DR 98-189 Contoocook Valley Telephone Company and Merrimack County Telephone Company Petition for Authority to Merge and for Approval of Tariffs and Temporary and Permanent Rates of the Resulting Corporation Order Approving Procedural Schedule O R D E R N O. 23,074 December 1, 1998 APPEARANCES: Devine, Millimet & Branch by Frederick J. Coolbroth, Esq., for Contoocook Valley Telephone Company, et al.; William Homeyer for the Office of the Consumer Advocate; and, Larry S. Eckhaus, Esq., for the Staff of the New Hampshire Public Utilities Commission. On October 26, 1998, Merrimack County Telephone Company (MCT) and Contoocook Valley Telephone, Inc. (CVT) (collectively, the Petitioners), both wholly owned subsidiaries of MCT, Inc., filed with the New Hampshire Public Utilities Commission (Commission) a Petition for Authority to Merge MCT and CVT and for Approval of Tariffs and Temporary and Permanent Rates of the Resulting Corporation (Petition). According to the Petition, CVT seeks to merge with and into MCT. The surviving entity, operating as MCT Telecom, will provide local exchange telephone service in all of the exchanges currently operated by MCT and CVT. On November 4, 1998, the New Hampshire Public Utilities Commission (Commission) issued an Order of Notice and scheduled a prehearing conference for November 20, 1998 to consider motions to intervene, and to establish the remainder of the procedural schedule. At the duly noticed Prehearing Conference on November 20, 1998, the Office of the Consumer Advocate (OCA) appeared on behalf of residential customers pursuant to RSA 363:28 II. In accordance with the Order of Notice, the parties and Staff provided preliminary statements of their positions. POSITIONS OF THE PARTIES A. CVT and MCT The Petitioners are requesting authority to merge CVT into MCT with the surviving company to be called Merrimack County Telephone Company doing business as MCT Telecom. The Petitioners propose to merge the rates of the two companies and, therefore, to provide a single intrastate access tariff and rates applicable throughout all exchanges. As part of the merger, the Petitioners are proposing to implement full 2-way, home and contiguous EAS in all eight exchanges. The Petitioners indicated that, although the Petition includes requests for temporary and permanent rates, after discussion with Staff and the OCA, Petitioners are willing to coordinate this proceeding with Docket DR 98-160, although they do not agree that CVT is in an overearnings situation, and to delay the implementation of rates and system-wide home and contiguous EAS until the conclusion of that proceeding. B. OCA The OCA maintained that additional information is required before the Commission can determine whether this Petition is in the public good. OCA is also concerned that any earnings reduction for CVT go to the appropriate customers which might not occur if the merger is first approved and temporary rates are set, which could also blur the overearnings issue. C. Staff According to Staff, the filing raises numerous issues including: whether the proposed merger is in the public interest; whether the request for consolidated temporary rates is appropriate; whether the proposed consolidated temporary rates are just and reasonable; how the financial structure of MCT Telecom as the surviving entity is affected; whether provision of 2-way EAS for all eight exchanges should be included as part of the merger plan; and, the relationship of this proceeding to Docket DR 98-160 which is an investigation into the earnings level of CVT. Staff is of the opinion that this investigation should track the schedule of DR 98-160, and that a determination regarding CVT's overearnings is required before permanent rates are set for the merged company. Staff maintains that the merger petition, discussion of any merged rates, and other issues contained therein, should be considered as a separate proceeding, although both dockets could proceed along similar time lines. At a Technical Session subsequent to the Prehearing Conference, the parties and Staff agreed upon the following procedural schedule, which is coordinated with Docket DR 98-160, such that Company Testimony in this proceeding will be filed after Staff and OCA Testimony in DR 98-160. A second hearing date has been added so that DR 98-189 will be heard immediately following DR 98-160 in order that CVT's overearnings be addressed prior to setting permanent rates for the merged company. Company Testimony February 26,1999 Staff & OCA Data Requests March 5,1998 - 1st Set Company Data Responses March 12,1999 - 1st Set Staff & OCA Data Requests March 19, 1999 - 2nd Set Company Data Responses March 26, 1999 - 2nd Set Staff & OCA Testimony April 9, 1999 All Parties Data Requests April 16, 1999 Staff & OCA Data Responses April 23, 1999 Settlement Discussions May 5, 1999 Stipulation (if any) May 11, 1999 or Rebuttal Hearing May 18-19, 1999 The Parties and Staff are also discussing the appropriate cost of service methodology to be used in establishing rate design. The Parties and Staff will forward their recommendation to the Commission if an agreement is reached. We find the proposed procedural schedule to be reasonable and just, for the reasons suggested by the parties and Staff. Based upon the foregoing, it is hereby ORDERED, that the procedural schedule stipulated to by the parties and Staff is adopted to govern our investigation in this proceeding. By order of the Public Utilities Commission of New Hampshire this first day of December, 1998. Douglas L. Patch Susan S. Geiger Nancy Brockway Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary