5. Division of Ratepayer Advocates (DRA) Comments
DRA maintains that SureWest has failed to justify the need to open a rulemaking to address whether to exempt URF ILECs from the § 851 requirement to request authority to encumber assets to secure debt, stating that the Commission has recently considered granting full exemption from § 851 to URF ILECs, and rejected that request in D.10-05-019.
In support of its opposition to SureWest's petition, DRA states that granting SureWest and other URF ILECs an exemption from § 851 to secure Commission approval to encumber assets to secure debt is not in the public interest. In particular, DRA states that the Commission should not relinquish its authority under § 851 to review such transactions, and the public should not relinquish the notice of such transactions and opportunity to comment on such requests as it currently does. DRA goes on to state that a request for encumbrance of assets could involve a significant dollar value, which, as surety for a secured loan, are forfeit (subject to seizure or sale) in the event of financial insolvency or bankruptcy.
In response to SureWest's claim that it is not able to react quickly to changes in the credit market, DRA references D.11-11-030,17 in which the Commission noted that SureWest could request authority to encumber assets prior to entering into negotiations with a lender for new indebtedness. DRA posits that prior authorization would enable SureWest to take advantage of any changes in the credit market or offers from a lender, while still complying with § 851.
DRA also asserts that SureWest fails to demonstrate that the application process is overly burdensome or results in an actual loss of the loan or a higher interest rate. Most recently, SureWest's A.10-12-013 took just 10 weeks to process. DRA goes on to state that the 30-day protest period is a reasonable time period that allows not only the Commission, but the general public the opportunity to voice any concern over a transaction that encumbers ratepayer assets. If no protest is received within this 30-day protest period, the Commission can quickly issue a decision approving the application, as it did in A.10-12-013.
DRA also contends that SureWest admits in its Petition that the other URF ILECs are not currently affected by the requirement to encumber assets, since these companies are currently issuing unsecured debt, as their parent companies are large and have credit ratings.
17 See D.11-11-030 at 7.
