6. Discussion
We deny SureWest's petition to open a rulemaking to determine if URF ILECs should receive an exemption from § 851 in order to secure debt. In D.11-10-030, we offered SureWest several "alternative solutions"18 for resolving its concern that it could not "nimbly"19 react to changes in the market, including: a petition for modification of a decision in an applicable rulemaking; a petition for a rulemaking; or filing of an application to request authority to encumber assets prior to its being necessary, giving it the ability to react to changes in the market. We did not direct that SureWest act on any one of the options provided.
SureWest also raised many of the same issues in its petition as it did in A.11-04-022, that we addressed in D.11-10-030, such as a comparison of the cost of new secured versus unsecured debt available to SureWest,20 its concern that the need to secure debt places it at a disadvantage,21 existing exemptions for NDIECs and CLECs,22 and our resolution of R.09-05-006.23
As we stated in D.11-10-030, one option for SureWest to resolve its concerns was to petition for a rulemaking (which they did in the current petition). A rulemaking would require the time and effort of the Commission, the petitioner, and interested parties (such as all URF ILECs, DRA, Communications Division (CD), and Administrative Law Judge (ALJ) Division). Also, if, as a result of a rulemaking, the URF ILECs were authorized an exemption from § 851, the Commission would then not have the opportunity to properly review the effect of any proposed encumbrance of utility assets on ratepayers; in particular, what the effect would be if an URF ILEC eventually defaulted on the secured debt for which the assets were encumbered.
Another option we provided to SureWest in D.11-10-030 was to file an application for authority to encumber assets before it was needed. The filing of an application would not be an unduly cumbersome process, would involve fewer parties, and require much less time and effort than a rulemaking. SureWest's most recent § 851 request, which was processed in ten weeks, was processed quite expeditiously when compared to the 18 months provided for processing such a ratesetting application. The filing of an application would also retain a venue for the Commission to properly review the effect of any requested encumbrance.
We therefore find that a much more efficient and straightforward solution to SureWest's concerns regarding § 851 is for URF ILECs to simply request authority via an application to encumber utility assets prior to its being necessary. As we stated in D.11-10-030, "By so doing, it will have the authority `on the shelf' and ready to be used. SureWest and its parent would be able to take advantage of any changes in the credit market or offers from a lender, while continuing to comply with § 851."
We understand that this option still requires the URF ILECs to file an application requesting authority under § 851, but if such authority is requested prior to the URF ILEC approaching a lender to issue debt, it greatly mitigates any disadvantage of having to request such authority. In particular, by having such authority on hand prior to needing it, an URF ILEC would have the ability to quickly react to changes in the debt market, and approach potential lenders with the freedom to issue debt immediately or change the amount or rate if more favorable terms are offered.
Given the reasons detailed above, we find that the public interest is served by the best use of Commission and party resources, which in the current case is the URF ILEC's use of the existing application process to request encumbrance of utility assets to secure debt, prior to the existence of such need to issue debt exists.
18 See D.11-10-030 at 1.
19 See D.11-10-030 at 6.
20 See D.11-10-030 at 4-5.
21 See D.11-10-030 at 6.
22 See D.11-10-030 at 3.
23 See D.11-10-030 at 4-5, and 7.
