COMMUNICATIONS/RSK/KOK/DLW/RHG

Decision 11-06-010 June 9, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Cal-Ore Telephone Company (U1006C) for an Order authorizing it to issue notes in an amount not exceeding $446,600, and to execute a related agreement and supplemental security instruments.

Application 10-11-008
(Filed November 10, 2010)

DECISION AUTHORIZING CAL-ORE TELEPHONE COMPANY

TO ISSUE DEBT

TABLE OF CONTENTS

I. Summary 1 1

II. Background 2 2

A. Financial Information 2 2

B. Financing Request 3 3

C. Current Financing Authority 4 4

D. Broadband Service Plans 6 6

E. Construction Budget 9 9

F. Cash Requirements Forecast 9 9

G. BIP Grant and Low Cost Loan Award 10 10

H. Capital Structure 11 11

III. Notice and Protests 11 11

IV. Discussion 12 12

V. Competitive Bidding Rule 17 17

VI. Reporting Requirement 17 17

VII. Fees 17 17

VIII. Category and Need for Hearings 18 18

IX. Assignment of Proceeding 18 18

Findings of Fact 18

Conclusions of Law 21

ORDER 23

DECISION AUTHORIZING CAL-ORE TELEPHONE COMPANY

TO ISSUE DEBT

I. Summary

This decision grants Cal-Ore Telephone Company (Cal-Ore) the authority requested in its Application 10-11-008.

Cal-Ore requests authority, pursuant to §§ 818 and 851 of the Public Utilities Code, to:¹

1. In conjunction with its affiliate Cal-Ore Communications, Inc. (COC), enter into a loan agreement with the United States of America, acting through the Rural Utilities Service (RUS),² for the purpose of borrowing $446,600 under the Broadband Initiative Program (BIP), as authorized by the American Recovery and Reinvestment Act of 2009 (ARRA);³

2. Use the loan proceeds to finance the construction of a broadband infrastructure project to serve end users in north central Siskiyou County, California;

3. Execute a Loan/Grant Security Agreement and Promissory Note in conjunction with the loan; and

4. Assign the proceeds of the loan and a $1,339,800 BIP grant from RUS and the property constructed therewith to COC.⁴

¹ All statutory references are to the Public Utilities Code unless otherwise indicated.

² RUS is an agency of the United States Department of Agriculture (USDA), charged with providing assistance to public electric, telephone, water, and sewer utilities in rural areas of the United States via public-private partnerships. RUS works closely with two other agencies that are not part of the USDA, the Federal Financing Bank (FFB) and the Rural Telephone Bank (RTB). These banks provide the funds for many of the loan programs administered by the RUS.

³ ARRA which is commonly referred to as the Stimulus or Recovery Act, is an economic stimulus package enacted by the 111^th United States Congress in February 2009. BIP is administered by RUS and created pursuant to the Recovery Act.

⁴ In conjunction with the $446,600 loan, RUS is providing Cal-Ore and its affiliate COC a BIP grant in the amount of $1,339,800 also to construct the broadband infrastructure project. Cal-Ore anticipates that it and COC will not need any additional funds to complete the project.