DR 98-059
                         Hollis Telephone Company
                    Order Approving Procedural Schedule
                         O R D E R   N O.  22,961
                               June 23, 1998
         On April 20, 1998 the New Hampshire Public
     Utilities Commission (Commission) issued an Order of Notice
     pursuant to RSA 365:5 and 378:7, opening an investigation
     into the level of earnings of Hollis Telephone Company
     (Hollis).  The Order of Notice scheduled a prehearing
     conference for May 27, 1998 to address the issue of
     temporary rates, to consider motions to intervene, and to
     establish a procedural schedule to govern the Commission's
     investigation into the reasonableness of Hollis's earnings. 
     By letter dated May 18, 1998, the Commission postponed the
     hearing on temporary rates to June 19, 1998.
         At the duly noticed Prehearing Conference on May
     27, 1998, there were no intervenors. Hollis, the Office of
     the Consumer Advocate (OCA), and the Commission Staff
     (Staff) agreed upon the following procedural schedule:
          Staff Audit                   July 15 - August 12,1998
          Staff Data Requests           August 7, 1998
          Company Data Responses        August 25, 1998
          Staff Testimony               September 16, 1998
          Company Data Requests         September 30, 1998
          Staff Data Responses          October 14, 1998
          Settlement Discussions        October 21, 1998
                                         (10:00 a.m.)
          Company Testimony             November 4, 1998
          Staff Data Requests           November 10, 1998
          Company Data Responses        November 18, 1998
          Settlement Discussions        November 23, 1998
          Stipulation, if any, 
            to Commissioners            December 2, 1998
          Hearings                      December 15-16, 1998
               Also at the prehearing conference, in accordance
     with the Order of Notice, the parties and Staff stated their
     initial positions.  Hollis agreed that it is in a position
     of overearning and proposed that current rates should be set
     as temporary rates.  Hollis further stated its belief that
     the above lengthy procedural schedule could be considerably
     shortened by working with Staff and the OCA toward a
     negotiated settlement. The OCA asserted that Hollis had
     overcharged ratepayers by about $293,000 in revenue and
     $180,000 in net earnings in 1997.  Therefore, the OCA
     recommended that temporary rates should be reduced to the
     level of the Company's overearnings in keeping with the
     Staff's recommended methodology.  Staff stated that
     significant overearnings exist and recommended that the
     Commission set temporary rates below current levels.  Staff
     suggested temporary rates which would reduce Hollis'
     revenues by 19%, an amount which would decrease the rate of
     return to the Hollis' authorized rate of return.  Staff
     asserted that the Commission's investigation and audit will
     answer questions regarding Hollis' accounting for its
     decision to enter the toll market as it affects the
     company's earnings.  Staff's position is that the company's
     entry into the toll market, which may have improved its
     overearnings position, benefitted only certain target
     customers rather than the entire customer base which created
     the overearnings position. 
               We find the stipulated procedural schedule just
     and reasonable.  We encourage Staff and the parties to work
     together to reach resolution of the disputed issues, if
               Based upon the foregoing, it is hereby
               ORDERED, that the procedural schedule outlined
     above is adopted to govern our investigation in this
               By order of the Public Utilities Commission of New
     Hampshire this twenty-third day of June, 1998.
        Douglas L. Patch  Bruce B. Ellsworth     Susan S. Geiger
            Chairman         Commissioner         Commissioner
     Attested by:
     Claire D. DiCicco
     Assistant Secretary