer.
Mr. Williams, shareholder and past operator, has pursued the ESOP to ensure the Company can
be owned by employees who have and are operating the business. This also ensures the
operations continue in the current form rather than being sold to a third party. The shares owned
by Ms. Archer are currently held by her estate.
Other than ownership of the shares, the plan to convert to an ESOP does not create
changes for the utility. The utility assets will continue to be owned and operated by Midvale.
The current debt obligations will also be retained by Midvale. Additional debt will not be
incurred by Midvale for the establishment ofthe ESOP. An ESOP Trust will be established as a
benefit/retirement fund for Midvale s employees. Midvale will make annual contributions to the
ESOP trust with the amount governed by Rural Utility Service loan regulations and federal laws
governing ESOPs.
DECISION MEMORANDUM - 1 -MARCH 20, 2009
ST AFF ANALYSIS AND RECOMMENDATION
Staff is treating the Midvale letter as a Letter Petition for review as a Petition for
Declaratory Order under Rule 101. Staff believes the proposed ESOP does not require
Commission approval under Idaho Code g61-90 1.
Staff views the proposed ESOP essentially as personal estate planning. As such the
annual contributions to the ESOP trust should not be included in the revenue requirement for
Midvale in its next rate case. To verify that the final ESOP structure and plan is consistent with
the proposal, Staff recommends all Documentation of the final ESOP structure and legal
documents be filed with the Commission.
COMMISSION DECISION
Does the Commission wish to issue a declaratory Order stating that the Midvale ESOP as
initially proposed in the letter does not require Commission approval?
Does the Commission accept Staffs recommendation to require the final ESOP
documents be filed with the Commission?
Does the Commission want to provide an initial determination on the ESOP Trust
contributions or leave such a determination to the next Midvale rate case?
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i:udmemolMidvale ESOP
DECISION MEMORANDUM - 2 -MARCH 20, 2009