19990507Affidavit of Carlock.doc

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE MOTION OF FREMONT TELECOM COMPANY FOR FUNDING FROM THE IDAHO UNIVERSAL SERVICE FUND. )
)
)
)
)
)
CASE NO. FRE-T-99-1

AFFIDAVIT OF
TERRI CARLOCK

TERRI CARLOCK, being first duly sworn and upon oath, deposes and states as follows:
1. I am the Audit Section Supervisor with the Staff of the Idaho Public Utilities Commission. I was actively involved in the audit for Fremont Telcom (Fremont) as audit supervisor and participated in various meetings with Fremont.
2. The Fremont Telcom on-site audit commenced on July 20, 1998. A 1997 test year was used for purposes of the audit. As is customary in any company audit, pro forma adjustments were made to the 1997 test year. These adjustments are made to include in the test year changes in investment, expenses and revenues that are known and measurable so that a company’s revenue requirement can be determined on a going forward basis. This is standard ratemaking procedure used by the Commission and its Staff.
In the Fremont audit, Staff made adjustments to the test year for investment, expenses and revenue changes Fremont incurred in 1998 to implement an Extended Area Service (EAS) calling area approved by the Commission. The EAS was actually implemented by Fremont on November 12, 1998. The Staff audit also included adjustments for revenue to be paid to Fremont by the National Exchange Carrier Association (NECA) in 1999.
4. Among other issues, Staff and Fremont representatives disagreed on adjustments to the 1997 test year for NECA payments to Fremont in 1999. According to information provided to Staff by NECA, the 1999 NECA payments are primarily based on a 1997 reporting year. Monthly data is provided to NECA with the 1999 payments supported by the actual investments and expenses incurred during 1997. Fremont is now scheduled to receive approximately $890,000 from NECA in 1999 (March 22, 1999 letter from Universal Service Administrative Co.) The audit memo references over $850,000 as being available. I believe that good audit, accounting and ratemaking procedures require adjustments to the test year for the known and measurable NECA payments in 1999. This is especially true since the NECA payments are based on expenses incurred by Fremont during the 1997 test year. Also, whenever the Commission determines a company’s ability to access state Universal Service funds, the revenue sources on a going forward basis must be considered.
5. Considering the NECA revenues on a going forward basis is consistent with various Company and Staff analyses utilized in arriving at stipulations for implementing EAS and the appropriate rates to charge on a going forward basis. NECA payment amounts reflected this time lag in Rockland/Lakeside (GNR-T-96-5), Albion/Westel (GNR-T-96-9, GNR-T-97-6) and Rural Telephone (GNR-T-97-9) current EAS case, Company Exhibit 2.

FURTHER YOUR AFFIANT SAITH NAUGHT.

RESPECTFULLY submitted at Boise, Idaho this _______ day of May 1999.

____________________________________
TERRI CARLOCK
Audit Section Supervisor
Idaho Public Utilities Commission Staff

vld/:N:Carlock_affid.doc

State of Idaho )
) ss
County of Ada )

SUBSCRIBED AND SWORN to before me this _______ day of May 1999.

_____________________________________
Notary Public for Idaho, residing at _______Idaho
My Commission expires: ________________

AFFIDAVIT OF TERRI CARLOCK 1