2. Factual Background
On February 10, 2012, Consolidated Communications Holdings, Inc. (CCHI), Consolidated Communications, Inc. (CCI) (CCHI and CCI, together Consolidated), WH Acquisition II Corp. (Merger Sub II), SureWest Communications, SureWest Telephone, SureWest Long Distance, and SureWest TeleVideo (collectively the SureWest Companies) (Applicants) jointly filed Application (A.) 12-02-011 (Application) requesting Commission approval for Merger Sub II to acquire direct control and for Consolidated to acquire indirect control of the SureWest Companies pursuant to a merger agreement "by which Consolidated proposes to acquire all of the assets of SureWest Communications, the parent of the SureWest California Utilities, through a series of mergers."4 The Applicants also seek Commission approval to modify the encumbrance of SureWest's assets:
In addition, Applicants seek approval for SureWest Telephone to encumber its assets. In connection with the Transactions, SureWest Communications' existing debt of approximately $204 million, for which the SureWest California Utilities have already encumbered their assets, will be repaid and redeemed in full, but the SureWest Companies will be required to encumber their assets, along with all of Consolidated's other subsidiaries, to secure existing financing arrangements of Consolidated.5
On March 8, 2012, Resolution ALJ 176-3290 reached a preliminary determination that this proceeding was ratesetting and that hearings would be necessary.
On March 19, 2012, the Division of Ratepayer Advocates (DRA) and The Utility Reform Network (TURN), filing jointly,6 and Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications (Frontier), filed protests to the Application.
On March 29, 2012, the Applicants filed a reply to the protests.7
On March 30, 2012, a prehearing conference (PHC) was held in San Francisco to address issues concerning the management of this proceeding, including proposals concerning the scheduling of the proceeding.
On April 6, 2012, Commissioner Peevey issued an Assigned Commissioner's Ruling and Scoping Memo. This memo set the scope and procedural schedule for this proceeding. The memo confirmed the preliminary determination that the proceeding should be categorized as ratesetting, but the memo envisioned two procedural paths: one in which a settlement was reached by all parties that led to a possible Commission decision in early June without hearings, and one in which issues were contested and hearings were possible that led to a possible Commission decision in August, 2012. In addition, the memo established that the parties to the proceeding include only the Applicants, TURN, DRA, and Frontier.
On April 9, 2012, by express permission of Administrative Law Judge (ALJ) Sullivan granted at the PHC, Frontier filed a Response to the Applicants' Reply to Protests.8
Pursuant to Rule 12.1(b), on April 13, 2012, the Applicants served an e-mail notice of a settlement conference. On April 25, 2012, the Settling Parties, which included all parties to this proceeding, held a settlement conference. No additional party claiming or seeking party status has come forward at this time.
On April 30, 2012, Consolidated, the SureWest Companies, TURN, DRA and Frontier filed a Joint Motion for adoption of an all party Settlement Agreement,9 along with a copy of the Settlement Agreement itself.10
On May 10, 2012, all parties filed an Amendment to Settlement Agreement (Amendment). The Amendment corrects a typographical error in the Settlement Agreement:
The final paragraph of Item 8 on page 6 of the Settlement Agreement should have stated, and now states, "Frontier agrees to not use Consolidated's name in their marketing communications to the SureWest Companies' business customers before or during the 60-day waiver period."11
Since the Settlement Agreement and the Amendment are the products of all five parties in the proceeding, they constitute a single "all party" settlement for the purposes of the Commission's rules for reviewing settlements.
4 Application at 2.
5 Id. at 2.
6 Joint Protest of the Division of Ratepayer Advocates and The Utility Reform Network (DRA/TURN Protest), March 19, 2012.
7 Reply to Joint Protest of the Division of Ratepayer Advocates and The Utility Reform Network and to the Protest of Citizens Telecommunications Company of California, Inc. d/b/a/Frontier Communications of California (Applicants Reply to Protests), March 29, 2012.
8 Response to Reply to Joint Protest of Division of Ratepayer Advocates and The Utility Return Network and to Protest of Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications of California, April 9, 2012.
9 Joint Motion for Adoption of All Party Settlement Agreement Pursuant to Article 12.1 of the Commission's Rules of Practice and Procedure (Joint Motion), April 30, 2012.
10 The Joint Motion identifies the Settlement Agreement as Appendix A. We refer to it throughout this decision as the Settlement Agreement. The Settlement Agreement is Attachment A to this decision.
11 Amendment at 1. The word "use" was not present in this sentence in the Settlement Agreement. The Amendment is Attachment B to this decision.
