20030909Application.pdf

09/09/03 TUE 15:54 FAI 8019246363 CITIZENS COInfUNICATIONS 002
e
4 Triad Center,Suite 200
Salt Lake City,Utah 84180
ACitismCommmkerkusCampuy
NEW CASE
September8,2003
Mrs.Glenda Koch
IDAHO PUBLIC UTILITIESCOMMISSION472WestWashingtonStreet
:G ific t
Ofor
Citizens Communications Company Subsidiaries in Idaho
Dear Mrs.Koch:
11xis letter is to confirm our prior communications regarding Certificates of Public ConvenienceandNecessityforCitizensCommunicationsCompany("Citizens")subsidiaries in Idaho.
Cirimne Telecommunications Company'and Citizens Telecommunications Company of Idaho'requesttheIdahoPublicUtilitiesCommission(the "Commission")reissue and/or correct the followingcertificates:
I.Amend Certificate No.323 to reflect a name change from Citizens Telecommunications Company toFrontierCommunicationsofAmerica.
2 Issue a new certificate for telephone properties Citizens acquiredfrom GTE Northwest IncorporatedandapprovedbytheCommissioninOrderNo.25219.The new certificate for CitizensTelecommunicationsCompanyofIdahod/bla Frontier Communications of Idaho should list thefollowing18exchanges:Aberdeen,Carey,Cascade,Donnelly,Elk City,Fairfield,GardenValley,Homedale,HorseshoeBend,Marsing,McCall,New Meadows,Parma,Riggins,Springfield,Sweet,White Bird,and Wilder.
Ifyou have any questionsor require additional information,I can be reachedat [phone].
Sincerely,
Ince A.Tade
Manager State Government Affairs
citizene Teleconununications Company,a subsidiary of Citizens,provides long distance service and is alsocertifiedtoprovideresoldandfacilities-based,Title 61 competitive basic services in select areas of Idaho,
2 Citizens Telecommunications Company of Idaho,a subsidiary of Citizens,provides local exchange service inIdahoandhasanapprovedCertificateofAssumedBusinessNamefromtheIdahoSecretaryofStateofficetousethedoingbusinessas(d/bla)name of 'Trontier Communications of Idaho".
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BEFORE THIS IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF THE GEM STATE TELEPHONE COMPANY,)
AN IDAHO CORPORATION,SEEKING )CASE NO.U-1037-11AUTHORITYTOAFENDANDEXTEND)CERTIFICATEOF PUBLIC CONVENIENCE )CERTIFICATENO.223
AND NECESSITY NO.223 )Amended
It is Hereby Certified that the present and future public
convenience and necessity require and will require the Gem
State Telephone Company,a corporation,its successors and
assigns,to own,hold,construct or otherwise acquire,and to
maintain and operate a general telephone system in,and supply
telephone service to:
CASCADE EXCHANGE
A.VALLEY COUNTY
All of T11N;R3E Sections 1 thru 18AllofT11N;R4E Sections 1 thru 18AllofTl2N;R3E
All of T12N;R4EAllofT13N;R3EAllofT13N;RAEAllofT14N;R2E Sections 1;12;and thatportionofsections2;11;13;14;24;25 and
36 lying within ValleyCounty.
All of T14N;R3EAllofT14N;R4EAllofT15N;R2E Sections 13;25;36 and
that portion of Sections
14;24;26 and 35 lyingwithinValleyCounty.
All of Tl5N;R3E Sections 11;12;13 thru
36 and the south half of
sections 1 ans-2.
All of Tl5N;R4E
DONNELLY EXCHANGE
A.VALLEY COUNTY
All of TlSN;R2E That portion of section
MICRO Ngaggg
I®SS
1;11;and 12 lying withinUnileyCounty.
All of T15N;R3E 3ections 3 thre 19 cod the
north he12 of sections 1 &2.All of T16N;R2E Sections L;12;13;and thatportionofSections2;11;14;
23;24;25;and 36 lying within
Valley County.All of T16N;R32
All of T16N;R42
All of Tl7N;R2E Sections 25;25;35;36;
and thΠt portion of sections
27 and 34 lying withinValleyCounty.
All of Tl7N;R3r;Sections 25 thru 36AllofTl7N;RAN Sections 25 thru 36
B.ADAMS COUNTY
All of T16N;R2E Sections 4 thru 10;15 thru
22;26 thru 35;and thatportionofsections2;3;
11;14;23;24;25;and
36 lying within Adams
County.
All of Tl7N;R2E Sections 28 thru 33 and
that portion of Section 27
and 34 lying within Adams
County.
MCCALL EXCHANGE
A.VALLEY COUNTY
All of T17N;R2E Sections 1;2;11;12;13;
14;23;24;and that portion
of 3;10;15;and 22 lying
within Valley County.
All of Tl7N;R32 Sections 1 thru 24
All of T17N;R4E Sections 1 thru 24
All of T18N;R2E Sections 24;25;26;35;
35;and that portion of 1;
12;13;14;22;23;27;
and 34 Lying within ValleyCounty.
All of Tl8N;R3E
All of T18N;R4EAllofT19N;R2E That portion of Section 36lyinginValleyCounty.
All of T19N;R3E Sections 1;2;3;4;5;8;
9;10;11;12;13;14;15;
16;21;22;23;24;25;26;27;28;33;34;35;
36 and that portion ofsection6;7;17;lû;20;
29 ;31;and 32 lying within
Valley County.
All of T19N;R4E
All of T20N;R3E Sections 1 thru 5;8 thru
15 ;22 thru 27;34 thru 36;
MICRO2
1988
MCCALL EXCHANGE
A.VALLEY COUNTY (continued)
and that portion of section
6;7;16;17;10;21;28;
32;and 33 lying withinValleyCounty.
All of T20N;R4E
All of T21N;R3E Sections 13;21;22;23;
24;25;26;27;28;29 ;
32;33;34;35;36;and
that portion of sections
12;14;15;16;17;19 ;20;30;and 31 lying within
Valley County.
All of T21N;R4E Sections 1 thru 5;7 thru
36;and that portion of
Section 6 lying within
Valley County.
B.ADAMS COUNTY
All of Tl7N;R2E Sections 4;5;6;7;8;
9;16;17;18;19;20;
21 and thet portion of
section 3;10;15;and
22 lying within Adama
County.
All of T18N;R2E Sections 2;11;19;20;
21;28;29;30;31;32;
33;and that portion of
sections 1;12;13;14;
22;23;27;and 34 lying
within Adams County.
All of T19N;R2E Sections 1;2;11;12;
13;14;23;24;25;26;
35;and that portion of
section 36 lying within
Adams County.
All of Tl9N;R3E Sections 19;30;and that
oortion of sections 6;
7;17;18;20;29;31 and
32 lying within Adams
County.
All of T20N;R2E Sections 1;2;11;12;13;
14;23;24;25;26;35
and 36.
All of T20N;R3E Sections 19;20;29;30;
and that portion of sections
6;7;16;17;18;21;28;
31;32;and 33 lying within
Adams County.
C.IDAHO COUNTY
All of T21N;R2E Sections 1;2;11;12;13;
14;23;24;25;26;35;
All of T21N;R3E Sections 2 thru 10;10;and
that portion of 1;11;'
14;15;16;17;19;20;30;
HOR©HŒgyagg
1968 x
MCCALL EXCHANGE
C.IDAHO COUNTY (continued)
and 31 lying within Idaho
County.
All of T21N;RAE That portion of Section 6lyingwithinIdahoCounty.
NFW MEADOWS EXCHANGE
A.ADAMS COUNTY
All of Tl8N;R1W Sections 1 thru 6
All of Tl8N;R1E Sections 1 thru 6;10 thru
16;East 4 of Section 9
All of Tl8N;R2E Sections 3 thru 10;15
thru 18.
All of Tl9N;R2W Sections 1 thru 4;9 thru
16;21 thru 28;33 thru 36.
All of Tl9N;R1W
All of Tl9N;R1E
All of T19N;R2E Sections 3 thru 10;15 thru
22;27 thru 34.
All of T20N;R2W Sections 1 thru 4;9 thru
16;21 thru 28;33 thru 36.
All of T20N;R1W
All of T20N;R1E
All of T20N;R2E Sections 3 thru 10;15 thru
22;27 thru 34.
All of T21N;R2W Sections 25 thru 23;33
thru 36.
All of T21N;R1W Sections 25 thru 36.
All of T21N;RlE Sections 27 thru 34;and
that portion of sections
25;26;and 35 lying
within Adams County.
B.IDAHO COUNTY
All of T21N;RIE Sections 36 and thet
portion of 25;26;and
35 lying within Ïdaho
County.
All of T21N;R2E Sections 27 thru 34
RIGGINS EXCEANGE
A.ADAMS COUNTY
All of T21N;R2W Sections 1 thru 4;9
thru 16;21 thru 24.
All of T21N;R1W Sections 1 thru 24.
All of T21N;R1E Sections 3 thru 10;15
thru 22;and that portion
of 2;11;14;23;and 24
lying within Adams County.
All of T22N;R2W sections 9 thru 16;21
thru 28;33 thru 36.
All of T22N;R1W Sections 7 thru 36.
NHOR®MLMED
RIGGINS EXCHANGE
A.ADAMS COUNTY (continued)
All of T22N;R1E Sections 7;8;17;18;
19;20;21;28;29;30;
31;32;33;and thatportionofsections 9;
15;16;22;27;34;and
35 lying within Adams
County.
B.IDAHO COUNTY
All of T21N;R1E Sections 1;12;13;and
that portion of sections
2;11;14;23;and 24lyingwithinIdahoCounty.
All of T21N;R2E Sections 3 thru 10;15
thru 22.
All of T22N;R1E Sections 1 thru 6;10 thru
14;23 thru 26;36 and
tbnt portion of sections
9;15;16;22;27;34 and
35 lying within Idabo
County.
All of T22N;R1W Sections 1 thru 6
All of T22N;R2W Sections 1 thru 4
All of T22N;R3W Sections 1 and 2
All of T22N;R2E
All of T22N;R3E
All of T22N;R4E
All of T23N;R1W
All of T23N;R2W
All of T23N;R3W
All of T23N;RlE
All of T23N;R2E
All of T23N;R3E
All of T23N;RAE i
All of T24N;R1W
All of T24N;R2W
All of T24N;RIE
All of T25N;R1W
All of T25N;R2W
All of T25N;R1E
All of T25N;R2E
All of T25N;R3E
All of T25N;R4E
All of T26N;RlW
All of T26N;R2W
All of T26N;R1E
All of T26N;R2E
WHITE BIRD EXCHANGE
A.IDAHO COUNTY
All of T27N;RlW
All of T27N;R2W
All of T27N;R1E
All of T27N;R2E
All of T28N;R1WAllofT28NR2WAllofT28N';R3W
5
WHITE BIRD EXCHANGE
A.IDAHO COUNTY (continued)
All of T28N;R1E
All Of T28N;R2E
All of T29N;R1W
All of T29N;R2W
All of T29N;R3W Sections 1;2;11;12;13;
14;23;24;25 ;26;35 and
36.
All of T29N;R1E Sections 4 thru 9;13 thru
36 and that portion ofsection3;10 and 11 lying
west of the Salmon River.
ELK CITY EXCHANGE
A.IDAHO COUNTY
All of T27N;R9E Sections 1 thru 12
All of T27N;RBE Sections 1 thru 12
All of T27N;R7E Sections 1 thru 12
All of T27N;R6E Sections 1 thru 12
All of T27N;RSE Sections 1 thru 12
All of T28N;RSE thru RSE
All of T29N;P4E thru R9E
All of T29N;R3E Sections 1;12;13;24;
25 and 36.
All of T30N;R3E That portion of section
36 lying east and south
of the Clearwater River.
All of T30N;RAE Sections 20 thru 29 and
31 thru 36.
All of T30N;R5E Sections 19 thru 36
to exercise all rights and privileges which have been granted
unto Gem State Telephone Company or which may hereafter be
granted to said Gem State Telephone Company,its successors
and assigns,by any franchise or permit conferred or hereafter
conferred,upon said Gem State Telephone Company,its successors
and assigns,by the villages of Cascade,Donnelly,Elk City,
McCall,New Meadows,Riggins and Whitebird;or by the counties
of Valley,Adams and Idaha,or by the State of Idaho or by
any political subdivision thereof.
