20260825Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER LODGE
COMMISSIONER HAMMOND
COMMISSIONER HARDIE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: ALLISON MOORE, COMMISSION STAFF
ERIKA K. MELANSON,DEPUTY ATTORNEY GENERAL
DATE: AUGUST 25, 2026
SUBJECT: IN THE MATTER OF THE 2026 ANNUAL IDAHO UNIVERSAL
SERVICE FUND REPORT; CASE NO. GNR-T-26-05.
On July 15, 2025, the Annual Idaho Universal Service Fund Report ("Report") was
submitted to the Idaho Public Utilities Commission ("Commission") by the Alyson Anderson
("Administrator"), the Administrator of the Idaho Universal Service Fund ("IUSF"). The Report
is for the fiscal year of July 1, 2025, through June 30, 2026.
The Report that was initially filed on July 15, 2026, did not meet the requirements of
IDAPA 31.46.01.303.05, which states that the report is part of the public record and should not
include information that identifies any telephone corporation, customer, or trade secrets.
Workpapers that include identifiable information and protected data are required to be filed and
labeled as confidential. As a result, Commission Staff("Staff') reached out to the Administrator
to have the Report and workpapers filed correctly. The Administrator resubmitted the Report and
workpapers to the Commission Secretary in accordance with IDAPA 31.46.01.303.05 on August
14, 2026.
BACKGROUND
The IUSF rules were adopted under the general legal authority of the Telecommunications
Act of 1988, Chapter 6, Title 62, Idaho Code and the specific authority found in Idaho Code § 62-
610. The fund was established by the Commission to maintain the universal availability of local
exchange service at reasonable rates and to promote the availability of Message
Telecommunications Service ("MTS") at comparable rates in the State of Idaho. Idaho Code §
62-610(1). The IUSF is funded by a statewide end-user surcharge on local exchange services and
DECISION MEMORANDUM - 1 - AUGUST 25, 2026

intrastate MTS and Wide Area Telephone Service ("WATS"). Id. An annual report is submitted
to the Commission by the Administrator on or before July 151h annually. The report consists of
statewide aggregate totals for local service, MTS/WATS revenues, inventories of services and
surcharge recommendations to meet the next year's funding requirements. IDAPA
31.46.01.303.05. The Commission is required to issue an order on or before September I"
annually that establishes the statewide end-user surcharges that will go into effect for the next
twelve months, starting on October 1st. IDAPA 31.46.01.104.
STAFF ANALYSIS
Staff reviewed the Report and workpapers submitted by the Administrator. Staff found
several errors within the Report and the calculations that had been completed by the Administrator.
On August 12, 2026, Staff reached out via email to the Administrator requesting that the errors
found be fixed and a new report and workpapers be submitted to the Commission. On August 14,
2026,the Administrator submitted a revised report and some of the requested revised workpapers.
After reviewing the revised Report and workpapers, Staff found errors consistent with the original
Report. As a result, Staff conducted its own calculations to ensure consistency and accuracy.
Staff s calculations are reflected below in the data and options.
The 2026 Annual Report
The Report provided an overview of the fiscal year, July 1, 2025, to June 30, 2026, for
IUSF. During this time period the monthly surcharge rates were $.24 per residential line, $.41 per
business line and$.005 per MTS/WATS billed minute. Report at 1. The total amount of revenue
collected for the fiscal year ending on June 30, 2026, was $1,076,888 of which $549,674 (51%)
was from local exchange services and $527,214 (49%) was from MTS/WATs billed minutes. Id.
During the identified fiscal year, a total of$904,977 was disbursed to local exchange companies.
Id. The Report also included a statement about the administrative fees of$18,697 and expenses
of$1,553 for the fiscal year. Id. The fund had a beginning balance of$264,435 on July 1, 2025,
and an ending balance of$417,551 on June 30,2026. The NSF does not earn interest on the funds
held in its bank account nor does it have investments. Report at 2.
As of May 1, 2026, the Administrator reported that there was a total of 45,028 residential
lines and 58,375 business lines in use. Id. Staff calculated that this was a 6% decrease in
residential lines, but an 11% increase in business lines from the previous year. The five-year
DECISION MEMORANDUM - 2 - AUGUST 25, 2026

