DR 98-160
                    Contoocook Valley Telephone Company
                        Overearnings Investigation
     Order Approving Temporary Rates and Revising Procedural Schedule
                         O R D E R   N O.  23,069
                             November 30, 1998
         APPEARANCES: Devine, Millimet & Branch by Frederick J.
Coolbroth, Esq., for Contoocook Valley Telephone Company; 
William Homeyer for the Office of the Consumer Advocate; and,
Larry S. Eckhaus, Esq., for the Staff of the New Hampshire Public
Utilities Commission.

         On September 22, 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 Contoocook Valley Telephone Company (CVT). 
The Order of Notice scheduled a prehearing conference for October
26, 1998 to consider motions to intervene and to establish the
remainder of the procedural schedule. A hearing was scheduled for
November 20, 1998 to address the issue of temporary rates. The
Order of Notice also recognized that, in addition to the question
of overearnings, CVT, and its affiliate Merrimack County
Telephone Company (MCT) (collectively, the Companies), would be
petitioning the Commission to merge the two companies.   

         At the Prehearing Conference held on October 26, 1998,
CVT informed the Commission that the Companies had filed a
petition for authority to average each company's residential and
business basic local rates to arrive at local rates for the
surviving entity and to include a revenue loss recovery plan for
provision of expansion of Extended Area Service (EAS), since
docketed as DR 98-189. On November 13, 1998, the Commission
issued Order No. 23,064 approving the procedural schedule
proposed by Parties and Staff.  
         Rather than filing testimony on the issue of Temporary
Rates, Staff, by letter dated November 19, 1998, submitted a
Stipulation and Agreement Regarding Temporary Rates
(Stipulation), approved by the Parties and Staff, proposing to
establish the existing retail rates of CVT as temporary rates to
go into effect as of the date of issuance of this order.  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. The Stipulation
was presented at the hearing on November 20, 1998.    
         At a Technical Session subsequent to the Prehearing
Conference, the parties and Staff agreed upon certain changes to
the Procedural Schedule previously approved by Order No 23,064,
as modified by Secretarial Letter dated November 23, 1998. The
changes provide additional time for CVT to respond to the Staff's
initial set of interrogatories and for Staff and OCA's second set
of interrogatories, provide the OCA with an opportunity to issue
data requests as a result of the Staff Audit and, accordingly,
delay the dates for Staff and OCA Testimony, data requests and
responses one week.  It also provides for the filing of Rebuttal
Testimony in the event a Stipulation is not reached.  In
addition, in order to coordinate this proceeding with Docket    
DR 98-189, Merrimack and Contoocook Valley Telephone Companies'
Petition for Authority to Merge, a second hearing date has been
added and the two Dockets will be heard, one after the other. The
revised procedural schedule is as follows:
     Staff Audit                November 9, 1998 -
                                          January 8, 1999
            Staff & OCA Data Requests     November 18, 1998
            - 1st Set
            Company Data Responses        December 15, 1998
            - 1st Set
            Staff & OCA Data Requests     December 21, 1998
            - 2nd Set

            Company Data Responses        January 8, 1999
            - 2nd Set

            Draft Audit Report            January 15, 1999

            Final Audit Report            January 29, 1999

            OCA Data Requests re:
                 Staff Audit              February 5, 1999

            Responses to OCA Data
                 Requests                 February 12, 1999

            Staff & OCA Testimony         February 19, 1999

            All Parties Data Requests     February 26, 1999
            - 1st Set

            Staff & OCA Data Responses    March 5, 1999
            - 1st Set

            All Parties Data Requests     March 12, 1999
            - 2nd Set

            Staff & OCA Data Responses    March 18, 1999
            - 2nd Set

            Settlement Discussions        March 19, 1999
            Company Testimony             March 26, 1999

            Staff & OCA Data Requests     April 9, 1999
            - 3rd Set

            Company Data Responses        April 16, 1999
            - 3rd Set

            Staff & OCA Data Requests     April 23, 1999
            - 4th Set (if needed)

            Company Data Responses        April 30, 1999
            - 4th Set (if needed)

            Settlement Discussions        May 5, 1999

            Stipulation (if any)          May 11, 1999
                 or Rebuttal Testimony

            Hearings                      May 18-19, 1999

                 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 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 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 378:28, Pennichuck, 78 NHPUC 197, 200. 
                 In the instant case, the parties and Staff propose
     temporary rates at current levels. We find that the proposed
     temporary rates are consistent with the public interest and
     sufficient to yield a reasonable return on the cost of CVT's
     property.  Staff will be conducting an audit of CVT, which will
     provide the information needed to determine the company's
     permanent rate level and the difference between temporary and
     permanent rates. 
                 We also find the proposed changes to the procedural
     schedule to be reasonable and just, for the reasons suggested by
     the Parties and Staff.
                 Based upon the foregoing, it is hereby
                 ORDERED, that temporary rates for CVT shall be set at
     current levels to go into effect as of the date of issuance of
     this order; and it is
                 FURTHER ORDERED, that the amended procedural schedule
     stipulated to by the parties and Staff is adopted to govern our
     investigation in this proceeding.
                 By order of the Public Utilities Commission of New
     Hampshire this thirtieth day of November, 1998.
       Douglas L. Patch     Susan S. Geiger       Nancy Brockway
           Chairman           Commissioner        Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary