20040819Final Order No 29566.pdf

Office of the Secretary
Service Date
August 19 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF RURAL TELEPHONE COMPANY FOR
AUTHORITY TO BORROW NOT MORE
THAN $17,500,000 FROM THE RURAL
UTILITIES SER VI ORDER NO. 29566
CASE NO. RUR-04-
THE APPLICATION
On July 23 , 2004, Rural Telephone Company filed an Application requesting
authority to borrow not more than $17 500 000 from the federal Rural Utilities Service (RUS).
Idaho Code ~ 61-901 requires telephone utilities like Rural Telephone to obtain the
Commission s approval before they issue or assume any securities or debt.
According to the Application, proceeds of the loan will be utilized for several
purposes including: a new central office and switch in the Boise River exchange; replacing
copper with fiber optic cable in the Atlanta exchange; placing fiber from the Prairie central office
to the Boise River central office; placing fiber and supporting power in the Shoup exchange; and
placing fiber optic cable from the Three Creek exchange to a connection point with Filer Mutual
at Rogerson, Idaho. The Application also states that the Company will be increasing capacity to
accommodate projected growth over the next ten years. A portion of the loan may qualify as a
hardship loan with the interest rate of 5%, and the remainder of the loan will be at the current
market rate when the advances are made.
ST AFF REVIEW
Staff recommended approval of Rural Telephone s Application. Staff reviewed the
Application and determined that the loan will be used primarily for new growth and upgrades to
existing telephone service through the year 2008. Of the proposed $17,425 104 loan
approximately $10 649 067 will be used in Nevada. The remaining $6 776 037 will be used in
Idaho. Staff noted that the Idaho portion of the loan proceeds will be used primarily for
providing regulated services. However, because equipment such as fiber optic cable and digital
switching electronics can be used for a variety of services, it is difficult to determine what other
services may be provided over such equipment and at what levels without specific review or
ORDER NO. 29566
studies. Staff also recommended that Rural Telephone Company be required to provide: (1)
copies of the RUS advance documents; and (2) all RUS compliance reports and calculations.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Rural Telephone Company is a telephone corporation within the definition of Idaho
Code ~ 61-121 and is a public utility in the definition of Idaho Code ~ 61-129. The Idaho Public
Utilities Commission has jurisdiction over this matter pursuant to the provision of Idaho Code
~ ~
61-901 et seq.
After examining the Application and Staff s comments, the Commission finds that an
evidentiary hearing in this matter is not required. The Commission further finds that the
proposed transaction is consistent with the public interest and Rural Telephone s proper
performance of its duties as a public utility.
The Commission also finds that the general purposes to which the loan funds will be
utilized are lawful purposes under the public utilities law and are compatible with the public
interest. However, this approval of the general purposes to which the funds will be put to use is
neither a finding of fact nor a conclusion of law that any particular project, program, or future
cost recovery is authorized. Approval in this Order shall not be construed to approve any
particular use of the funds which Rural Telephone may benefit by the approval in this Order.
The Commission further finds that the issuance of an Order authorizing the
borrowing of funds not exceed $17.million does not constitute agency
determination/approval of the type of financing or the related costs for ratemaking purposes.
The Commission expressly reserves the ratemaking implication from these loans until an
appropriate future proceeding.
The Commission s approval of this Application is conditioned upon Rural Telephone
satisfying the reporting requirements recommended by the Staff. Rural Telephone is reminded
that compliance with reporting requirements does not guarantee that the cost of the loans or the
use of such funds will be automatically recovered in the next rate case. To the extent these loan
funds are used for non-regulated services, any adjustments associated with the non-regulated
costs will occur in a future rate case.
Rural Telephone has paid the fee required by Idaho Code ~ 61-905.
ORDER NO. 29566
ORDER
IT IS HEREBY ORDERED that Rural Telephone Company s Application is granted
as conditioned in this Order. Rural Telephone shall file copies of the following material(s) with
the Commission: (1) copies of the RUS advance documents; and (2) all RUS compliance reports
and calculations.
IT IS FURTHER ORDERED that this authorization to borrow funds not to exceed
$17 500 000 is without prejudice to the regulatory authority of this Commission with respect to
rates, services, accounts, evaluations, estimates, or determination of costs, or the allocation of
costs between regulated and non-regulated activities, or any other matter that may come before
this Commission pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Idaho
Code, Title 61 , Chapter 9, or any act or deed done or performed in connection with this Order
shall be construed to obligate the State of Idaho to payor guarantee in any manner whatsoever
any funds authorized by the Commission.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of Rural Telephone s exhibits or other material accompanying the Application for
any purpose other than issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or interlocutory Orders previously issued in this Case No. RUR-04-
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. RUR-04-Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
ORDER NO. 29566
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /1
day of August 2004.
tJ~
MARSHA H. SMITH, COMMISSIONER
Out of the Office on this Date
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
O:RURT0401 dw
ORDER NO. 29566