average for both types of lines indicates a decrease of 14% for residential and 9% for business
lines. The Administrator noted in the Report that during 2025 there were a total of 101,873,122
MTS/WATS minutes billed, which is a 1% increase from the previous year. Id. The five-year
average for MTS/WATS minutes billed shows an 11% increase in minutes billed.
In the Report, the Administrator indicated an adjustment in the residential services
statewide weighted average rate of$35.36 and the IUSF threshold 125% statewide average rate of
$57.88. Report at 3. The business services also had an adjustment in the statewide weighted
average rate, $44.20 and in the IUSF threshold 125% statewide average rate of$72.35. Id. The
Report indicated a decrease in the statewide average toll switch access (long distance) per minute
rate from $0.055 last year to $0.054 this year. Id. The Administrator reviews the residential,
business,and switch access rates of the recipient local exchange companies to determine eligibility
to receive IUSF funding. IDAPA 31.46.01.106. Rule 106 states that in order for a company to be
eligible its average one-party single-line rate must equal or exceed the 125% statewide weighted
average line rate and the average rates per minute for MTS/WATS access rate must exceed 100%
of the statewide weighted average weighted access rate. Id.
Funding Options
The options presented below includes Staff s recalculations of the data and information
submitted in confidential workpapers. Each of the options below includes the Administrator's
estimated expenses of $29,400 for the 2026-2027 budget. See Attachment A - Staff 2026-27
Funding Options 1, 2, 3, and 4.
OPTION 1: Status Quo
If the current surcharge rates of$.24 per residential line, $.41 per business line, and $.005
per intrastate MTS/WATS billed minute, are maintained as well as the authorized NSF
disbursements,the fund will decrease by approximately$8,126. Report at 3. The 2026-2027 IUSF
authorized disbursements will continue at $904,977. MTS/WATS services would contribute
approximately 55% of the surcharge revenue and the local exchange services (business and
residential) would contribute 45% of the surcharge revenue. The fund would have a balance of
approximately $409,425 on June 30, 2027.
DECISION MEMORANDUM - 3 - AUGUST 25, 2026

OPTION 2: Maintain Surcharge Rates & Adjust Funding to Meet Statewide Averages
IDAPA 31.46.01.106.02 states 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 $6,000, the company must revise rates to be equal to or exceeding 100% of the statewide
average for MTS/WATS access service, and 125% of the statewide average for local exchange
service. The following applies Rule 106 to each company currently drawing from the NSF.
Report at 4.
The application of Rule 106 effectively eliminates all annual IUSF authorized
disbursements. If current surcharge rates of$.24 per residential line, $.41 per business line, and
$.005 per intrastate MTS/WATS billed minute are maintained the fund will increase by
approximately $896,851. MTS/WATS services would contribute approximately 55% of the
surcharge revenue and local exchange services (business and residential)would contribute 45%of
the surcharge revenue. Id. The fund would have an unfeasible balance of approximately
$1,314,402 on June 30, 2027. Id.
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 have been reduced
by 14%, the business lines reduced by 9% and the MATS/WATS billed minutes have been
increased by 11%. Id. If the surcharge rates are maintained at $.24 per residential line, $.41 per
business line, and $.005 per intrastate MTS/WATS billed minute and IUSF disbursements are
maintained at current authorized levels,the fund will increase by$4,400. Id. MTS/WATS services
would contribute approximately 60% of the surcharge revenue and the local exchange services
would contribute 40% of the surcharge revenue. Id. The fund would have a balance of
approximately $421,952 on June 30, 2027. Id.
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. Id. If the surcharge rates are suspended and
the IUSF disbursements are adjusted to meet statewide averages per Rule 106, the fund will
DECISION MEMORANDUM - 4 - AUGUST 25, 2026

decrease by any ongoing administrative expenses approximately $29, 400. Id. The fund balance
will approximately be $388, 151 on June 30, 2027. Id.
Administrator's Recommendation
The Administrator has recommended that the Commission adopt Option 4 which would
suspend the fund, only pay for administrative fees and reduce the current fund balance of$417,551
to $388,151. In the current and previous annual Reports,the Administrator states that local access
lines and toll minutes will continue to decline due to the increase in broadband, wireless, satellite
and Voice over Internet Protocol ("VoIP") services. Report at 5. The decline in local exchange
services affects the statewide average calculations. Id. The Administrator also stated that "the
current fund balance could be invested while the underlying rules and statutes are adjusted and the
conclusion/transition of the 11USF is considered." Id. Additionally, the Administrator stated that
if the Commission "is inclined to maintain company funding at current levels until changes are
made to the underlying rules and statures,"then the recommendation is Option 1. Report at 6.
Staff recommends the Commission adopt Option 1 which maintains the current funding.
By maintaining the current funding levels, it provides Staff an opportunity to provide consistency
to companies and provide an opportunity for Staff to monitor the decline in local exchange
services. Staff agrees that there has been a decline in local access lines but there has been a
continued increase over the last three years in MTS/WATS billing minutes. The FCC is focused
on retiring legacy copper and creating an all-internet protocol infrastructure nationwide. This
transition will have an impact on the fund and local exchange services but the extent of the impact
is unknown at this time. Additionally, by maintaining the current funding, Staff will have an
opportunity to work with the Administrator on accurately calculating data for the quarterly reports,
future annual reports, and providing the Commission with funding options that include raising or
decreasing surcharges rates in accordance with IDAPA 31.46.01. Staff recommends adopting
Option 1, and the proposed IUSF Administrator's budget for the 2026-2027 fiscal year.
DECISION MEMORANDUM - 5 - AUGUST 25, 2026

RECOMMENDATION
Staff recommends that the Commission adopt Option 1- status quo to maintain the current
surcharge rates of $.24 per residential line, $.41 per business line, and $.005 per intrastate
MTS/WATS billed minute. Staff recommends that the Commission approve the proposed NSF
2026-2027Administrator's budget.
COMMISSION DECISION
Does the Commission wish to adopt Staff s recommendation of Option I- status quo to
maintain the current surcharge rates of$.24 per residential line, $.41 per business line, and $.005
per intrastate MTS/WATS billed minute.?
Does the Commission wish to adopt the Administrator's recommended funding option,
which suspends the fund and except for the payment of administrative fees, until the underlying
rules and statutes are changed,or does the Commission wish to adopt a different recommendation?
Does the Commission wish to approve the IUSF 2026-2027 Administrator's budget?
Allison Moc6
Commission Staff
Attachments: Attachment A: Staff 2026-27 Funding Options 1, 2, 3, and 4
Attachment B: Staff USF 2026 Notes
Attachment C: Staff USF Inventory Comparison 2026
I:\Uti1ity\UDMEM0S\GNR-T-26-05 Decision Memo.docx
DECISION MEMORANDUM - 6 - AUGUST 25, 2026

2026-27 IDAHO UNIVERSAL SERVICE FUND OPTIONS
OPTION 1-STATUS QUO
FUND
RATE CHANGE
BANK BALANCE 7/1/26 $ 417,551
ANNUAL INVENTORY
RESIDENTIAL LINES 45,026 0.24 $129,681 14%OF TOTAL SURCHARGE REVENUE
BUSINESS LINES 58,375 0.41 $287,205 31%OF TOTAL SURCHARGE REVENUE
TOLL MINUTES 101,873,122 0.005 $509,366 55%OF TOTAL SURCHARGE REVENUE
TOTAL IUSF SURCHARGE REVENUE $926,251
ESTIMATED INTEREST INCOME 0
ESTIMATED IUSF DISBURSEMENTS (904,977)
ESTIMATED ADMINISTRATIVE EXPENSES 29,400
TOTAL ESTIMATED EXPENSES (934,377)
PROJECTED INCOME/(DRAWDOWN) (8,126)
PROJECTED BALANCE 6/30/27 $409,425
OPTION 2-MAINTAIN SURCHARGE RATES&ADJUST FUNDING
TO MEET RULE 106/STATEWIDE THRESHOLDS
FUND
RATE CHANGE
BANK BALANCE 7/1/26 $ 417,551
ANNUAL INVENTORY
RESIDENTIAL LINES 45,028 0.24 $129,681 14%OF TOTAL SURCHARGE REVENUE
BUSINESS LINES 58,375 0.41 287,205 31%OF TOTAL SURCHARGE REVENUE
TOLL MINUTES 101,873,122 0.005 509,366 55%OF TOTAL SURCHARGE REVENUE
TOTAL IUSF SURCHARGE REVENUE 926,251
ESTIMATED INTEREST INCOME 0
ESTIMATED IUSF DISBURSEMENTS 0
ESTIMATED ADMINISTRATIVE EXPENSES 29,400
TOTAL ESTIMATED EXPENSES (29,400)
PROJECTED INCOME/(DRAWDOWN) 896,851
PROJECTED BALANCE 6/30/27 $1,314,403
OPTION 3-ADJUST INVENTORIES FOR 5 YEAR AVERAGE,
MAINTAIN SURCHARGE RATES&FUNDING
FUND
RATE CHANGE
BANK BALANCE 7/1/26 $ 417,551
ANNUAL INVENTORY
RESIDENTIAL LINES 38,724 0.24 $111,525 12%OF TOTAL SURCHARGE REVENUE
BUSINESS LINES 53,121 0.41 261,357 28%OF TOTAL SURCHARGE REVENUE
TOLL MINUTES 113,079,166 0.005 565,396 60%OF TOTAL SURCHARGE REVENUE
TOTAL IUSF SURCHARGE REVENUE 938,278
ESTIMATED INTEREST INCOME 0
ESTIMATED IUSF DISBURSEMENTS (904,977)
ESTIMATED ADMINISTRATIVE EXPENSES 28,900
TOTAL ESTIMATED EXPENSES (933,877)
PROJECTED INCOME/(DRAWDOWN) 4,400
PROJECTED BALANCE 6/30/27 $421,952
OPTION 4-ADJUST INVENTORIES FOR 5 YEAR AVERAGE,SUSPEND SURCHARGE RATES
&ADJUST FUNDING TO MEET RULE 106/STATEWIDE THRESHOLDS
FUND
RATE CHANGE
BANK BALANCE 7/1/26 $ 417,551
ANNUAL INVENTORY
RESIDENTIAL LINES 38,724 0.00 $0
BUSINESS LINES 53,121 0.00 0
TOLL MINUTES 113,079,166 0.000 0
TOTAL IUSF SURCHARGE REVENUE 0
ESTIMATED INTEREST INCOME 0
ESTIMATED IUSF DISBURSEMENTS 0
ESTIMATED ADMINISTRATIVE EXPENSES 29,400
TOTAL ESTIMATED EXPENSES (29,400)
Attachment A
PROJECTED INCOME/(DRAWDOWN) (29,400)
PROJECTED BALANCE 6/30/27 $388,151 Case No. GNR-T-26-05
Decision Memo
August 25, 2026

