20260814ADMINISTRATORS REPORT - Revised.pdf

RECEIVED
ADMINISTRATOR'S REPORT AUGUST 14, 2026
IDAHO UNIVERSAL SERVICE FUND IDAHO PUBLIC
UTILITIES COMMISSION
YEAR ENDED ~- JUNE 307 2026
SURCHARGE REVENUES
Surcharge revenues collected during the year ended June 30, 2026, totaled
$1,076,888, of which $549,674, or 51% was assessed on local exchange
services and $527,214, or 49%, was assessed on MTS/WATS services.
Current monthly surcharge rates are $.24 per residential line, $.41 per
business line, and $.005 per MTS/WATS billed minute.
DISBURSEMENTS
Payments to local exchange companies authorized by the Idaho Public
Utilities Commission to receive disbursements from the Idaho Universal
Service Fund during the year ended June 30, 2026, totaled $904,977.
ADMINISTRATIVE FEES AND EXPENSES
Administrative fees and expenses for the year ended June 30, 2026 were
$18,697. Administrative expenses payable at June 30, 2026 are $1,553.
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INVESTMENTS AND FUNDS
CASH
At June 30, 2026, the Idaho Universal Service Fund had a cash balance of
$4177551. The following is a table showing the beginning, ending, and
quarterly fund cash balances for the year ended June 30, 2026.
Beginning Ending
Balance Balance Balance Balance Balance
6/30/25 9/30/25 12/31/25 3/31/26 6/30/26
$264,435 $2921399 $432,361 $4491665 $4171551
INTEREST
No interest was earned on funds held in bank accounts for the year ended
June 30, 2026.
INVESTMENTS
The Idaho Universal Service Fund had no investments during the year
ended June 30, 2026.
INVENTORIES
Total residential and business lines at May 1, 2026, were 45,028 and
58,375 respectively. This represents a decrease of 6% in residential lines
and an increase of 11% in business lines from the prior year. Total
MTS/WATS billed minutes of use for the year ended December 31, 2025,
were 101,873,122, a 1% increase from the prior year.
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STATEWIDE WEIGHTED AVERAGE RATES
ONE--PARTY, SINGLE LINE SERVICE
The following table shows the statewide weighted averages for one-party,
single line service.
IUSF THRESHOLD
STATEWIDE 125% STATEWIDE
WEIGHTED WEIGHTED
AVERAGE RATE AVERAGE RATE
RESIDENTIAL SERVICES $3 5.36 $5 7.88
BUSINESS SERVICES $44.20 $72.35
TOLL SWITCHED ACCESS
The statewide weighted average toll switched access revenue is $ .054 per
minute.
FUNDING OPTIONS
OPTION 1: STATUS QUO
If current surcharge rates ($.24 per residential line, $.41 per business line,
and $.005 per intrastate MTS/WATS billed minute) are maintained as well
as the authorized IUSF disbursements, the fund will decrease by
approximately $9,025. The 2026-2027 IUSF authorized disbursements
will continue at $904,977. MTS/WATS services would contribute
approximately 55% of the surcharge revenue and local exchange services
would contribute 45% of the surcharge revenue. The fund would have a
balance of approximately $409,425 at June 30, 2027.
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OPTION 2: MAINTAIN SURCHARGE RATES &ADJUST FUNDING TO MEET
STATEWIDE AVERAGES
Idaho Universal Service Fund rule 106.02 indicates that to continue
receiving IUSF funding after the first year of eligibility, the company may
need to revise rates to meet or exceed the statewide threshold rates. If the
rate is below the statewide threshold rate, and the difference between the
rate is greater than 3% and $6,000, the company must revise rates equal or
exceed 100% of the statewide average for MTS/WATS access service, and
125% of the statewide average for local exchange service. The following
applies rule 106 to each company currently drawing from the IUSF.
The application of rule 106 effectively eliminates all annual IUSF
authorized disbursements. If current surcharge rates ($.24 per residential
line, $.41 per business line, and $.005 per intrastate MTS/WATS billed
minute) are maintained the fund will increase by approximately $895,952.
MTS/WATS services would contribute approximately 55% of the
surcharge revenue and local exchange services would contribute 45% of
the surcharge revenue. The fund would have an unfeasible balance of
approximately $1,314,403 at June 30, 2027.
OPTION 3: ADJUST INVENTORIES, MAINTAIN SURCHARGE RATES &
MAINTAIN FUNDING LEVELS
In order to more accurately calculate future fund balances, the inventories
have been adjusted according to the most recent five-year trend. Thus, the
residential lines were reduced 14%, the business lines reduced 9% and the
MTS/WATS billed minutes have been increased 11%. If the surcharge
rates are maintained at $.24 per residential line, $.41 per business line, and
$.00 5 per intrastate MTS/WATS billed minute and IUSF disbursements are
maintained at current authorized levels, the fund will increase by
approximately $3,900. MTS/WATS services would contribute
approximately 60% of the surcharge revenue and local exchange services
would contribute 40% of the surcharge revenue. The fund would have a
balance of approximately $421,452 at June 30, 2027.
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OPTION 4: ADJUST INVENTORIES, SUSPEND SURCHARGE RATES &
ADJUST FUNDING TO MEET STATEWIDE AVERAGES
In order to more accurately calculate future fund balances, the inventories
have been adjusted according to the most recent five-year trend. If the
surcharge rates are suspended and IUSF disbursements are adjusted to
meet statewide averages per rule 106, the fund will decrease by any
ongoing administrative expenses approximately $29,400. The fund
balance will approximate $388,151 at June 30, 2027.
ADMINISTRATOR'S RECOMMENDATION
During the past year, there was a continued decrease in local residential
lines of 6% though local business lines increased 11% and MTS/WATS
billed minutes increased 1%. As in the past, I believe that the local access
lines and toll minutes will continue to decline due to the continued
migration toward broadband, wireless, cellular and VOIP services, as well
as the shift from stand--alone residential service to bundled packages. This
affects the statewide average rate calculations, as well as the application of
rule 106 to the companies funded by the IUSF. In light of FCC orders and
continuing industry changes, it is becoming more difficult to evaluate the
IUSF funding as it applies to Rule 106. It is equally challenging to estimate
future inventory levels and project the fund balance. The Commission
recognized this in opening Case No. GNR-T-17--05, The 2017 Review of
the Idaho Universal Service Fund.
Idaho Universal Service Fund rules (IDAPA 31.46.01) outline the criteria
for the continuation of eligibility for funding from the IUSF. The
application of this rule eliminates all funding from the IUSF for 2026-
202 7.
Therefore, I recommend that the Commission adopt Option 4 suspending
the surcharge rates and, also, applying rule 106.02 that effectively
eliminates funding to all companies. It undermines the purpose of the
Idaho Universal Service Fund to support companies with average rates
below the statewide average. The current fund balance could be invested
while the underlying rules and statutes are adjusted, and the
conclusion/transition of the Idaho Universal Service Fund is considered.
The fund balance at June 30, 2027, will approximate $388,151.
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If the Commission is inclined to maintain company funding at current
levels until changes are made to the underlying rules and statutes, I
recommend the adoption of Option 1. This option maintains the surcharge
rates at $.24 per residential line, $.41 per business line, and $.005 per
intrastate MTS/WATS billed minute. The fund balance will approximate
$409,425 at June 30, 2027.
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