28887.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

in the matter of THE APPLICATION OF MIDVALE TELEPHONE EXCHANGE, INC. FOR AUTHORITY TO BORROW FROM THE RURAL UTILITY SERVICE (RUS) IN THE AMOUNT OF $5,692,309. )
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CASE NO. MID-T-01-2

ORDER NO.  28887

On September 27, 2001, Midvale Telephone Exchange, Inc. (Midvale) filed an Application with the Commission requesting authority to execute a loan contract. More specifically, Midvale sought permission to execute a loan contract amendment and loan supplemental mortgage in the amount of $5,692,309 with the United States of America, acting through the Rural Utilities Service (RUS). Midvale is a certificated telephone corporation organized under the laws of the state of Idaho providing telecommunications services (including local exchange service) within the states of Idaho, Oregon, and Arizona.
THE APPLICATION AND STAFF COMMENTS
In its Application, Midvale states that the proceeds of the RUS loan will be used to pay for and partially reimburse general funds for the following projects: (a) extension of service to new customers; (b) the upgrade and replacement of inside and outside plant for the Stanley and Midvale exchanges located in Idaho and the Cascabel exchange located in Arizona; (c) the formation of two new exchanges (Millside and Silver Bell) and previously unserved areas in Arizona; and (d) for such other purposes as may be permitted by law. On October 5, 2001, Midvale supplemented its Application with a signed and certified copy of the Company’s board of directors’ resolution authorizing the proposed loan transaction.
Following the Commission Staff’s review of the Application, it reported that approximately $1.52 million of the loan will be used for Idaho facilities with the balance of the funds dedicated for use in Arizona. Staff also noted that a portion of the proceeds will be used to construct fiber optic extensions and equipment in conjuction with the “Syringa” project. In response to the Staff’s inquiry, Midvale indicated that it will “own” the fiber optic installations and Syringa will simply lease portions of the fiber project. Staff noted that the regulatory and accounting treatment for projects associated with Syringa have yet to be addressed by this Commission. Staff concluded that the Commission should approve this loan application conditioned upon the same restrictions and requirements made by RUS.
FINDINGS OF FACT
The Commission has jurisdiction over Midvale Telephone exchange and this Application in accordance of Idaho Code, Title 61, Chapters 1 and 9.
The Application requests that the Commission authorize Midvale to execute a loan contract amendment and a supplemental mortgage in the amount of $5,692,309 from the RUS.
The Commission finds that the proceeds will be used to pay for, and partially reimburse general funds for:
(a) the extension of service to new customers,
(b) the upgrade and replacement of inside and outside plant for Stanley and Midvale exchanges in Idaho and the Cascabel, Arizona exchange,
(c) the formation of two new exchanges (Millsite and Silver Bell) in previously unserved areas in Arizona, and
(d) related purposes as may be permitted by law.
The proposed loan is for lawful purposes and within Midvale’s corporate powers. The proposed transaction is in the public interest, and a formal hearing on this matter would serve no public purpose.
All fees have been paid by Midvale in accordance with Idaho Code § 61-905.
O R D E R
IT IS THEREFORE ORDERED that the Application of Midvale Telephone Exchange, Inc. for authority to execute a loan contract amendment and supplemental mortgage with the Rural Utilities Service (RUS) in the amount of $5,692,309, be, and the same, is hereby granted.
IT IS FURTHER ORDERED that nothing in this Order shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any loan authorized, issued, assumed or guaranteed under the provisions of this Order.
IT IS FURTHER ORDERED that this authorization to execute a loan contract amendment and supplemental mortgage is without prejudice to the regulatory authority of this Commission with respect to rates, services, accounts, evaluations, estimates, or determination of costs, or any other matter which may come before this Commission pursuant to its jurisdiction and authority as provided by law. Approval of the Application shall not be construed as authorizing any revenue recovery or increased disbursement from the state Universal Service Fund. Regulatory treatment for any Syringa related costs must be addressed separately.
IT IS FURTHER ORDERED that approval of this loan is conditioned on the same restrictions and filing requirements made by the RUS.
IT IS FURTHER ORDERED that Midvale Telephone shall file with the Commission Staff copies of the final loan documents and all required filings with the RUS as they are completed.
IT IS FURTHER ORDERED that Midvale Telephone shall file annually with the Commission Staff statements reflecting the detail of total loan balances outstanding. Schedules showing all mortgage compliance calculations shall also be filed.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of Midvale’s exhibits or other materials that accompanied this Application for any other purpose other than the issuance of this Order approving the loan contract amendment and supplemental mortgage.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. MIDT012 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 this Case No. MIDT012. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of October 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:MID-T-01-02_dh

Syringa Networks is a limited liability company installing a fiber optic network in southern Idaho. See Order No. 28765. Midvale and several rural telephone companies are participating in the network project and have guaranteed a loan to Syringa. Id.

ORDER NO. 28887 1

Office of the Secretary
Service Date
October 31, 2001