CASE NOTES
LOCAL
2026 RESIDENTIAL LINES 45,028
STATEWIDE AVG RATE x 35.36
$ 1 ,592,263.50 38.16%
2026 BUSINESS LINES 58,375
STATEWIDE AVG RATE x 44.20
$ 2,580,175.00 61 .84%
$ 4,172,438.50
2025 TOLL BILLED MINUTES 101,873,122
DISBURSEMENTS ANNUAL MONTHLY
CURRENT COMPANY $ 904,977.36 $ 75,414.78 3 MONTH BAL
ADMINISTRATIVE $29,400.00 $ 2,450.00 $ 233,594.34
$ 934,377.36
ADJUSTED COMPANY
PER RULE 106 $ - $ - 3 MONTH BAL
ADMINISTRATIVE $29,400.00 $ 2,450.00 $ 7,350.00
$ 29,400.00
Attachment B
RATES Case No. GNR-T-26-05
Decision Memo
STATUS QUO August 25, 2026 1

7/1/26 BANK BALANCE $ (417,551.44)
EST INTEREST INCOME $ -
$ (417,551.44)
DESIRED BALANCE $ 233,594.34
$ (183,957.10)
EST 2026-27 DISBURSEMENTS $ 934,377.36
$ 750,420.26 X .50 $ 375,210.13
RESIDENT RATE ($375,210.13*.3816)/45,028/12= 0.2650
BUSINESS RATE ($375,210.13*.6184)/58,375/12= 0.3312
TOLL RATE ($375,210.13/101 ,873,122)= 0.0037
ADJUST DISBURSEMENTS
7/1/26 BANK BALANCE $ (417,551.44)
EST INTEREST INCOME 0
$ (417,551.44)
DESIRED BALANCE 7,350.00
$ (410,201.44)
EST 2025-26 DISBURSEMENTS 29,400.00
$ (380,801.44) X .50 $ (190,400.72)
RESIDENT RATE
BUSINESS RATE Attachment B
Case No. GNR-T-26-05
TOLL RATE Decision Memo 2
August 25, 2026

ADJUSTED INVENTDRIES
LOCAL 5 yr Avg o
2026 RESIDENTIAL LINES-ADJUST -14.00% 38,724
STATEWIDE AVG RATE x 35.36
$ 1 ,369,346.61 36.84%
2026 BUSINESS LINES-ADJUST -9.00% 53,121
STATEWIDE AVG RATE x 44.20
$ 2,347,959.25 63.16%
$ 3,717,305.86
2025 TOLL BILLED MINUTES-ADJUST 11.00% 113,079,166
DISBURSEMENTS ANNUAL MONTHLY
CURRENT COMPANY $ 904,977.36 $ 75,414.78 3 MONTH BAL
ADMINISTRATIVE $ 29,400.00 $ 2,450.00 $ 233,594.34
$ 934,377.36
ADJUSTED COMPANY
PER RULE 106 $ - $ - 3 MONTH BAL
ADMINISTRATIVE $29,400.00 $ 2,450.00 $ 7,350.00
$ 29,400.00 Attachment B
Case No. GNR-T-26-05 3
Decision Memo
August 25, 2026

RATES
7/1/26 BANK BALANCE $ (417,551.44)
EST INTEREST INCOME 0
$ (417,551.44)
DESIRED BALANCE 233,594.34
$ (183,957.10)
EST 2026-27 DISBURSEMENTS 934,377.36
$ 750,420.26 X .50 $ 375,210.13
RESIDENT RATE ($375,210.13*.3684)/40,975/12= 0.2974
BUSINESS RATE ($375,210.13*.6316)/55,456/12= 0.3718
TOLL RATE ($375,210.13/107,985,510)= 0.0033
7/1/26 BANK BALANCE $ (417,551.44)
EST INTEREST INCOME 0
$ (417,551.44)
DESIRED BALANCE 7,350.00
$ (410,201.44)
EST 2026-27 DISBURSEMENTS 29,400.00
$ (380,801.44) X .50 $ (190,400.72)
Attachment B
RESIDENT RATE Case No. GNR-T-26-05
Decision Memo 4
August 25, 2026

BUSINESS RATE
TOLL RATE
Attachment B
Case No. GNR-T-26-05
Decision Memo 5
August 25, 2026

IDAHO UNIVERSAL SERVICE FUND
INVENTORY COMPARISON
2000-01 2001-02 a 2002-03 a 2003-04 a 2004-05 a 2005-06 a
RESIDENTIAL LINES 548,932 532,279 -3% 519,505 -2% 501,853 -3% 485,612 -3% 474,571 -2%
BUSINESS LINES 193,455 190,428 -2% 200,050 5% 187,654 -6% 192,947 3% 208,671 8%
MTS/WATS BILLED MINUTES 304,239,393 297,072,069 -2% 278,681,411 -6% 277,754,500 -0.33% 312,577,570 13% 315,380,191 1%
2006-07 a 2007-08 a 2008-09 A 2009-10 A 2010-11 a
RESIDENTIAL LINES 458,089 -3% 418,844 -9% 371,114 -11% 328,592 -11% 292,282 -11%
BUSINESS LINES 195,729 -6% 232,566 19% 225,161 -3% 219,752 -2% 221,764 1%
MTS/WATS BILLED MINUTES 304,175,225 -4% 322,680,311 6% 304,154,937 -6% 284,863,207 -6% 253,602,445 -11%
2011-12 a 2012-13 a 2013-14 a 2014-15 a 2015-16 a
RESIDENTIAL LINES 253,461 -13% 229,336 -10% 202,341 -12% 181,984 -10% 169,987 -7%
BUSINESS LINES 219,108 -1% 230,860 5% 236,547 2% 225,505 -5% 193,095 -14%
MTS/WATS BILLED MINUTES 257,750,454 2% 197,465,217 -23% 172,567,590 -13% 167,029,919 -3% 197,135,145 18%
2016-17 A 2017-18 A 2018-19 a 2019-20 a 2020-21 A
RESIDENTIAL LINES 152,290 -10% 122,347 -20% 106,787 -13% 94,556 -11% 97,154 3%
BUSINESS LINES 122,009 -37% 114,359 -6% 114,073 0% 87,586 -23% 101,719 16%
MTS/WATS BILLED MINUTES 125,154,200 -37% 110,719,570 -12% 117,572,337 6% 107,374,568 -9% 90,893,786 -15%
2021-22 a 2022-23 a 2023-24 a 2024-2025 a 5 YR AVERAGE
RESIDENTIAL LINES 72,811 -25% 65,516 -10% 57,436 -12% 47,750 -17% 68,133 -12%
BUSINESS LINES 78,030 -23% 68,257 -13% 47,478 -30% 52,752 11% 69,647 -8%
MTS/WATS BILLED MINUTES 89,781,375 -1% 46,111,289 -49% 87,944,136 91% 100,711,564 15% 83,088,430 8% Attachment C
Case No. GNR-T-26-05
Decision Memo 1
August 25, 2026