This Certificate is predicated upon and issued pursuant
to the findings and order of this Commission the same being
Order No.7835 in the above entitled matter,made and entered
6
|
on this 26th day of July,1965,to which said Order reference
is hereby made.
DATED at Boise,Idaho this 26th day of July,1965.
ATTEST:
SECRETARY
7
|
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT )APPLICATION OF GTE NORTHWEST )CASE NO.GTE-T-93-2
INCORPORATED AND CITIZENS )CTC-T-93-1
TELECOMMUNICATIONS COMPANY OF )IDAHO FOR AN ORDER APPROVING )THE SALE AND TRANSFER OF )TELEPHONE PROPERTIES IN THE )ORDER NO.25219
STATE OF IDAHO BY GTE NORTHWEST )INCORPORATED TO CITIZENS TELE-)
COMMUNICATIONS COMPANY OF )IDAHO )
On June 18,1993,GTE Northwest (GTE)and Citizens Telecommunications Company
of Idaho (Citizens)filed a Joint Application requesting approval for Citizens to purchase and GTE
to sell eighteen (18)telephone exchanges serving approximately 14,000 customers situated
throughout central and southern Idaho.Citizens Telephone Company of Idaho is a newlyformed
Delaware Corporation wholly-owned by Citizens Utilities Company (CUC).The Applicants also
requested permission to transfer the certificates of public convenience and necessity for the 18
exchanges.The Applicants urged the Commission to consider this matter at its earliest
convenience so that a "non-appealable Order will be legally effective in sufficient time to allow for
a closing date of the transaction not later than December 31,1993."Application at 3.A hearing in
this matter was convened September 29,1993.Based upon our review of the testimony and
evidence in this case,we conclude that the sales transaction and transfer of the certificates of public
convenience and necessity are reasonable and in the public interest.
BACKGROUND
A.Procedural History
On May 18,1993,GTE and CUC executed an Asset Purchase Agreement for the
purchase of approximately 500,000 access lines in nine states.GTE will receive $1.1 billion in
cash from CUC.Under the terms of the Agreement,GTE will convey 18 Idaho exchanges formerly
served by Contel of the West.These exchanges were all purchased by GTE from Contel in 1991
and include:Aberdeen,Carey,Cascade,Donnelly,Elk City,Fairfield,Garden Valley,Homedale,
Horseshoe Bend,Marsing,McCall,New Meadows,Parma,Riggins,Springfield,Sweet,White
Bird,and Wilder.The exchanges contain approximately 15,000 access lines of which
approximately5%are multi-partylines.Seven of the exchanges are served by digital switches.
ORDER NO.25219 -1 -
The Application asserted that the purchase transaction and the transfer of the
accompanying certificates are in the public interest.It stated that Citizens and CUC "are financially
sound utility companies dedicated to providing customers the highest quality service at reasonable
costs."Application at 3.Citizens will provide telecommunications services pursuant to the GTE
tariffs in effect at the time of closing and will comply with all rules and orders issued by this
Commission.
In Order No.25118 issued August 30,1993,the Commission scheduled a hearing in
this matter.The Commission directed the Applicants to file testimony addressing several specific
issues including:(1)the willingness and financial ability of Citizens and CUC to provide adequate
and efficient service;(2)Citizens'plans to modernize the telecommunication networks in the 18
exchanges;(3)the transitional procedures to ensure a "seamless transition";(4)the accounting
procedures for the sales transaction;and (5)Citizens'near-term plans for reviewing existing rates
including access charges,zone charges,and party-line rates.
B.The Parties
The followingpersons were granted party status in this case.
CITIZENS TELEPHONE:Beth Ann Burns
Citizens Utilities Company
2901 N.Central Avenue,STE 1660
Phoenix,AZ 85012
Kenneth Bergquist
PO Box 1775
Boise,ID 83701-1775
COMMISSION STAFF:Donald Howell,II
Deputy AttorneyGeneral
Idaho Public Utilities Commission
Statehouse Mail -
Boise,ID 83720-6000
GTE NORTHWEST:Richard E.Potter,Associate
General Counsel
GTE Northwest,Incorporated
1800 41st Street
Everett,WA 98201
US WEST COMMUNICATIONS:Mary S.Hobson
Senior Attorney-Idaho
US WEST Communications,Inc.
999 Main Street,11th FL
ORDER NO.25219 -2-
Boise,ID 83702-9001
IDAHO TELEPHONE ASSOCIATION:Conley E.Ward
Givens,Pursley &Huntley
277 N Sixth Street,STE 200
PO Box 2720
Boise,ID 83701-2720
AT&T COMMUNICATIONSOF THE T.Larry Barnes
MOUNTAIN STATES,INC.:William P.Eigles
AT&T
1875 Lawrence St.,RM.1575
Denver,CO 80202
In Order No.25113 issued August 27,1993,the Commission denied intervention to Westcom Long
Distance.Beside the Applicants,the onlyparties presenting evidence and appearing at the hearing
were US WEST and the Commission Staff.
C.The Settlement Agreement
The day before the hearing,Citizens and the Staff filed a Joint Motion asking the
Commission to adopt a Stipulation and Settlement Agreement that resolved all issues between
Citizens and the Staff.The Settlement resolved three major issues:(1)the treatment of deferred
federal income taxes (DIT);(2)the treatment of Citizens'"acquisition adjustment";and (3)several
operational and rate concerns.The Agreement also recited that Citizens will provide
"telecommunications service pursuant to the rates and tariffs in effect at the time of closing."
Stipulation and Settlement at 4.
1.T)eferre<1 Tncome Taxes.As outlined in the Settlement,Citizens and the
Commission Staff recognized that there "will not be an equal balance of deferred taxes on the
books of [Citizens]to serve as corresponding offset to the rate base"acquired from GTE.Id.at 4.
Upon the sale,all of the existing deferred income taxes [DIT]will become payable by GTE
pursuant to the tax code.AlthoughCitizens will build-up new DIT on the purchased plant,the
Staff was not convinced this offset would be equal to or greater than the balances otherwise
available as a rate base offset absent the sale to Citizens.To resolve this issue,Citizens agreed to
quantify and provide workpapers demonstrating the offsetting benefits to the Staff no later than
April29,1994 so the Staff could determine whether a ratemaking adjustment is necessary.The
Stipulation provided:
If the net present value of the net revenue requirement related to the plant
purchased from GTE Northwest is greater or less than the hypothetical net
revenue requirement that would have existed in the absence of the sale ...,
Staff and [Citizens]reserve the right to recommend a balancingratemaking
ORDER NO.25219 -3-
adjustment which will increase or decrease the revenue requirement and
which shall not violate normalization requirements.Such balancing
adjustments shall include the same rate of return and booked depreciation
used in the actual revenue requirement calculation and shall reflect
previously flowed-through or deferred federal and state income taxes or
income tax benefits on a fullynormalized basis.
Id.at 5.Citizens reserved the right to challenge any such adjustment and agreed that it would not
challenge any future adjustment "on the grounds that by approving the sale the Commission is
precluded from making such a ratemaking adjustment."Id.at 6.
2.Acqiiisition A<ijiistment The purchase price of the Idaho exchanges exceeds the net
booked value of the telephone plant.In the Settlement,Citizens agreed to amortize the "acquisition
adjustment"on its books for a period of 15 years beginning upon the close of the transaction.
Citizens further agreed that it would not be entitled to receive any ratemaking consideration for the
acquisition adjustment
unless it can demonstrate to the satisfaction of the Commission that the
inclusion of the cost savings from operating efficiencies,or other benefits,
offset the requested ratemaking recognition of the acquisition adjustment.
Staff does not concede that any portion of the acquisition adjustment
should be offset for ratemaking purposes by cost savings from operating
efficiencies.
Id.Citizens and the Staff agreed that the Commission would not be bound in this proceeding or in
future proceedings from denyingrecognition of the acquisition adjustment for ratemaking purposes.
In essence,Citizens does not want to be foreclosed at this time from requesting future ratemaking
treatment of the acquisition adjustment.
3.Operational Issiles Finally,Citizens and the Staff agreed that the Company would
submit a plan addressing several operational concerns identified in the Staffs testimony.These
operational matters include:(1)installation of digital technology in the non-digital central ofÏices;
(2)the reduction of toll access rates;(3)the reduction or elimination of rural zone charges;(4)the
examination of universal one-party service;(5)the location of business and management offices in
Idaho;and (6)formulation of the Company's response to an existing case requesting toll-free
extended area service between White Bird and Grangeville,Idaho.The Settlement recited that
Citizens "will seek input from its customers and will work with the Staff to develop a plan"
addressing the aforementioned concerns.Id.at 4.If the Applicants are able to close the Idaho
transaction by December 31,1993,then Citizens will submit its operational plan "on or before
April 29,1994 and will seek to implement the first step by July 1,1994."Id.
With the Stipulation,the Staff asserted that all disputed issues with Citizens had been
ORDER NO.25219 -4-
resolved.Accordingly,the Staff recommended at the hearing that the sales transaction be approved
and that the Certificates of Public Convenience and Necessity be transferred to Citizens.
THE HEARING
1.Staff Objection to AT&T Comments.At the hearing,AT&T provided via facsimile
"Preliminary Comments"to be included in the record and considered by the Commission.AT&T's
comments address the joint Stipulation Settlement filed by Citizens and the Staff.AT&T expressed
concern that Citizens would continue to charge the current access rates tariffed by GTE.'Until it
received a copy of the Joint Stipulation the day before the hearing,AT&T anticipated that the
Commission would "initiate a rate case in which just and reasonable rates for carrier access service"
would be established if the transaction were approved.AT&T Comments at 2.Upon learning that
Citizens would continue the current access rates and had committed only to file an operational plan
to reduce access rates and to address other issues on April 29,1994,AT&T asserted that an
examinationof the current access rates "will be delayed indefinitelybased upon the priorities set by
[Citizens]in its plan."Id.at 3.The Company urged the Commission to require Citizens to file a
rate case after the conclusion of "the instant docket.In this way,all parties would be providedwith
an opportunity to review [Citizens']total operations and revenue requirement."Id.(footnote
omitted.)A subsequent rate case would allow the Commission to review Citizens'access rates and
the other issues identified in the Settlement.
As a preliminary matter at the hearing,the Staff objected to AT&T's comments and
urged the Commission to either remove the comments from the record or not accept the comments
into the record.The Staff cited several procedural and substantive reasons for striking these
comments.Briefly,the Staff maintained that the "Preliminary Comments"should be disallowed
because the Commission had set this matter for hearing.The Staff argued that if AT&T desired to
participate,then it should have filed testimony on September 17,1993 as requiredby the Notice of
Hearing.Moreover,Staff insisted that acceptance of the comments without a supporting witness
deprived all the parties of the opportunity to examine AT&T's position.
The Staff also asserted that AT&T should not have been surprised by the prospect of
Citizens continuing the existing access rates.The Staff pointed out that the Application,the Notice
of Application,the Notice of Hearing,and the previously
filed testimonies of both Citizens and the Staff all noted that Citizens would adopt and continue the
currently tariffed rates.Citizens and GTE joined in the Staffs Motion.
From the bench,the Commission indicated that it was inclined not to include AT&T's
1 AT&T implicitly asserted that the existing rates for access services were unreasonably high.
ORDER NO.25219 -5-
comments in the record.However,in an abundance of caution,the Commission stated it would
admit the comments "but accord them the weight that would be accorded matters which are
submitted in the record without a sponsoring witness and without the opportunity for cross-
examination."Tr.at 8.The Chairman noted that it would reserve a final ruling on the Staffs
Motion until the Commission issued a final Order.
Having fully reviewed the comments and the objections,we affirm our bench rulingto
admit AT&T's preliminary comments.Althoughthe comments are admitted,we will accord them
the weight applicable to comments submitted without the opportunity for cross-examination.As
outlined by Staff counsel,the record is replete with statements that Citizens planned to continue,at
least for the short-term,the access rates currentlyin effect.Therefore,AT&T should not have been
taken by surprise.We conclude that AT&T was provided every opportunity to participate in this
proceeding and the hearing but did not do so.
