20260901Final_Order_No_37152.pdf

Office of the Secretary
Service Date
September 1,2026
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE 2026 ANNUAL ) CASE NO. GNR-T-26-05
IDAHO UNIVERSAL SERVICE FUND )
REPORT )
ORDER NO. 37152
On July 15, 2026, the Annual Idaho Universal Service Fund Report("Initial Report") was
submitted to the Idaho Public Utilities Commission ("Commission") by Alyson Anderson
("Administrator"), the Administrator of the Idaho Universal Service Fund ("IUSF"). The Report
covered the fiscal year of July 1, 2025, through June 30, 2026.
The Initial Report 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 must be filed and labeled as confidential. As a result, Commission Staff
("Staff') instructed the Administrator to update the Initial Report and workpapers. On August 14,
2026, The Administrator resubmitted the Report and workpapers to the Commission Secretary in
accordance with IDAPA 31.46.01.303.05 ("Report").
The Commission now issues this Final Order maintaining the monthly IUSF surcharge
rates at $0.24 per residential line, $0.41 per business line, and $0.005 per Message
Telecommunications Service ("MTS")/Wide Area Telephone Service ("WATS") minute,
effective for 12 months beginning October 1, 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 of Idaho Code §§ 62-610
et seq. The Commission established a universal service fund to maintain the universal availability
of local exchange services at reasonable rates and to promote the availability of MTS at reasonably
comparable rates throughout the state of Idaho. Idaho Code § 62-610(1). The Commission
annually distributes IUSF funds to qualifying high-cost local exchange telephone companies to
supplement their annual revenue requirements.
ORDER NO. 37152 1

The IUSF is funded through a statewide end-user surcharge on local exchange services and
intrastate MTS and WATS type services. The Administrator submits an annual report to the
Commission, on or before July 15 of each year, detailing the program activities of the previous
year and recommending surcharge rates to meet the next year's funding requirements.Idaho Code
§ 62-610 and IDAPA 31.46.01.303. Staff then analyzes the Report and submits recommendations
to the Commission, and the Commission issues an Order establishing statewide end-user
surcharges to be in effect for the next 12 months beginning October 1. IDAPA 31.46.01.104.01.
THE 2026 REPORT
A. The 2026 Data and 2026-2027 Proposed Budtet
The Report provided an overview of IUSF's fiscal year from July 1, 2025, through June
30, 2026. During this period, the monthly surcharge rates were $0.24 per residential line, $0.41
per business line, and $0.005 per MTS/WATS billed minute. Report at 1. Total revenue collected
during the fiscal year ending June 30, 2026, was $1,076,888, of which $549,674 (51%) was
attributable to local exchange services and$527,214(49%)was attributable to MTS/WATS billed
minutes. Id. During the fiscal year, IUSF disbursed a total of $904,977 to local exchange
companies. Id. The Report also identified $18,697 in administrative fees and $1,553 in expenses
for the fiscal year. Id. The IUSF began the fiscal year with a $264,435 balance and ended with a
$417,551 balance.Id. at 2. IUSF does not earn interest on funds held in its bank account and does
not maintain any investments. Id.
As of May 1, 2026, the Administrator reported that there were 45,028 residential lines and
58,375 business lines in use. Id. This represented a 6% decrease in residential lines and an 11%
increase in business lines compared to the previous year.Id. The Administrator also reported that,
during 2025, a total of 101,873,122 MTS/WATS minutes were billed,representing a 1% increase
from the previous year.Id.
The Report indicated adjustments to the statewide weighted average rates for residential
and business services. Id. at 3. The statewide weighted average rate for residential services was
$35.36, with an IUSF threshold rate of 125% of the statewide average, or$57.88.Id. For business
services,the statewide weighted average rate was $44.20, with an IUSF threshold rate of 125%of
the statewide average, or$72.35.Id. The Report also indicated a decrease in the statewide average
toll switch access (long-distance) rate, from $0.055 per minute in the previous year to $0.054 per
minute in the current year.Id.
ORDER NO. 37152 2

