20071108final_order_no_30462.pdf

Office of the Secretary
Service Date
November 8, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF MIDV ALE TELEPHONE EXCHANGE
INC. FOR AUTHORITY TO BORROW
FROM THE RURAL UTILITIES SERVICE
(RUS) IN AN AMOUNT NOT TO EXCEED
$12 145 000
CASE NO. MID-07-
ORDER NO. 30462
On October 15, 2007, Midvale Telephone Exchange, Inc. filed an Application
requesting authority to execute a loan agreement and promissory note in an amount not to exceed
$12 145 000 with the United States of America acting through the Rural Utilities Service (RUS).
Midvale is a telephone corporation organized under the laws of Idaho and generally provides
telecommunications services with the states of Idaho, Arizona and Oregon.
The Application indicates that the proposed RUS loan will be used to pay for, and
partially reimburse general funds to: (1) extend service to approximately 1 081 new customers;
(2) provide for central office switching and software upgrades; (3) provide for central office
equipment upgrade; (4) make related system improvements including replacement of an existing
analog microwave system with fiber optic cable; and (5) repay a line of credit with the Rural
Telephone Finance Cooperative (RTFC) that was used to construct some of the above mentioned
facilities and that will be refinanced through the proposed RUS loan.
The loan qualification and approval letters dated June 29 and August 8, 2007 were
included with the Application. Midvale asserts that the proposed RUS loan may qualify as a
hardship loan with an interest rate of approximately 5% per annum. If the loan is not designated
as a hardship loan, the interest rate will be at RUS' s then current market rates at the time of
closing.
Midvale states that the proposed transaction is consistent with the public interest.
The extension of service to new customers and upgrading its current facilities will improve
service for the Company s customers. In addition, the anticipated improvements will allow
Midvale to meet new service demands. Consistent with Idaho Code ~ 61-905 , Midvale has paid
the requisite filing fee of $685.20.
ORDER NO. 30462
ST AFF REVIEW AND RECOMMENDATION
Commission Staff reviewed the Company s Application and the accompanYIng
documents. Staff recommended approval of the Application with the following conditions:
(1) Provide copies of the RUS final loan approvals including documentation
for advances.
(2) Provide a copy of any executed collateral documentation.
(3) Provide copies of all annual certification, covenant reports, and letters
regarding these determinations.
(4) The "Report of Securities Issued.
For ratemaking purposes, the Commission should reserve judgment on the reasonableness of the
Company s use of proceeds in capital investments, the cost of the investment, the allocation of
the costs to states, and any associated expenses incurred for any and all security issuances. The
Company shall promptly notify the Commission of any covenant violations.
FINDINGS OF FACT
Midvale Telephone is principally engaged in the provision of telecommunications
services in Idaho, Arizona and Oregon. Midvale is a telephone corporation within the definition
of Idaho Code ~ 61-121 and is a public utility as defined by Idaho Code ~ 61-129. The Idaho
Public Utilities Commission has jurisdiction over this matter pursuant to Title 61 , Idaho Code
and specifically Idaho Code ~~ 61-508 , 61-901 , and 61-902.
After reviewing the Application and Staff s recommendation, the Commission finds
that an evidentiary hearing in this matter is not required.
The Commission further finds that the Application requesting authorization to
execute a loan agreement and promissory note in an amount not to exceed $12 145 000 with the
RUS is for a lawful purpose and is within Midvale s corporate powers. The Commission further
finds that the loan agreement is compatible with the public interest and the method of issuance is
proper.
Based upon the representations in the Application, we find that the proceeds from the
proposed loan will be used to pay for equipment and system improvements and to repay a line of
credit with the RTFC that was used to construct some of the facilities and improvements
mentioned above.
ORDER NO. 30462
The Commission further finds that the Application requesting authority to borrow
$12 145 000 and execute a supplement mortgage subject to those conditions recommended by
Staff is for a lawful purpose, is within Midvale Telephone s corporate duties, and is generally
compatible with the public interest.
The issuance of this Order does not constitute agency determination/approval of the
type of financing or the related costs for ratemaking purposes, which determination the
Commission expressly reserves until the appropriate proceeding.
Finally, the Commission finds that the Company has paid the necessary fee as
required by Idaho Code ~ 61-905.
ORDER
IT IS HEREBY ORDERED that Midvale Telephone Company, Inc.s Application
for authority to execute a loan agreement and promissory note in an amount not to exceed
$12 145 000, together with a supplemental mortgage under the terms and conditions and for the
purposes set forth in the Application and this Order is granted.
IT IS FURTHER ORDERED that Midvale file, as soon as available, copies of the
RUS final loan approvals including documentation for advances, executed collateral
documentation, annual certifications, covenant reports, and letters regarding these determinations
and "Report of Securities Issued.
IT IS FURTHER ORDERED that Midvale Telephone will promptly notify the
Commission if it does not qualify for a hardship loan at the interest rate of approximately 5% per
annum. If the loan is not designated as a hardship loan, Midvale shall expeditiously notify the
Commission of the interest rate at the time of closing.
IT IS FURTHER ORDERED that Midvale Telephone will promptly notify the
Commission of any covenant violations.
IT IS FURTHER ORDERED that nothing in this Order or any act or deed performed
in connection with this Order shall be construed to obligate the State of Idaho to payor guarantee
in any manner whatsoever any loan or mortgage authorized, issued, assumed or guaranteed under
the provisions of this Order.
IT IS FURTHER ORDERED that this authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, service, accounts, evaluation
estimates or determination of costs or any other matter which may come before the Commission
ORDER NO. 30462
pursuant to its jurisdiction and authority as provided by law. For ratemaking purposes, the
Commission shall reserve judgment on the reasonableness of the Company s capital investments
allocation of costs to states, and any associated expenses incurred for any or all of the loan
agreement and promissory note.
IT IS FURTHER ORDERED that the issuance of this Order does not constitute
acceptance of Midvale Telephone s exhibits or other material accompanying this Application for
any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in the Order (or in issues decided
by this Order) may petition for reconsideration within twenty-one (21) days ofthe service date
this Order with regard to any matter decided in this Order and in this case. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ ~ 61-626 and 62-619.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 8 f'-
day of November 2007.
IDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
;ff~J a D. Jewell
mmission Secretary
bls/O:MID-07-01 dh
ORDER NO. 30462