2.The Joint Stipulation and Settlement.Citizens witness Mark Shine and Staff
witness Eileen Benner testified that the Stipulation and Settlement was reasonable and in the public
interest.They urged the Commission to accept the Settlement.No party objected to our
consideration of the Settlement.Consequently,we find:It is just and reasonable for us to accept
for consideration the Stipulation and Settlement Agreement.
Addressing the deferred income tax and the premium acquisition issues first,we find
that the resolution of these issues as contained in the Stipulation and Settlement is appropriate and
reasonable.As both parties recognized,the Commission is not bound to accept the Settlement but
we evaluate settlements in the context of the entire case.The Settlement does not preclude the
Commission in future proceedings from examining the appropriate treatment of deferred income
taxes or making an acquisition adjustment for ratemaking purposes.We find:The criteria set out
in the Settlement for measuring the accounting effects of the deferred income tax issue is
appropriate.We further find:That the parties'settlement of the acquisition adjustment issue does
not foreclose Citizens from seeking future ratemaking treatment.
Turningto the operationalconcerns,the issue generating the greatest amount of cross-
examination at the hearingwas the current level of access charges and Citizens'intentionsto reduce
these charges.Under questioning by US WEST's counsel,Citizens'witness Mark Shine was
unable to quantify the amount of any immediate access charge reduction or indicate when exactly
the Company intends to initiate such reductions.He acknowledged that it was the Company's
desire to reduce access charges "to prevailing market rates"but that such rates were not necessarily
identical to the weighted statewide average access rate.He stated that the reduction of access
charges and the timing of such reductions will be addressed in the plan to be submitted to the
Commission no later than April 29,1994.He maintained that reducing access charges would be
balanced with the other operationalfactors identified in the Settlement.
ORDER NO.25219 -6-
US WEST's witness,Guy Duncan,asserted that the current access rates to be adopted
by Citizens "are nearly twice the current statewide average."Tr.at 106.He proposed that any
Commission Order approving the sale of exchanges "include a very specific plan for timelyaccess
rate reductions."Id.
We commend the Staff and Citizens for identifying the immediate operational concerns
facing Citizens.Citizens'pledge to submit a plan addressing these operationalmatters no later than
April 29,1994 presents an ambitious undertakingwhich,in our view,will provide an opportunity to
adequately address the level of access charges.It is evident that the Company recognizes the level
of access charges should be reduced.Accordingly,we approve the Settlement's provisions relating
to the operational concerns including access charges.In addition to those operational matters
identified in the Settlement,we also direct the parties to consider the elimination or reduction of
touchtone charges.Given Citizens'plan to upgrade its remaining analog switches to digital
switches there is no technical or economic reason to continue charging for this touchtone dialing.
3.Ciistomer Deposits Staff witness Benner also recommended that GTE refund
customer deposits for those customers who have established a good payment record and who are
within two months of receiving a refund as of December 31,1993.Requiring GTE to refund the
deposits early would avoid subsequent delay caused by transferring the deposits to Citizens.Given
the lack of any objections by the parties,we find:The Staffs recommendation is reasonable.
4.Financial Viability of Citizens.Citizens'witness Shine testified that the proposed
transaction is in the public interest and that Citizens has sufÏicient financial resources to ensure the
provision of adequate service to Idaho customers.He indicated that Citizens Telephone Company
of Idaho will operate as a wholly-ownedsubsidiary of Citizens Utilities Company.Citizens'Vice
President of Western Telephone Operations,Robert Crum,also testified that Citizens'existing
telephone properties are almost entirely served by digital switching technology.He noted that
Citizens intends to provide its Idaho customers with "the same state-of-the-art products and quality
of service that other Citizens telecommunications users enjoy."Tr.at 90.Both Citizens'witness
and GTE urged the Commission to approve the transaction so the companies may close the
transaction no later than December 31,1993.
The Staff also recommended that the Commission approve the transaction.Staff
auditor Madonna Faunce testified that Citizens has the ability to complete the nationwide
transaction (including Idaho)without injuring its financial ability to operate.Given the resolution
of all outstanding issues between Citizens and the Staff,the Staff noted that the transaction was
reasonable and serves the public interest.US WEST took no position on whether the exchanges
should be sold to Citizens.
Having reviewed the evidence submitted in this matter and given absence of any
objection,we find:The sales transaction and the transfer of the Certificates of Public Convenience
ORDER NO.25219 -7-
and Necessity are reasonable and in the public interest.We further find:Citizens and its parent,
CUC,have sufficient financial viability to ensure that Idaho customers are provided with
appropriate and reasonable telecommunications services.
ULTIMATE FINDINGS OF FACT AND CONCLUSIONS OF LAW
GTE Northwest is a telecommunications corporation subject to our regulatory
jurisdiction pursuant to Idaho Code Title 61.As a future provider of basic local exchange services,
Citizens Telephone Company of Idahowill also be subject to our regulatoryjurisdiction pursuant to
Idaho Code,Title 61 and Title 62,Section 604.The Commission has jurisdiction over this matter
pursuant to Idaho Code.61-526,-527,and -528.
We find that the Stipulation and Settlement entered into by Citizens and the
Commission Staff is reasonable and appropriate.
We conclude that it is just and reasonable for GTE to sell and for Citizens Telephone
Company of Idaho to purchase the 18 telephone exchanges.We further conclude that the sales
transaction and the transfer of the Certificates of Public Convenience and Necessity are reasonable
and in the public interest.
ORDER
IT IS HEREBY ORDERED that the Staffs Motion to Strike AT&T's "Preliminary
Comments"is denied.
IT IS FURTHER ORDERED that the joint Stipulation and Settlement entered into
between the Staff and Citizens Telephone Company of Idaho is accepted and adopted by the
Commission.
IT IS FURTHER ORDERED that the Joint Application of GTE and Citizens be
approved as conditioned by the Stipulation and Settlement and by this Order.At the closure of the
sales transaction,GTE shall convey the Certificates of Public Convenience and Necessity to
Citizens.
IT IS FURTHER ORDERED that Citizens develop a plan addressing the operational
issues outlined in the body of this Order.This plan is to be filed in the form of an Application no
later than April 29,1994,conditioned upon the closure of this transaction no later than
December 31,1993.
IT IS FURTHER ORDERED that GTE refund those deposits of customers who are
within two months of establishing a good credit history as of the anticipated closure date of
December 31,1994.At the time of the transfer,GTE shall provide a list to the Commission
showing those customers who have deposits on file,the date of the deposit,and the amount of the
deposit.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
ORDER NO.25219 -8-
decided by this Order)or in interlocutory Orders previously issued in these Case Nos.GTE-T-93-2
and CTC-T-93-1 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 these Case Nos.GTE-T-93-2 and CTC-T-93-I.Within seven (7)days after any person
has petitioned for reconsideration,any other person may cross-petition for reconsideration.See
Idaho Code.61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of October 1993.
MARSHA H.SMITH,PRESIDENT
DEAN J.MILLER,COMMISSIONER
RALPH NELSON,COMMISSIONER
ATTEST:
Myrna J.Walters
Commission Secretary
DH:JR/GTE-T-93-2.O
ORDER NO.25219 -9-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT )APPLICATION OF GTE NORTHWEST )CASE NO.GTE-T-93-2
INCORPORATED AND CITIZENS )CTC-T-93-1TELECOMMUNICATIONSCOMPANYOF)IDAHO FOR AN ORDER APPROVING )THE SALE AND TRANSFER OF )TELEPHONE PROPERTIES IN THE )ERRATUM NOTICE
STATE OF IDAHO BY GTE NORTHWEST )INCORPORATED TO CITIZENS TELE-)COMMUNICATIONS COMPANY OF )IDAHO )
On October 22,1993,IPUC Order No.25219 was issued by this Commission.The
followingchange should be made to that Order:
Page 10,paragraph 5,line 3:
Reads:
"...closure date of December 31,1994...."
SHOULD READ:
"...closure date of December 31,1993...."
DATED at Boise,Idaho,this day of October 1993.
MyrnaJ.Walters
Commission Secretary
bls/GTET932.b1s
ERRATUM NOTICE