DR 98-059
                         HOLLIS TELEPHONE COMPANY
                        Overearnings Investigation
                      Order Approving Temporary Rates
                         O R D E R   N O.  22,969
                               June 30, 1998
         APPEARANCES: Devine, Millimet & Branch by
     Frederick J. Coolbroth, Esq. for Hollis Telephone Company;
     the Office of the Consumer Advocate by William P. Homeyer
     for residential ratepayers, and E. Barclay Jackson, Esq. for
     the Staff of the New Hampshire Public Utilities Commission.
               Pursuant to New Hampshire Public Utilities
     Commission (Commission) Order No. 22,823 in DR 97-187, the
     Staff of the Commission (Staff) conducted and prepared for
     the Commission a review of the earnings of Hollis Telephone
     Company (Hollis) and the relationship of those earnings to
     Hollis's toll rates.  On April 20, 1998, the Commission
     issued an Order of Notice opening this docket.  The Order of
     Notice scheduled a prehearing conference for May 27, 1998,
     to consider motions to intervene, establish a procedural
     schedule and to address the issue of temporary rates.  The
     Order of Notice required Hollis, Staff, and all parties to
     prefile testimony on the issue of temporary rates by May 20,
               By motion filed April 29, 1998, the Office of the
     Consumer Advocate (OCA) requested that the Commission amend
     the schedule for temporary rate hearing or, in the
     alternative, permit the OCA to file rebuttal testimony on
     that issue.  Hollis objected to the OCA's motion on
     procedural grounds.  By letter dated May 18, 1998, the
     Commission rescheduled the date for hearing evidence on the
     issue of temporary rates to June 19, 1998.  Staff and Hollis
     filed testimony on temporary rates on May 22, 1998.  After
     discussions, Staff and Hollis reached agreement regarding
     the level of temporary rates.  The OCA concurred in the
               After the duly noticed prehearing conference on
     May 27, 1998, the Commission issued an order approving a
     procedural schedule for the permanent rate case, Order No.
               At the hearing on temporary rates, June 19, 1998,
     the parties and Staff presented a Stipulation solely with
     regard to the issue of temporary rates in this docket.      
               Staff and the parties agreed that the Hollis's
     existing retail rates should go into effect as temporary
     rates as of the date of issuance of this order, subject to
     the following specific reductions:
          1.  A reduction entitled "local credit" in the amount
     of $3.72 per month will be included on each customer bill
     for local service.  The effect of this local credit is an
     estimated annual revenue reduction of $134,902.
          2.  A reduction in the charge for new installation from
     $47.70 to $39.00.  The effect of this reduction is an
     estimated annual revenue reduction of $5,072.
          3.  Reductions in access rates
               a.  Reducing originating CCL from $0.015859 per
     minute             to $0.013759.
               b.  Reducing terminating CCL from $0.03058 to
               c.  Reducing local switching from $0.024 to
               The effect of temporary rates is to permit
     reconciliation of any overearnings or underearnings by the
     company, pursuant to RSA 378:27, retroactive to the date of
     this order.
               Our authority to set temporary rates is explicitly
     authorized by RSA 328:27, conditioned on a finding that such
     rates are in the public interest.  Temporary rates are
     established without the extensive investigation as is
     required for the determination of permanent rates. Re New
     England Telephone & Telegraph Company v. State, 95 N.H. 515
     (1949); Pennichuck Water Works, Inc., 78 NH PUC 197 (1993). 
     The standard for determining temporary and permanent rates
     requires that rates must be sufficient to yield not less
     than a reasonable return on the cost of utility property
     that is used and useful in the public service less accrued
     depreciation.  RSA 378:38, Pennichuck, 78 NHPUC 197, 200. 
               In the instant case the parties and Staff propose
     temporary rates lower than current levels.  We approved the
     existing rates of GTE NH, Hollis's corporate predecessor, as
     permanent rates for Hollis in Docket DF 94-021, Order No.
     21,251 (dated June 6, 1994).  In view of Hollis' changed
     corporate structure and the reasonable anticipation of
     permanent rate reductions, we find that the proposed
     temporary rates are consistent with the public interest and
     sufficient to yield a reasonable return on the cost of
     Hollis's property.  Staff will be conducting an audit of
     Hollis, which will provide the information needed to
     determine the company's permanent rate level. 
               Based upon the foregoing, it is hereby 
               ORDERED, that temporary rates for Hollis shall be
     set at the levels proposed, as outlined above. 
               By order of the Public Utilities Commission of New
     Hampshire this thirtieth day of June, 1998.
      Douglas L. Patch    Bruce B. Ellsworth     Susan S. Geiger
          Chairman           Commissioner         Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary