980107.docx

BRAD PURDY
Deputy Attorney General
IDAHO PUBLIC UTILITIES COMMISSION
PO Box 83720
Boise, ID  83720-0074
Tele:  [phone]
FAX: [phone]
Street Address for Express Mail:
472 W Washington
Boise, ID  83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF FILER MUTUAL TELEPHONE COMPANY FOR DISBURSEMENTS FROM THE IDAHO UNIVERSAL SERVICE FUND.
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CASE NO. FIL-T-97-1
ANSWER TO PETITION FOR RECONSIDERATION
On December 31, 1997, Filer Mutual Telephone Company (Filer Mutual) filed a Petition for Reconsideration of Order No. 27249 issued in this case on December 12, 1997.  In response to that Petition, Staff submits the following answer.
Filer’s first point of contention is that the Commission erred in limiting Filer Mutual’s authorized 10% return to 60% of the Company’s current rate base.  Filer Mutual contends that this is arbitrary and capricious.  Staff, on the other hand, believes that the Commission’s decision was just, reasonable and is supported by the record in this case.  The record reflects the Staff position that 100% of Filer Mutual’s plant investment was obtained from customer contributions through additional rates thereby justifying that none of the plant invested to date should earn a return.  The Commission concluded that a maximum of 60% of Filer Mutual’s rate base should earn a return since the Company only retained 60% of the earnings and the remainder was returned to the customers thereby reducing Filer Mutual’s rates.  The Commission decision supported the 60% allowance of the return to reflect that the Company would need cash flow to cover future investments.  The Commission’s ruling also reflects that all new investments will earn a 100% return in the next rate proceeding.  The record in this case supports the Commission decision as being just and reasonable.
Regarding Filer Mutual’s request that the Commission conduct another evidentiary hearing to recalculate Filer Mutual’s actual lost access charge revenues, Staff believes that such a request is not justified.  First, the $312,923 was the estimate provided by Filer Mutual that the Commission simply accepted.  Second, as Filer Mutual notes, the Company implemented EAS not that long ago.  Consequently, there are only three months of actual data pertaining to lost access charge revenues.  Moreover, Staff notes that the latter portion of the three months of actual lost revenue data falls within the holiday season.  It is to be expected, therefore, that call volumes would be higher during this time of year and to annualize this higher level of traffic would not be reason­able.  Furthermore, Staff believes that immediately following the implementation of EAS, there is an inclination on the part of customers to increase their call volume but that this trend typically tapers off. Again, it would be unreasonable to annualize the three months in question and Staff believes that the Commission should wait until more actual data is available before reevalu­ating this issue.
RESPECTFULLY submitted this 7th day of January 1998.

Brad Purdy
Deputy Attorney General
vld/N:FIL-T-97-1.bp