B. Surcharge Options
The Administrator proposed surcharge options for Commission review:
Option I—Status Quo: The Administrator calculated that the IUSF balance would decrease
by approximately $9,025 if the current surcharge levels were maintained and no additional IUSF
funding were authorized. Id. at 3. Assuming disbursements remain at the fiscal year 2025-2026
level of$904,977, the IUSF balance as of June 30, 2027, would be approximately $409,425. Id.
The Administrator further projected that MTS/WATS services would account for approximately
55% of surcharge revenue, while local exchange services would account for approximately 45%.
Id.
Option 2-Maintain Surcharge Rates & Adjust Funding: IDAPA 31.46.01.106.02 may
require IUSF recipients to increase their rates to specified statewide threshold levels after their
first year of eligibility. Id. at 4. Applying the rule to current IUSF recipients would effectively
eliminate annual IUSF disbursements. Id. If current surcharge rates remain unchanged, the fund
was projected to increase by approximately $895,952, resulting in an estimated balance of
$1,314,403 by June 30, 2027. Id. MTS/WATS services would generate approximately 55% of
surcharge revenue, with local exchange services generating the remaining 45%.Id.
Option 3—Adjust Inventories, Maintain Surcharge Rates & Maintain Funding Levels:
Using the most recent five-year trends, the Administrator projected declines in residential and
business lines and an increase in MTS/WATS billed minutes. Id. If current surcharge rates and
authorized IUSF disbursements remain unchanged, the fund would be expected to increase by
approximately $3,900, resulting in a projected balance of approximately $421,452 as of June 30,
2027. Id. MTS/WATS services would generate approximately 60% of surcharge revenue, with
local exchange services contributing the remaining 40%.Id.
Option 4—Ad
just Inventories, Suspend Surcharge Rates & Adjust Funding to Meet
Statewide Averages: Using the most recent five-year trends to project future fund balances, the
Administrator believed that suspending the surcharge rates and adjusting IUSF disbursements to
the statewide averages pursuant to IDAPA 31.46.01.106.02 would result in a decrease in the fund
balance.Id. at 5. After accounting for ongoing administrative expenses of approximately$29,400,
the IUSF balance was projected to be approximately $388,151 as of June 30, 2027.Id.
ORDER NO. 37152 3

C. Administrator Recommendation
The Administrator noted continued shifts in telecommunications usage, including
declining residential lines and increasing business lines and MTS/WATS minutes, which make
future IUSF funding and fund-balance projections more difficult. Id. Because application of
IDAPA 31.46.01.106.02 would effectively eliminate IUSF funding for 2026-2027, the
Administrator recommended Option 4, which would suspend the surcharge rates and result in an
estimated fund balance of $388,151 as of June 30, 2027. Id. Alternatively, the Administrator
recommended Option 1, which would maintain current surcharge rates and funding levels,
resulting in an estimated balance of$409,425. Id. at 6.
STAFF RECOMMENDATIONS
Staff reviewed the Administrator's Report and workpapers and identified several errors in
the reported data and calculations. Staff Decision Memorandum at 2. After requesting corrections,
Staff reviewed the revised materials but continued to find discrepancies and therefore performed
its own calculations. Id. Staff presented four funding options, each incorporating estimated
administrative expenses of$29,400 for fiscal year 2026-2027. Id. at 3. Option 1 would maintain
the current surcharge rates and authorized IUSF disbursements, resulting in a projected fund
balance of approximately$409,425 as of June 30,2027.Id. Option 2 would maintain the surcharge
rates while applying IDAPA 31.46.01.106.02 to adjust funding to statewide averages, effectively
eliminating IUSF disbursements and producing a projected balance of approximately$1,314,402.
Id. at 4. Option 3 would adjust service inventories based on five-year trends while maintaining
current surcharge rates and funding levels, resulting in a projected balance of approximately
$421,952. Id. Option 4 would adjust inventories, suspend surcharge rates, and apply IDAPA
31.46.01.106.02, resulting in a projected balance of approximately $388,151.Id. at 4-5.
Staff recommended that the Commission adopt Option 1 and maintain current funding
levels.Id. at 5-6. Staff explained that this approach would provide stability for funded companies
while allowing additional time to monitor changes in local access lines and MTS/WATS usage,
assess the effects of the Federal Communications Commission's ("FCC") transition away from
legacy copper networks,and work with the Administrator to improve the accuracy of future reports
and funding projections. Id. at 6. Staff also recommended adopting the Administrator's proposed
budget for the 2026-2027 fiscal year.Id.
ORDER NO. 37152 4

COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the implementation and administration of the IUSF
under the Telecommunications Act of 1988, Chapter 6, Title 62, Idaho Code, and the specific
authority of Idaho Code §§ 62-610 et seq. The Commission is empowered to issue an order in
response to the Report, which establishes statewide end-user surcharges to be in effect for 12
months beginning on October 1. IDAPA 31.46.01.104.
Considering the Report and Staff s recommendations, the Commission finds it fair,just,
and reasonable that the statewide end-user surcharges for the 12 months beginning on October 1,
2026, shall maintain the IUSF local exchange surcharge rate of$0.24 per residential line and$0.41
per business line. The surcharge rate for intrastate MTS/WTS billed minutes shall be maintained
at$0.005, and IUSF disbursements shall be maintained at current levels.
The Commission appreciates the Administrator's advocacy of Option 4 but finds that
Option 1 provides a more prudent approach at this time. Maintaining the current surcharge rates
and funding levels will provide greater stability while allowing the Commission to monitor the
continued decline in local exchange services and assess the impact of the FCC's nationwide
transition from legacy copper networks to an all-internet protocol infrastructure. Given the
uncertainty surrounding the extent and timing of these industry changes, the Commission finds
that maintaining the current funding levels will provide an opportunity to evaluate their effects on
the IUSF before making further adjustments. Accordingly, the Commission finds that Option 1
represents a reasonable approach that will continue to fulfill the purposes of Idaho's
Telecommunications Act of 1988 while allowing for future consideration of changes to the IUSF
as circumstances develop. The Commission further directs the Administrator,in next year's report,
to include funding options that evaluate potential updates to the current surcharge rates and
consider various levels of IUSF funding.
Additionally, the Commission accepts the Administrator's proposed budget for fiscal year
2026-2027.We further note it is important for the Commission to strictly monitor the IUSF balance
to avoid unforeseen cash flow impacts due to diminishing line counts and minutes. The
Administrator shall continue to provide Staff with quarterly cash flow analysis to assist the
Commission in monitoring IUSF balances. See Order No. 33851 at 7.
ORDER NO. 37152 5

Finally, we direct the Administrator to work with Staff prior to submitting the 2027 IUSF
Report to ensure the non-confidential filing is properly submitted directly to the Commission
Secretary in accordance with IDAPA 31.46.01.303 and Order No. 36719.
ORDER
IT IS HEREBY ORDERED that the monthly IUSF surcharge rates shall remain $0.24 per
residential line, $0.41 per business line, and $0.005 per MTS/WATS minute, effective for 12
months beginning October 1, 2026. The Administrator's proposed fiscal year 2026-2027 budget
is approved.
IT IS FURTHER ORDERED that the Administrator shall provide Staff quarterly cash flow
reports, as outlined above and in Order No. 33851.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within 21 days of the service date of this Order regarding any matter decided in
this Order. Within 7 days after any person has petitioned for reconsideration, any other person may
cross-petition for reconsideration.Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 1st day of
September 2026.
G 0
EDWARD LODGE, P SIDENT
R. HAMMOND JR., COMMISSIONER
DAYN HA IE, COMMISSIONER
ATTEST:
M B 'o anchez
Commission Secretary
1 ALegal\TELECOM\GNRT2605_final_em.docx
ORDER NO. 37152 6