20020117Decision Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
LYNN ANDERSON
DON HOWELL
RANDY LOBB
JOE CUSICK
DOUG COOLEY
MADONNA FAUNCE
TERRI CARLOCK
TONYA CLARK
BEV BARKER
GENE FADNESS
WORKING FILE

FROM: LISA NORDSTROM

DATE: JANUARY 17, 2002

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

The Application
Potlatch and Troy Telephone Companies filed a Joint Application on November 19, 2001 to merge their companies into a single corporation. Applicants currently furnish general telephone service in the cities of Kendrick, Juliaetta, and Troy, Idaho and their immediate surrounding areas. The Applicants expect that the merger will reduce the administrative requirements and tariff updates currently required for these two companies.
The Application states that the merger will not impact the day-to-day operations or services provided by these companies. 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. Potlatch Telephone Company shall be the surviving corporation following the merger.
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. By doing so, Potlatch Telephone requests authority to continue applying Troy Telephone rates and tariff provisions to the former Troy exchange areas indefinitely. 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.
The proposed merger does NOT include a proposed change in rates. 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.
Staff Comments
During the comment period, Staff and one member of the public filed comments. Staff supports the proposed Troy/Potlatch merger and their request to blend the current approved depreciation rates. 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. Staff anticipates customers will be unaffected by the merger since Potlatch and Troy do not wish to change the existing tariffs at this time. Staff also believes that the merger will result in fewer allocation errors, better accounting records and reduced cost.
Because the companies have not requested an increase in depreciation rates, Staff believes it is fair to allow Potlatch to book these rates until the surviving company files a general rate case. Consequently, Staff recommends that the proposed depreciation rates be acknowledged, booked effective January 1, 2002 and reviewed for appropriateness in the next rate case. Staff also recommends Potlatch be notified that depreciation rates or reserves cannot be retroactively adjusted in a rate case filing. 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.
Troy and Potlatch Telephone Companies did not file reply comments.

Public Comment
Jerry L. Brown of Kendrick, Idaho filed an electronic comment in favor of the proposed merger. Mr. Brown believes that “as one company, the toll charges should be eliminated and become a local call.” Although the Application does not address intra-company toll charges, this issue will be addressed in the Petition from Potlatch customers for EAS to Lewiston pending in GNR-T-00-5.
Commission Decision
Does the Commission wish to approve the merger of Troy and Potlatch Telephone Companies into a single corporation?
Does the Commission wish to further amend Potlatch Telephone’s Amended Certificate of Public Convenience and Necessity No. 263 to reflect the addition of Troy Telephone’s Amended Certificate No. 201?
( Does the Commission wish to advise Potlatch that depreciation rates or reserves cannot be retroactively adjusted in a rate case filing?
( If the merger is approved, should the amended tariff be made effective January 1, 2002?

__________________________
Lisa Nordstrom

M: POTT011_TROT011_ln2

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DECISION MEMORANDUM