28938.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF POTLATCH TELEPHONE COMPANY AND TROY TELEPHONE COMPANY FOR AUTHORITY TO MERGE INTO A SINGLE CORPORATION AND FOR AN AMENDED CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY.
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CASE NOS. POT-T-01-1
TRO-T-01-1

ORDER NO. 28938

On November 19, 2001, Potlatch and Troy Telephone Companies (Applicants) filed a Joint Application to merge their companies into a single corporation. Applicants currently furnish telephone service in the communities of Kendrick, Juliaetta, and Troy, Idaho and their immediate surrounding areas. On December 13, 2001, the Commission ordered that this case be processed under Modified Procedure and established a January 2, 2002 comment deadline. Order No. 29813. In this Order we authorize the Applicants to merge their respective companies into a single corporation, amend Potlatch’s Certificate of Public Convenience and Necessity, and blend their depreciation schedules effective January 1, 2002.
THE APPLICATION
The Application states that the proposed merger will not impact the day-to-day operation or services provided by these companies. Application at 3. While Potlatch Telephone will assume official control and responsibility for providing local exchange service on January 1, 2002, the Applicants state that both companies have been operating out of the Kendrick office for years. Id. Potlatch Telephone Company shall be the surviving corporation following the merger. Id. at 2. The proposed merger does NOT include a change in customer rates. Id.
To accomplish the merger, the Applicants request that Potlatch Telephone’s Amended Certificate of Public Convenience and Necessity No. 263 be further amended to reflect the addition of Troy Telephone’s Amended Certificate No. 201. Id. at 3. By doing so, Potlatch Telephone requests authority to continue applying Troy Telephone rates and tariff provisions to the former Troy exchange areas indefinitely. Id. Potlatch intends to apply for authority to combine the Potlatch and Troy tariff provisions, other than rates, into a single coherent tariff in the first half of 2002. Id. To minimize their filings with the Internal Revenue Service, the Applicants request that approval of the merger and amended tariff be made effective January 1, 2002.
COMMENTS
The Commission received comments from Staff and one member of the public. Staff supports the proposed Troy/Potlatch merger and the request to blend the current approved depreciation rates. Staff Comments at 2. Because Troy has been controlled from the Potlatch office via a remote switch since November 1997, Staff believes that the merger will have no effect on the service being provided. Id. Staff anticipates customers will be unaffected by the merger since Potlatch and Troy do not wish to change the existing tariffs at this time. Id. Staff also believes that the merger will result in fewer allocation errors, better accounting records and reduced cost. Id.
Because the companies have not requested an increase in customer rates, Staff believes it is fair to allow Potlatch to book the proposed depreciation rates until the surviving company files a general rate case. Id. at 3. Consequently, Staff recommends that the proposed depreciation rates be acknowledged, booked effective January 1, 2002 and reviewed for appropriateness in the next rate case. Id. Staff also recommends Potlatch be notified that depreciation rates or reserves cannot be retroactively adjusted in a rate case filing. Id. Because it is the beginning of the accounting and tax year, Staff finds January 1, 2002 to be a reasonable effective date for both the merger and booking the change in depreciation rates. Id.
In addition to Staff’s comments, the Commission received one comment from a private citizen. Jerry L. Brown of Kendrick, Idaho filed an electronic comment in favor of the proposed merger. Mr. Brown also believes that “as one company, the toll charges should be eliminated and become a local call.” Troy and Potlatch Telephone Companies did not file reply comments.
DISCUSSION AND FINDINGS

Potlatch Telephone Company and Troy Telephone Company are telecommunications corporations subject to the Commission’s regulatory jurisdiction pursuant to Idaho Code, Titles 61 and 62. The Commission has jurisdiction over the merger of these two corporations pursuant to Idaho Code §§ 61-302, 61-526, and 61-528.
Based upon our review of the Application, written comments and record in this case, we find that the merger of Potlatch Telephone with Troy Telephone to be reasonable and not adverse to the public interest. Consequently, we authorize modification of Potlatch Telephone’s Amended Certificate of Public Convenience and Necessity No. 263 to reflect the addition of Troy Telephone’s Amended Certificate No. 201. Because no party intervened, filed dissenting comments or requested a hearing, the Commission also finds it is reasonable to grant this Application without a public hearing.
Given that the Applicants did not request an increase in customer rates, it is reasonable for the surviving company to book the depreciation rates proposed in the Application until a general rate case is filed. At that time, the rates will be examined in the context of whatever rate change is requested. In keeping with precedent, depreciation rates or accumulated depreciation reserves will not be adjusted retroactively at the time the surviving company files a general rate case. To simplify the administrative and tax filing burdens of the Applicants, the Commission finds it appropriate to make January 1, 2002 the effective date for both the merger and booking the change in depreciation rates.
The Commission also acknowledges Mr. Brown’s concern about toll charges between Troy Telephone’s exchanges and Potlatch Telephone’s exchanges now that these companies will merge. The Commission declines to address this issue in this Order because this Application purposefully did not propose tariff changes and our Notice of Application did not seek comment on intra-company toll charges. Although no comment period or hearings have been scheduled yet, the Commission will address this tariff issue in the context of a Petition from Potlatch Customers for Extended Area Service to Lewiston in Case No. GNR-T-00-5.
O R D E R
IT IS HEREBY ORDERED that the Joint Application of Troy and Potlatch Telephone Companies to merge their respective companies is granted.
IT IS FURTHER ORDERED that the Joint Application to further amend Potlatch Telephone Company’s Amended Certificate of Public Convenience and Necessity No. 263 to reflect the addition of Troy Telephone’s Amended Certificate No. 201 is granted.
IT IS FURTHER ORDERED that Potlatch Telephone Company submit its tariff combining the two companies to the Commission for approval. The new tariffed rates shall not be changed from current rates.
IT IS FURTHER ORDERED that Potlatch and Troy Telephone Companies may blend the current approved depreciation rates as proposed in their Application.
IT IS FURTHER ORDERED that January 1, 2002 shall be the effective date for both the merger and booking the change in depreciation schedules.
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 these Case Nos. POT-T-01-1 and TRO-T-01-1 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 these Case Nos. POT-T-01-1 and TRO-T-01-1. 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
day of January 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

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ORDER NO. 28938 -1-

Office of the Secretary
Service Date
January 25, 2002