KRASKING.docx

October 8, 1998
Stephen G. Kraskin
Kraskin & Lesse, LLP
2120 L Street N.W., Suite 520
Washington, D.C. 20037
RE:Co-ops and State USFs
Dear Steve,
Pursuant to our telephone conversation yesterday, I have enclosed for your information three orders concerning Filer Mutual Telephone Company’s request for state USF support.  Filer Mutual’s request for state USF support followed its implementation of EAS.  Under state law, companies having local rates set at 125% of the statewide average and having a residual revenue requirement are eligible for disbursements from the state USF.
As explained in greater detail in Order No. 27249 issued December 12, 1997, the Commission found that Filer Mutual did not have a residual revenue deficiency.  In evaluating Filer’s alleged revenue deficiency, the Commission treated Filer as having an overall rate of return of 10% but limited the return to only 60% of Filer Mutual’s current rate base.  The 40% adjustment reflected Filer Mutual’s decision to return 40% of its “net margin” to its customers.
Thanks again for the update on Fremont.  Please give my best to Tom.
Sincerely yours,
Donald L. Howell, II
Deputy Attorney General
Enclosures
bls/L:kraskin.dh