28510.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
SILVER STAR TELEPHONE COMPANY FOR AUTHORITY TO BORROW FROM THE RURAL TELEPHONE FINANCE COOPERATIVE IN THE AMOUNT OF $3,263,158 )
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CASE NO. SIL-T-00-1

ORDER NO. 28510

On May 24, 2000, Silver Star Telephone Company (Silver Star), filed an Application pursuant to Chapter 9, Title 61, of the Idaho Code and Rules 141-150 of the Commission's Rules of Procedure (IDAPA 31.01.01.141-150), requesting an order to execute a loan contract amendment and supplemental mortgage in the amount of $3,263,158 with the Rural Telephone Finance Cooperative (RTFC). The Commission twice suspended the Application in Order Nos. 28428 and 28504. In this Order we approve the Application as conditioned below.
THE APPLICATION
In its Application Silver Star proposes to borrow $3,263,158 from the RTFC. Silver Star intends to reimburse its treasury for funds expended to construct both central office and outside plant facilities in the Afton local exchange located in both Wyoming and Idaho. The new facilities will provide Afton customers with modern digital telecommunications services. Silver Star is providing unregulated services to customers in the Afton exchange. Citizens Telecommunications of Wyoming is the incumbent local exchange company serving the Afton exchange. The loan proceeds will cover both regulated and non-regulated activities. The proposed loan will carry interest rates to be determined in accordance with RTFC’s fixed or variable interest rates at the time the loan closes. The current estimated rate is 8.5% per annum. The loan is proposed for a term of fifteen (15) years. Silver Star proposes to secure the loan by granting a first mortgage lien on its telecommunications assets.
Silver Star has paid the fees required by Idaho Code § 61905.
In its review of the Company’s Application, Staff expressed concern about using regulated assets to secure non-regulated activities. Although these non-regulated activities may initially increase the risk to Silver Star, engaging in non-regulated activities is becoming more common place. Consequently, Staff recommended that the Commission impose reporting requirement if it were to approve this Application. In particular, the Staff recommended that Silver Star provide:
The “Report of Securities Issued” required by 18 CFR 34.10;

Verified copies of any Agreement entered into pursuant to this Order;

A copy of the RTFC’s final due diligence investigation report;

A copy of the executed collateral documentation;

Copies of all annual certification, covenant reports, and letters regarding these determinations; and

Copies of letters and approval by RTFC of any future assignment of any portion of the loan to a subsidiary.

We find that it is reasonable and appropriate to approve the Application conditioned upon the Staff’s recommendations. Adoption of the reporting requirements will allow us to monitor events concerning this loan which is to be used for regulated and non-regulated purposes.

FINDINGS OF FACT
AND
CONCLUSIONS OF LAW

Silver Star is a telephone corporation within the definition of Idaho Code § 61121 and is a public utility within the definition of Idaho Code § 61129.
The Idaho Public Utilities Commission has jurisdiction over this matter pursuant to the provisions of Idaho Code § 61901 et seq., and the Application reasonably conforms to Rules 141-150 of the Commission’s Rules of Procedure, IDAPA 31.01.01-141-150.
The method of issuance is proper.
The general purposes to which the proceeds will be put are lawful purposes under the Public Utility Law of the State of Idaho and are compatible with the public interest. However, this general approval of the general purposes to which the proceeds will be put is neither a finding of fact nor a conclusion of law that any particular construction program of Silver Star which may be benefited by the approval of this Application has been considered or approved by this Order, and this Order shall not be construed to that effect.
The issuance of an Order authorizing the proposed financing 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.
The Commission finds that this Application should be approved as conditioned by the reporting requirements.

O R D E R
IT IS THEREFORE ORDERED that Silver Star Telephone Company’s Application for authority to execute a loan contract amendment and supplemental mortgage in the amount of $3,263,158 with the Rural Telephone Finance Cooperative (RTFC) be, and the same is hereby granted as conditioned above.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory authority of this Commission with respect to rates, service, accounts, valuation, estimates, or determination of costs, or any other matter that may come before this Commission pursuant to this jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Chapter 9, Title 61, Idaho Code, or any act or deed done or performed in connection with this Order shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any security authorized, issued, assumed, or guaranteed under the provisions of Chapter 9, Title 61, Idaho Code.
IT IS FURTHER ORDERED that Silver Star shall file, as they become available, the reports, documents and other reporting information set out in the body of this Order:
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of Silver Star's exhibits or other material accompanying the Application for any purpose other than the issuance of this Order.
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. SIL-T-00-1 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 this Case No. SIL-T-00-1. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration in response to issues raised in the petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this day of September 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

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ORDER NO. 28510 1

Office of the Secretary
Service Date
September 18, 2000