2. Background

Applicants received $31,299,810.13 from Rural Telephone Bank stock redemption and dividends, and on December 20, 2007, applied for Commission authorization to credit $3,037 of those funds to ratepayers.¹ In D.10-06-029, the Commission ordered all the funds returned to ratepayers.

The Commission also found that the applicants should be required to show cause why they should not be fined for the following apparent violations:

(A) failure to disclose the substantial revenue from the dissolution of the Rural Telephone Bank in their respective 2006 California High Cost Fund A advice letter filings as required by Decision 91-09-042, and

(B) failure to comply with Rule 1 of the Commission's Rules of Practice and Procedure for filing an application that did not disclose the actual amount at issue and failing to be forthcoming with relevant information.

On July 28, 2010, applicants filed a Motion for Rehearing of D.10-06-029, a request for official notice, and a Motion for Stay of Decision D.10-06-029 until the Motion for Rehearing had been ruled upon. On August 18, 2010, the applicants filed a motion for an order directing the Commission's Docket Office to accept the July 28, 2010 request for official notice for filing. The Commission denied all these motions on October 28, 2010, in D.10-10-036.

¹ The extensive history of the Rural Telephone Bank is set out in Decision (D.) 10-06-029. In summary, Congress created the Bank in 1971 to make low-cost capital available to rural telephone providers. The applicants obtained substantial loans from the Rural Telephone Bank. They also obtained stock in the Rural Telephone Bank through the loans and as refunds of interest paid on the loans. In August 2005, the Board of Directors of the Rural Telephone Bank authorized its dissolution and initiated the stock redemption process. Redemption payments began in April 2006.