Findings

1. Ducor filed its GRC by Advice Letter Nos. 318 and 318A on December 19, 2007, and July 21, 2008, respectively for test year 2009.

2. Ducor requests the following for test year 2009.

· An increase in the CHCF-A support of $1,211,337, which represents a 68% increase in year 2008 CHCF-A support for the year 2009.

· Various changes to its tariff schedules as described in the Discussion section of this resolution.

· An intrastate rate of return of 10.00%.

· An intrastate operating revenue of $4,350,780.

· A total intrastate rate base amount of $6,538,434.

3. The Communications Division recommends the following for Ducor for test year 2009 (Appendix C, column B):

· An intrastate ROR of 10.00% with a total intrastate rate base amount of $6,507,721.

· A California High Cost Fund-A (CHCF-A) support of $2,514,516, representing a reduction of $478,879 or 16.00% less than the Ducor's proposed CHCF-A 2009 support of $2,993,395.

· An intrastate operating revenue of $4,053,739

· Various changes to its tariff schedules as described in the Discussion section of this resolution

· Tariff increases as described in the Discussion section of this resolution.

4. The difference in estimates for Ducor and CD is the result of the use of different assumptions and methodologies for estimating revenues, expenses, and rate base.

5. The Commission finds CD's application of a benefit to salary ratio of 42% for ratemaking purposes to be reasonable.

6. The Commission finds CD's recommended overall rate of return of 10.00% for Ducor to be reasonable.

7. The Commission finds CD's methodology in estimating revenues, expenses, and rate base reasonable. The Commission therefore adopts CD's recommended intrastate estimates shown in Appendix C.

8. The Commission finds CD's recommended $2,514,516 CHCF-A support for Ducor for 2009 to be reasonable. The $2,514,516, support is based on the Commission's adoption of CD's Intrastate Results of Operations for Ducor for test year 2009.

9. The Commission finds CD's recommendation to approve Ducor's proposed tariff revisions outlined in the Discussion section of this resolution to be reasonable. The proposed tariff changes include an increase to the Flat Residential Service Rate per D.08-09-042 as corrected by D.08-10-040, California Lifeline Rate per General Order 153, and the change in DA allowances from 5 to 3, to 5 to 1.

10. The Commission finds CD's proposed rate increases in the Discussion section of this resolution to be reasonable.

11. The Commission finds CD's proposed reduction in Local Area Operator Assistance Service allowance to be reasonable.

12. CD's proposed rate increase should be reflected in Ducor's tariff revisions.

13. The Commission finds CD's recommendation that the Commission waive the 30-day notice period required under G.O. 96-B and to allow Cal-Ore to file a Tier 2 Advice Letter supplement revision to its tariff schedules for all increases and changes to its rates and charges as contained in this resolution, to be reasonable.

14. Commission approval is based on the specifics of this Advice Letter and does not establish a precedent for the contents of any future filings.

THEREFORE, IT IS ORDERED that:

1. Ducor shall file a Tier 2 Advice Letter supplement revision to its tariff schedules for all increase s and changes to its rates and charges, as contained in this resolution, within 7 days of adoption of this resolution. The effective date of all increases and changes shall be February 1, 2009.

2. The intrastate revenues, expenses, and rate base amounts for test year 2009 identified in Appendix C, column (E) are adopted for Ducor Telephone Company.

3. The overall intrastate rate of return of 10.00% is adopted for Ducor Telephone Company for test year 2009.

4. Ducor shall send a notice, within 7 days of adoption of this resolution, to all customers regarding the increases and changes to all Ducor's rates and charges as contained in this resolution.

5. To the extent the carrier can not implement the adopted rate changes in their February billings, the carrier may implement a surcharge to recover the differential between the Commission adopted rates and those charged by the carrier. The carrier must collect the differential before the conclusion of 2009.

6. Ducor Telephone Company's CHCF-A yearly support for 2009 is $2,514,516 with a resulting monthly support of $209,543.

7. Ducor is granted authority to revise the tariffs for the changes described in this resolution. The revised tariff sheets will include the updated Table of Contents and the renumbering of the tariff sheets using the latest tariff sheet numbers.

This Resolution is effective today.

I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on January 29, 2009. The following Commissioners approved it:

/s/ Paul Clanon

PAUL CLANON

Executive Director

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners