DR 98-189
    Contoocook Valley Telephone Company and Merrimack County Telephone
      Petition for Authority to Merge and for Approval of Tariffs and
        Temporary and Permanent Rates of the Resulting Corporation
                    Order Approving Procedural Schedule
                         O R D E R   N O.  23,074
                             December 1, 1998
         APPEARANCES: Devine, Millimet & Branch by Frederick J.
Coolbroth, Esq., for Contoocook Valley Telephone Company, et al.; 
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 October 26, 1998, Merrimack County Telephone Company
(MCT) and Contoocook Valley Telephone, Inc. (CVT) (collectively,
the Petitioners), both wholly owned subsidiaries of MCT, Inc.,
filed with the New Hampshire Public Utilities Commission
(Commission) a Petition for Authority to Merge MCT and CVT and
     for Approval of Tariffs and Temporary and Permanent Rates of the
     Resulting Corporation (Petition).  According to the Petition, CVT
     seeks to merge with and into MCT.  The surviving entity,
     operating as MCT Telecom, will provide local exchange telephone
     service in all of the exchanges currently operated by MCT and
         On November 4, 1998, the New Hampshire Public Utilities
     Commission (Commission) issued an Order of Notice and scheduled a
     prehearing conference for November 20, 1998 to consider motions
     to intervene, and to establish the remainder of the procedural
         At the duly noticed Prehearing Conference on November
     20, 1998, the Office of the Consumer Advocate (OCA) appeared on
     behalf of residential customers pursuant to RSA 363:28 II.  In
     accordance with the Order of Notice, the parties and Staff
     provided preliminary statements of their positions. 
     A. CVT and MCT
         The Petitioners are requesting authority to merge CVT
     into MCT with the surviving company to be called Merrimack County
     Telephone Company doing business as MCT Telecom. The Petitioners
     propose to merge the rates of the two companies and, therefore,
     to provide a single intrastate access tariff and rates applicable
     throughout all exchanges.  As part of the merger, the Petitioners
     are proposing to implement full 2-way, home and contiguous EAS in
     all eight exchanges.   The Petitioners indicated that, although
     the Petition includes requests for temporary and permanent rates,
     after discussion with Staff and the OCA, Petitioners are willing
     to coordinate this proceeding with Docket DR 98-160, although
     they do not agree that CVT is in an overearnings situation, and
     to delay the implementation of rates and system-wide home and
     contiguous EAS until the conclusion of that proceeding.  
     B. OCA
         The OCA maintained that additional information is
     required before the Commission can determine whether this
     Petition is in the public good.  OCA is also concerned that any
     earnings reduction for CVT go to the appropriate customers which
     might not occur if the merger is first approved and temporary
     rates are set, which could also blur the overearnings issue.
     C. Staff
         According to Staff, the filing raises numerous issues
     including: whether the proposed merger is in the public interest;
     whether the request for consolidated temporary rates is
     appropriate; whether the proposed consolidated temporary rates
     are just and reasonable; how the financial structure of MCT
     Telecom as the surviving entity is affected; whether provision of
     2-way EAS for all eight exchanges should be included as part of
     the merger plan; and, the relationship of this proceeding to
     Docket DR 98-160 which is an investigation into the earnings
     level of CVT. Staff is of the opinion that this investigation
     should track the schedule of DR 98-160, and that a determination
     regarding CVT's overearnings is required before permanent rates
     are set for the merged company. Staff maintains that the merger
     petition, discussion of any merged rates, and other issues
     contained therein, should be considered as a separate proceeding,
     although both dockets could proceed along similar time lines. 
         At a Technical Session subsequent to the Prehearing
     Conference, the parties and Staff agreed upon the following
     procedural schedule, which is coordinated with Docket DR 98-160,
     such that Company Testimony in this proceeding will be filed
     after Staff and OCA Testimony in DR 98-160.  A second hearing
     date has been added so that DR 98-189 will be heard immediately
     following DR 98-160 in order that CVT's overearnings be addressed
     prior to setting permanent rates for the merged company.
          Company Testimony             February 26,1999
          Staff & OCA Data Requests     March 5,1998
          - 1st Set
          Company Data Responses        March 12,1999
          - 1st Set
          Staff & OCA Data Requests     March 19, 1999
          - 2nd Set
          Company Data Responses        March 26, 1999
          - 2nd Set
          Staff & OCA Testimony         April 9, 1999
          All Parties Data Requests     April 16, 1999
          Staff & OCA Data Responses    April 23, 1999
          Settlement Discussions        May 5, 1999
          Stipulation (if any)          May 11, 1999
               or Rebuttal
          Hearing                       May 18-19, 1999
               The Parties and Staff are also discussing the
     appropriate cost of service methodology to be used in
     establishing rate design.  The Parties and Staff will forward
     their recommendation to the Commission if an agreement is
               We find the proposed procedural schedule to be
     reasonable and just, for the reasons suggested by the parties and
               Based upon the foregoing, it is hereby
               ORDERED, that the 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 first day of December, 1998.
     Douglas L. Patch       Susan S. Geiger       Nancy Brockway
           Chairman           Commissioner        Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary